Degrees of Freedom: August 2006: Politics, Philosophy and Economics from a libertarian point of view.

The unstated premises of conservatism Wednesday, August 30, 2006

In my last post, I mentioned the possibility that leftists and libertarians just don't see eye to eye on things because of some unshared and unstated premises. I don't want to give the impression that I believe this is only true of leftists.

In 1962, Michael Oakeshott began his essay entitled On Being Conservative with these words:

The common belief that it is impossible (or, if not impossible, then so unpromising as to be not worth while attempting) to elicit explanatory general principles from what is recognized to be conservative conduct is not one that I share. It may be true that conservative conduct does not readily provoke articulation in the idiom of general ideas, and that consequently there has been a certain reluctance to undertake this kind of elucidation; but it is not to be presumed that conservative conduct is less eligible than any other for this sort of interpretation, for what it is worth. Nevertheless, this is not the enterprise I propose to engage in here. My theme is not a creed or a doctrine, but a disposition. To be conservative is to be disposed to think and behave in certain manners; it is to prefer certain kinds of conduct and certain conditions of human circumstances to others; it is to be disposed to make certain kinds of choices. And my design here is to construe this disposition as it appears in contemporary character, rather than to transpose it into the idiom of general principles.

I see. There is no unstated premise. There are no premises at all. Or perhaps I don't see.

My reading of this is that Oakeshott conceives of his own conservatism as a "disposition" or a "preference." If so, one can only wonder how such a thing as conservatism, which is, for Oakeshott, no more than a set of personal likes and dislikes, can be relevant to matters of policy. All policy analysis turns on the question of what constitutes a sufficient reason for agents of the state to use coercion to control the behavior of grownups. Dispositions and preferences don't strike me as an adequate basis to address that question.

As an aside, my copy of the aforementioned essay comes from The Portable Conservative Reader © 1982, Viking Press, Ed. Russell Kirk. On the cover of that volume is an 18th Century liberal by the name of George Washington. Go figure.

Agreeing to disagree or What makes leftists tick?

Recently, Matt McIntosh rounded up some interesting empirical arguments that potentially undermine a lot of leftist orthodoxy. For example: Poverty measures are flawed, the corporate income tax hurts the little guy, inequality concerns are based on mistaken assumptions, and successful people really do seem to be successful because of positive traits.

Trouble is, anyone can readily anticipate how a leftist would react to such such arguments: The poverty measure is flawed because the government actually wants a measure that is easily undermined so that they can manufacture a reason to cut poverty programs when they want more money to fund defense contracts. The ability of corporations to shift their tax burden onto workers and consumers just indicates the market power of corporations and points to the need for more regulation. The surplus from transactions is unequally distributed at the time of the transaction due to differences in market power, so this is also a reason for more regulation. Traits may be correlated one way or another, but you get the genes you get as a matter of luck so we should redistribute the benefits of those genes for the sake of being fair.

So here's my question: The tendency of leftists to react as they do to such arguments must be based on something. What is that thing and what would be sufficient to convince a leftist to abandon it? I have no clue on this one.

Just to be clear, I don’t automatically dismiss leftists as downright irrational or evil. I could, given that most leftists advocate applications of systematic violence that I find abhorrent, but I don’t. I suspect that the same is true of most libertarians.

Instead, I (we?) give leftists the benefit of the doubt and assume that their positions rest on some implicit premise which, if made explicit, would lend some clear justification to the beliefs of leftists. Whenever I discuss politics with any of my leftist friends, they seem to generally agree that our disagreements on policy issues could probably be attributed to a lack of common premises.

Whatever that implicit premise is, I wish that leftists would make it explicit. The alternative is to “agree to disagree” which might be fine in discussions of chocolate vs. vanilla, but when it comes to policy issues, it amounts to a situation where whatever side has the most adherents gets to tell everyone else how to live.

Defending IP in theory and practice Sunday, August 27, 2006

Matt McIntosh brings up an interesting argument concerning intellectual property rights. To summarize: Some people will argue that they should be free to buy a CD and burn all the copies they like on the grounds that they paid for the CD and it should be theirs to play, duplicate or whatever else. This view is mistaken. Why?

If A produces some work and encodes it on some media, then A may offer that work to B on whatever set of terms A likes. If B consents to the transaction, then B agrees to those terms. And the terms A offers may well be of the form "You may have the non-transferable right to listen, and only to listen, to the music encoded in this CD recording of Let it Bleed in exchange for $X." If B accepts the offer, tenders $X to A, and then makes a copy of the material on the CD, well, then B is guilty of fraud because the exchange took place with the understanding that B was not also going to be doing other things with the material on the CD, such as making copies.

This argument is fine so far as it goes, but it should be pointed out that this argument, despite popularity with companies that make most of their money from intellectual property, doesn't come close justifying the policies that such companies actually advocate. Consider three possible scenarios:

1. If B should happen to abandon the media on which intellectual property is encoded, and C finds it, what obligations does C have to keep B's commitments to A? May C make copies of the intellectual property? Appealing only to the argument above, the correct answer is that not enough information is available. I suspect that most of the A's in the IP business however, would disregard this point of indeterminacy and insist that C also is obligated not to make any copies.

2. Suppose that B breaks the agreement with A and releases a copy of whatever intellectual property A produced. C obtains a copy from B. Is C guilty of any wrongdoing? According to the argument above, again, there is not enough information. A can claim that B is obligated to keep certain commitments because of an agreement that took place at the time of the transaction. This was an agreement to which C was never a party, but again, I suspect that most of the A's in the IP business would disregard this point of indeterminacy and insist that C also is obligated to make any copies.

3. Suppose that B had entered into the above agreement with A. Suppose, also, that C had previously taken A up on an offer along the lines of "You may purchase the non-transferable right to listen, and only to listen, to the music encoded in this vinyl LP recording of Let it Bleed." C's vinyl copy finally wears out after years of use. B hears of C's misfortune and offers C a copy of the CD. Has C done anything wrong? In this case, the answer is clearly, no. C had purchased, on terms agreed to by A, the right to listen to the music recorded on the LP. And again, I suspect that most of the A's in the IP business would claim otherwise.

To be sure, in each case B's behavior is at least questionable if not entirely objectionable. This does not change the fact that the policies which most A's in this world would like to enforce against the C's in this world do not follow from the argument above. There may be an argument for the actual positions of the real world A's, but this is not it.

Firearm microstamping Saturday, August 26, 2006

The California state Senate recently passed a bill to require that all semi-automatic handguns be fitted to stamp ejected shell casings with information about the gun that discharged them. From the text of the legislation,

Existing law requires the submission of handguns by manufacturers for determining if the handguns are unsafe, as specified.

This bill would provide that, commencing on January 1, 2009, no handgun may be submitted for that testing unless the handgun is designed and equipped with a microscopic array of characters, that identify the make, model, and serial number of the pistol, etched into the interior surface or internal working parts of the pistol,
and which are transferred by imprinting on each cartridge case when the firearm is fired...

There are plenty of good reasons to be distrustful of this. In all likelihood, at least some crooks will find ways to circumvent microstamping. Normal wear and tear may result in deterioration of the microstamping device inside a firearm. The state doesn't own the firearms in question, so the state is usurping the property rights of gun owners to require microstamping. And slippery slope arguments are not entirely without merit here either. Historically, there has never been a case where some government said "Ok, we've involved ourselves enough. We're done regulating this matter."

What I find more troubling is that the Law Enforcement Alliance of America also opposes the recent bill. Law enforcement groups seldom take the same positions as gun rights groups (On guns, anyway. They probably have a lot in common otherwise.) so whenever both sorts of groups are on the same side of any issue, that's unusual enough to warrant some amount of curiousity. So here's how I see it:

Either microstamping actually works or it doesn't. If it doesn't work, it would be very unusual for law enforcers to see that as a reason to protest it. All kinds of policies don't work for fighting crime and crime related problems (e.g. D.A.R.E., restrictions on types of firearms, etc.), and yet law enforcement groups have not seen the need to protest these policies on the grounds that they are ineffective.

On the other hand, if microstamping does work, it's a little frightening that a group representing the interests of law enforcement officers would oppose it. Supposing that microstamping actually works, it would seem to be nearly analogous to DNA testing, a technology well known for its usefulness in establishing guilt and also for its usefulnes in establishing innocence. I can't imagine police officers being against a technology that helps them get convictions against suspects. Getting convictions is one of the main criteria by which police officers are evaluated. The remaining alternative is somewhat more plausible, but highly disconcerting: Perhaps law enforcement officials oppose microstamping because it would give persons accused of firearms related charges an additional line of defense.

My readership must be growing! Friday, August 25, 2006

Peter Boetke recounts a recent experience with someone named Chris Trotter who very obviously has been reading this blog. As Boetke writes,

Mr. Trotter (who has no relation to Sir Ronald Trotter) said some nice things as well. He said I was energetic and implied that I presented the case for the free market with rhetorical polish. But his position can fundamentally be summed up in the following sentence: "The sort of people who pay the salaries of Boettke and his ilk own the politicians, the media and the intellectuals."

Get it? Boetke's analysis is suspect because his income ultimately comes from people who have benefitted from the free market. Well this looks almost exactly like a suggestion I made in this primer on arguing with libertarians.

8. Criticize libertarians for whatever interaction or noninteraction they have had with the state.

Example: "Yet another libertarian that went to a state school. What a hypocrite!" Alternately: "Yet another libertarian that went to a private university. Of course the super rich can afford to be libertarian." Since the government is involved in just about every aspect of our lives, it should be easy enough to find a similar charge to make against any libertarian. Whatever the personal activities of a libertarian may be, be sure to find fault.

Boetke's recollection of his experience is informative, but this only captures half the story. See, if you are wealthy or have wealthy backers, then you've been bought and your free market claims are suspect. On the other hand, if you are less than wealthy or perhaps have even relied on the state for support, then you are a hypocrite for advocating free market principles. That's the beauty of the ad hominem circumstantial: everyone is one circumstance or another.

Who can you root for in this one? Thursday, August 24, 2006

Ralph Nader has gotten himself into some legal trouble in Pennsylvania. Apparently the signatures to get him and running mate Peter Camejo on the ballot didn't all correspond to the names of actual people, unless there really are registered voters named "Mickey Mouse" and "Fred Flintstone" in Pennsylvania. My initial reaction was to cheer the fact that the fraudsters will have to pay for their actions. Upon reflection, I keep noticing that it's just so hard to find anyone to root for in all of this.

Yes, Nader and Camejo turned to fraud to get on the ballot. There is no excusing that and using the names of cartoon characters borders on criminal stupidity. Nader and Camejo probably didn't choose to use cartoon names themselves, but then is it any less stupid to delegate a criminal act to whatever tofu eating idiot put those names on the petition?

Then there are the Pennsylvania voters who brought the suit against Nader and Camejo. Again, yes, Nader and Camejo turned to fraud to get on the ballot. But something tells me that the voters bringing the suit against them aren't in this because they care about the "rule of law." More likely, I suspect that they believe limiting voter choice to be a good tactic for promoting their own agenda.

And then there is the Pennsylvania government who implemented the ballot access requirement. I understand the argument; if anybody could get his name on the ballot just for asking, the ballot would be a mile long. Fine. Let every aspiring candidate pay the marginal cost of putting their name on the ballot. The signature requirement just protects the major parties from having too many challengers.

Policy and Inequality Wednesday, August 23, 2006

I'm normally not given to discussions of income inequality. It's just not an issue that I see as important in and of itself. However, a lot of econobloggers have been offering their views on the matter in response to a recent claim by Paul Krugman that government policies can affect income inequality. Gabriel Mihalache neatly lists several of the recent responses.

Their comments pretty much cover all aspects of the issue. Just the same, it never hurts to analyze the data.^[1] And wouldn't you know, I find that the data do support Krugman's claim. There does seem to be a statistically significant association between increases in inequality and the party affiliations of policy makers.

After controlling for monetary and fiscal policy and the year-on-year change in income inequality of the previous year, it seems that inequality rises significantly faster after Democrats have been in office for a year!

Not only that, but it seems that the sort of policies Krugman favors also seem to contribute toward greater levels of inequality growth. Loose monetary policy and higher government spending (as a fraction of national income) are also strongly correlated with greater increases in inequality.

Below is the output of a time series regression analysis. The dependent variable is the year-on-year change in national income inequality, as caputured by the GINI coefficient. The variables r_pres_1, r_house_1 and r_senate_1 are binaries to indicate Republican control of the Presidency, House and Senate, all with a lag of one year (to account for the time between election and the measurable effects of policies). The variable fedfunds is the nominal Fed funds rate. The variable govshare is calculated as government spending divided by national income.

OLS estimates using the 32 observations 1969-2000
Dependent variable: d_ginicoef
Serial correlation-robust standard errors, lag order 2

      VARIABLE       COEFFICIENT        STDERROR      T STAT   P-VALUE

  const                -0.0221156        0.0105210    -2.102   0.04579 **
  r_pres_1             -0.00603126       0.00165760   -3.639   0.00125 ***
  r_house_1            -0.00972793       0.00326421   -2.980   0.00633 ***
  r_senate_1            0.00184290       0.00124777    1.477   0.15217
  fedfunds             -0.000917501      0.000324687  -2.826   0.00914 ***
  govshare              0.00116251       0.000389344   2.986   0.00625 ***
  d_ginicoef_1         -0.145898         0.106311     -1.372   0.18214

Unadjusted R-squared = 0.33603
Adjusted R-squared = 0.176677
F-statistic (6, 25) = 3.44194 (p-value = 0.0129)
First-order autocorrelation coeff. = -0.141678

^[1] Yes, Krugman's column contains numbers. A list of numbers and claims is not an analysis.

Law Enforcement Against Prohibition Monday, August 21, 2006

In case anyone thought I was in favor of drug prohibition...

Just watch the video. (Via Radley Balko)

Bias in multiple choice tests of political leanings Saturday, August 19, 2006

Matt Barr offers an interesting one question political quiz:

What was your reaction to this story?
Boeing Co. said Friday it will begin shutting down production of its C-17 cargo plane, the last to be built in Southern California, because Congress has not funded new purchases.

The decision could affect thousands of Boeing workers in four states and thousands of others employed by companies that supply parts for the C-17.

The Chicago-based company said it has told its suppliers and subcontractors to stop work on planes beyond those already on order. Boeing said it has enough orders to continue production through the middle of 2009.
1. About time the rotten, stagnant economy caught up to the military industrial complex.

2. Congress is hamstringing the Global War on Terror again!

3. I suppose it's too much to hope for that Congress is using the savings to protect the environment and lift millions out of poverty.

4. The military needs to adapt to the Islamofascist threat, and this is one unfortunate example.

5. Goddamn Bush and his wiretaps, fearmongering and heavyhanded usurpation of executive power!

6. We can look forward to more non-funding of massive cargo aircraft if the Democrats retake Congress!

7. All those people losing their jobs... but they were contributing to American imperialistic hegemony... I need to lay down.

But Matt must be some kind of loony un-American left-winger. Why else would he have left out the patriotic, conservative answer?

8. I'll make out a personal check to fund the production of more C-17's because that's how I think my money ought to be spent. Really. I promise.

The trouble with "practical" libertarians Thursday, August 17, 2006

Recently, a lot of libertarians have moved in a direction toward a variant of libertarianism which they call by various names, including practical libertarianism, pragmatic libertarianism, cost-benefit libertarianism, consequential libertarianism, neo-libertarianism, and so on. I want to mention, briefly, why I find this new sort of libertarianism wanting.

Generally, practical libertarianism is a view that favors free enterprise, small government, low taxes, deregulation, privatization and for the most part, everything else that generally goes along with libertarianism. The distinguishing characteristic is that practical libertarians attempt to deliberately avoid any talk of first principles, rights, non-aggression, and so on.

There are (at least) two motivations for this. First, for some, any emphasis on philosophical or ethical foundations is seen as an obstacle to persuading outsiders to consider libertarian ideas. Second, one could argue that an argument for libertarianism which depends on a particular theoretical foundation has an extra point of failure: if that theoretical foundation is flawed, the whole argument for libertarianism is undermined. More on these later.

Before I move into a discussion of what I perceive to be the shortcomings of practical libertarianism, I want to mention what I think is good about it. In at least one sense, practical libertarianism is nothing new. Libertarians see libertarianism as a set of ideas that are actually relevant for the issues people face in the real world. Insofar as practical libertarians are interested in looking for libertarian approaches to these issues, there is no problem. So far as I know, every form of libertarianism claims to be practical in at least this sense.

Also, practical libertarians seem to at least have some good intentions. Rather than rely on first principles about the metaphysics of morals, practical libertarians seek to make arguments that are as agnostic as possible with regard to ethical or philosophical foundations.

So what's the problem?

The Way Things Ought To Be

The purported goal of practical libertarianism is to supply solutions to real world problems. And here comes the trouble. Practical libertarians cannot even state their own goal without venturing out of the domain to which they claim to limit themselves.

It is impossible to even decide what constitutes a problem without some normative basis, let alone to justify the position that problems ought to be solved. Don't get me wrong; there really are problems in the world that really should be solved. But once we admit this, we have to admit that we've already brought normative concerns to bear. It's too late to exclude them from the analysis of possible solutions. If normative concerns are admissible in deciding what the problems are, it is inconsistent (rather than practical) to insist that normative considerations be excluded from the analysis of potential solutions.

Persuasion and Practicality

As mentioned above, one of the arguments made by practical libertarians is that too much emphasis on first principles and the natural right to self ownership make libertarianism less appealing to outsiders. Maybe so, but I doubt it. I've talked to plenty of non-libertarians in my time and very few reject libertarianism because they are turned off by a rigorous consideration of ethics. In nearly every case, they are turned off of libertarianism because they heard someone advancing the sort of arguments that practical libertarians are likely to make and find that those arguments don't sit well with their own foundations. The solution is not to disregard this, but rather to address it head-on by confronting those foundations.

Why Be Libertarian Anyway?

In addition to avoiding the moral and philosophical foundations of libertarianism, most practical libertarians differ from regular libertarians on matters of policy as well. Most recently, such disagreements have been related to foreign policy, but that's not the only point of disagreement. Other differences between practical libertarians and radicals exist on immigration, publicly funded drug treatment, fiat money, environmental regulation, insider trading and still other issues. My goal here is not to take a side on any of these issues, but there is something curious about all of this. If practical libertarians differ from regular libertarians, why do they call themselves libertarians? What's the benefit? Apparently they endorse a set of policy prescriptions similar to, but different from, regular libertarianism. Now if they want to be persuasive, perhaps they might call themselves something with the potential for some helpful name recognition. But if they have only a partial agreement with the libertarian position, and they believe that persuasion of outsiders is highly important, why do they burden themselves with a label that associates them with a bunch of wild eyed radicals?

Rights and Norms vs. Costs and Benefits

Where the hard core of regular libertarian policy analysis is private property and nonaggression, the hard core of practical libertarian policy analysis is cost-benefit analysis. Presumably, this is a way to avoid getting mired in difficult to resolve ethical disagreements. And there are problems. For one, what counts as a cost or a benefit and how do we measure and compare them? This is a hard problem. As well, there is another problem which should resonate more fully with the concerns of most practical libertarians: Arguments based on cost benefit analysis aren't persuasive. Tell a statist that free-market capitalism outperforms their favorite form of interventionism on a cost-benefit basis and watch their reaction if you don't believe me. More often than not, you'll hear a counterargument about "non-economic values," or (if the statist is fairly sophisticated) that cost-benefit analysis is inherently flawed because it assigns a zero weight to things that people value but cannot pay for such as equality of income. The only way to engage such a view is to address the normative arguments for whatever non-economic value the statist has in mind.

Moral Assumptions

One reason that many practical libertarians give for avoiding any discussion of philosophical foundations is that they don't want to get caught up in debates over the merits of different philosophies. This concern is sensible enough, but the conclusion is misplaced. The way to avoid this problem is simply to make arguments that are more robust to varying the assumptions. For example:

"Now look here, statist. Either printing money and using it to manipulate the bond market is good (by your definition of good, whatever it may be) or bad (again, by your definition). If it's good, then we should do away with the laws that forbid it. Of course you don't believe that, so it must be bad in which case we should do away with laws that permit the government to do this. But you can't have it both ways and argue that the activity should be illegal for ordinary citizens because it has bad consequences, violates rights, or whatever else and then turn around and argue that governments should do this regularly because the consequences will be great, or because it doesn't violate any rights, or whatever else. Whatever your normative standards may be, you can't selectively apply them in one way to ordinary citizens and in some different way to the government."

This sort of argument gets around the problem of convincing the statist to accept one ethical theory in favor of another without retreating once and for all from the issue of ethical foundations.

Note:

I should mention that this pertains only to those practical libertarians who would take the position that their brand of libertarianism is a superior alternative to regular libertarianism. These remarks do not pertain to someone who would choose to specialize in looking at applications of libertarianism to specific issues and take a position along the lines of "Well, I don't really specialize in that," when it comes to the moral and philosophical arguments concerning libertarianism.

How'd that get in there? Tuesday, August 15, 2006

Lew Rockwell has an interesting article in the American Conservative, mostly dealing with the disappointning mess that American conservatism has become. In Lew's words,

The reality is that today there are ever fewer conservatives alive who believe in true liberty as the old school believed in it. They have been ideologically compromised beyond repair. They have been so seduced by the Bush administration that they have become champions of an egregious war, ghastly bureaucracies like the Department of Homeland Security, and utterly unprincipled on the question of government growth.

Well, no argument there.

But just keep reading! A few paragraphs later, Lew writes,

This is why [conservatives] fail to see that the Left has been making a lot more sense on policy issues in recent years. It is correct on civil liberties, on issues of war and peace, and on the critical issue of religious liberty. By “correct” I mean that in these areas the Left is saying precisely what the liberals of old used to say: as much as possible, society ought to be left to manage itself without the coercive intervention of the state.

Is he serious?

I'll give him civil liberties, in the sense that leftists are less restrictive than conservatives, but that's where it ends. According to mainstream leftism, I should't have the religious liberty to to choose whether or not to fund secular schools. On war and peace, the left has no real substantive disagreement with a typical neocon. Their only complaints on Iraq are that the guy leading the show is from the wrong party, and that not enough other countries are involved. But these are minor league issues to a leftist anyway. The primary issue of the left is, was and always will be increasing the amount of forced wealth redistribution. Redistribution for health care, income equality, senior citizens, it really doesn't matter. Just be sure to redistribute.

This isn't all that new coming from Lew. He's written in the past to say that libertarians should try to form some kind of intellectual alliances with the left. Seeing how well his recent article describes the failure of the same kind of alliance with the right, I'm surprised he'd entertain the notion of a productive alliance with the left.

The fight for social justice continues

I wish I could say I saw this coming. Apparently a some townships are now worried about giving longevity awards to their workers since they would, by necessity, go mostly to older workers. They are seriously considering scrapping such awards to avoid the appearance of age discrimination.

Council bosses in Norfolk are planning to axe long service awards for staff - in case they are accused of being ageist.

New laws that come into force in October will make it illegal to discriminate against someone on the grounds of how old or young they are.

Bosses at Broadland Council say they are "reviewing" their policy of handing out awards to employees, in case they breach the rules.

If someone had predicted this in advance, they would have been laughed at for suggesting that this could happen. Here's the link.

Analytical vices, dispensable and indispensable Sunday, August 13, 2006

Recently, Tyler Cowen claimed to have diagnosed the analytical vice common to libertarians: the assumption that the quality of government is fixed. Others have already commented on professor Cowen's remarks better than I could hope to regarding his diagnosis of the libertarian vice, but I'd like to point out an important way in which the vice identified by Cowen is unique: you don't actually have to succumb to it in order to be a libertarian. I don't even know of any version of libertarianism that claims this even as a minor footnote.

Contrast this with the statist vice, the belief that there are some types of acts which are so unacceptable that violence should be used to curtail them, except in case the doer is acting on behalf of a government in which case those same types of acts are to be encouraged.

Is it even possible to be a statist without first believing this?

The Weak Case for Agricultural Subsidies Friday, August 11, 2006

Lately, I've been engaged in a discussion over the merits of agricultural subsidies with someone who claims that whatever distortions such subsidies may cause, they are justified by whatever increases they bring in the stability of agricultural output.

This seems a weak argument, given the vanishingly small likelihood of a disruption in the availability of food. Moreover, the sort of events that might cause a serious food disruption (comet impact? continent wide drought?) would probably be so serious that no amount of subsidies would be mitigate the disruption. Worse still, this argument has "lexicographic preference" written all over it. Does additional stability of agricultural output really justify any distortion? What about agricultural conscription? I suspect that most of us would draw the line before we got to that point!

All that to the side, whatever the potential for food disruption, and whatever the possible benefit of subsidies, agricultural subsidies are unnecessary.

Trivially, if there is never a disruption, then agricultural subsidies are worse than unnecessary: they are all cost and no benefit. What about the other case? What if there is a disruption?

People who actually believe that an agricultural disruption might happen could buy insurance against a food supply disruption to deal with this possibility. Food producing firms, such as large bakeries, do this already. (That they feel the need to do this despite the fact that there are already agricultural subsidies in place is telling.) They buy agricultural futures contracts to hedge against variability in the market. But suppose that this wouldn't be adequate for whatever reason.

In that case, there is still no argument for subsidies. We already have a mechanism for dealing with risk. It's called insurance. Those believing a disruption to be likely could invest jointly in a firm that ran an archipelago of farms in North America at a loss until the disruption arrives. Such a firm could cover all or part of their losses by turning around and selling a wide array of insurance policies specifying in advance what policyholders could expect in the event of a food disruption. When the food supply disruption finally comes, the stockholders in that firm would have those farms ready to go, producing the food that they need to get them through the disruption, and policyholders could call in their claims.

So far as dealing with food supply disruptions is concerned, this would work at least as well as agricultural subsidies. I say "at least" because there is at least one sense in which it would be far, far better for than subsidies. In the event of a food supply disruption, there would be a tremendous profit opportunity for all of the firms that receive subsidies today to take advantage of, perhaps in ways that those fearing a food disruption wouldn't approve of.

Now consider how things would work with the sort of firm just described. Shareholders in such a firm would be able to vote on the firm's policies. No government program operates on a democracy nearly this direct. Policyholders, while unable to vote, would at least have a clearly defined claim to something. All of the subsidies in the world won't provide that.

I can only think of one way in which this would be materially different from agricultural subsidies: no one could use the coercive power of the state to force people to fund the project against their will. I see this a feature, rather than a bug. When any other entity in society forces people to fund things that they claim not to want, we would condemn it as extortion without a second thought as to the possibility that "extortion" is too harsh or loaded a term. Let's be consistent and call it extortion when the government does the same, ok?

So, I've now suggested a way of accomplishing what the proponents of agricultural subsidies hope to accomplish and it's a better way in many respects. It solves the agency problem in that shareholders and policyholders wouldn't have to wonder about exactly how the major agricultural firms would use the subsidy in normal times and how they would respond to a food disruption. People could choose to insure a little, or a lot, or not at all, depending on their own assessment of the risk of a food disruption. And of course there would be no deadweight or rent seeking costs because no firm would be in a position to lobby for more and ever more subsidies.

Is any of this likely? Yes and no. There is plenty of reason to believe that where a risk exists, it won't be long for a market to exist to deal with that risk. On the other hand, the actual risk of a food disruption is so small that I doubt many people would be willing to pay to insure against this risk if they were limited to using their own money. What this does show, however, is that regardless of the actual risk of a food supply disruption, agricultural subsidies are both unnecessary and inferior to market-based alternatives.

Hooray! Thursday, August 10, 2006

I was thrilled to hear that a plot to commit another terrorist act was foiled today. These guys are scum, through and through, willing to kill any number of innocents just because we disagree over whether or not the entire world should become one repressive Islamic caliphate. May they get what they deserve.

Now in light of today's events, here's a suggestion. As we bear witness to this attempted terrorist attack, let's not jump to the conclusion that the key to our safety is more government control of our lives. That might be comforting, especially to those who believe that governments are uniquely able to guarantee things. We can't trust anyone other than the government with something this important, can we? Well, here's a wild idea.

Let the airlines do whatever they want to secure their own airplanes.

Who has a stronger incentive to keep air flights secure, the government, or the people who stand to lose huge sums of money if a terror attack on one of their airplanes frightens away most of their customers? Sure, some carriers will engage in that much talked about practice of racial profiling, specifically searching Arab males in their mid twenties. That might offend some of us. Had airlines done so on September 11, 2001, thousands of people that are dead today would also be alive. That un-offends me. Others might insist that everyone fly naked, handcuffed and sedated. Or they might have a large team of armed security personnel on board each flight. Or they might use methods similar to those that the government uses now. I don't pretend to know.

What I do know is that incentives matter. Airlines have a hard time competing with each other on the usual stuff, e.g. price, availability, etc. If they are allowed to compete in security, they'll jump at the chance to do so, to the consumer's benefit.

On the other hand, the airlines would have no incentive, or even the opportunity, to expand their scope to, say, going after petty domestic criminals. If an airline has a flight security division, that division is only concerned about flight security. That's it. They won't suffer from mission creep. They'd have to bear their own costs if they did.

Shifting the burden Wednesday, August 09, 2006

Jim Fedako has a new article up regarding a recent study, which purports to show that private schools are no better than public schools. Two things come to mind here.

First, I'm rather confident that results of this study will soon find their way into the talking points of those who favor a nationalized education industry. That's interesting because of the particular metrics that the study uses, standardized test results. The same people who oppose standardized testing of verbal and quantitative skills as measures of educational quality will lose no time to compromise their principles on this, we can be sure.

More importantly, I wonder how people actually think through the use of such studies. I've heard before, from people that I thought of as highly intelligent, that libertarian talk about coercion is unpersuasive, and that they would only prefer voluntary over coercive policy arrangements if it could be shown that the voluntary approach worked better. If the voluntary approach only generates outcomes as good as the coercive approach, well that's not enough to motivate the case for voluntary arrangements. Note the implication: if coercive arrangement A and voluntary arrangement B work equally well in terms of their outcomes, then coercion is the preferred option. In other words, assume the appropriateness of coercion and then demand that the other side prove their case against it.

Better regulate than never! Saturday, August 05, 2006

According to this article in USA Today,

Creekstone Farms, a Kansas beef producer, wants to reassure customers that its cattle are safe to eat by testing them all for mad cow disease. Sounds like a smart business move, but there's one problem: The federal government won't let the company do it.

How long until people realize that the regulatory industry is just a tool for the benefit of big business at the expense of consumers?

Let's clear things up. Friday, August 04, 2006

There is some interesting back and forth between Marginal Revolution and Crooked Timber on the Iraq war. As I understood it, AT's original point was that conservatives are inconsistent to be skeptical of central planning in every other context and all for the central planning of war, a fairly mild point and one that I'd expect a bunch of Crooked Timber liberals to gleefully add to their list of talking points.

No such luck. The CT folk accuse AT of trying to infer "We should have less government." from "The government makes a mess in wartime." I don't think that was the point AT was trying to make, (and AT says as much) but perhaps Alex, and libertarians in general, are still partly at fault here. Maybe the fine folks at CT have just gotten confused because libertarians have spent too much time going over individual cases of government failures and not enough time explaining the general arguments for less government. So:

Premise 1. It would be unwise to trust the people outside of the government with the power to take and spend other people's money without their consent.

Premise 2. The people in the government are no more trustworthy than anyone else.

Conclusion: Therefore, it would be unwise to trust the people in the government with the power to take and spend other people's money without their consent.

This seems like a valid argument, so if there is disagreement over the conclusion, we can probably trace that back to disagreement over the truth of the premises. I don't see anyone arguing for repeal of the laws against, say, theft, so I'll even guess that Premise 1 is fairly uncontroversial. That leaves only the possibility that statists deny Premise 2. Why?

The Journal of Libertarian Studies

The Journal of Libertarian Studies, Vol. 20.2 is now available.

Taxes and Poverty Thursday, August 03, 2006

Lately, I've been involved in a research project concerning poverty and the effects of various government policies on poverty. Here's a scatterplot that I found fairly interesting.

When personal income taxes (federal, state and local) consume a larger share of GDP, this correlates with greater increases (or smaller decreases) in the poverty rate. Controlling for other variables, the relationship is still there, but you don't need fancy statistics to see it. This makes pretty good intuitive sense given what we know about taxes and economic growth (taxes diminish growth) and what we know about economic growth and poverty (economic growth alleviates poverty).

Fiscal conservatives might give some thought to the kinds of arguments they make when defending tax cuts to bleeding heart liberals who think the solution to just about every problem is to spend more and ever more tax revenues on it.

Checks and balances Wednesday, August 02, 2006

I had been meaning to do a post on the issue of checks and balances, and why I think they are unlikely to be terribly effective at preventing a government from becoming abusive. Specifically, the persons in the agencies within a government that are supposed to check and balance each other's power can't reasonably be expected to do so.

As is the case in a market setting, if they can get a collusive arrangement going, they will stand to benefit from it at the expense of everyone else. (Imagine how much higher your phone bill would be if your phone service provider and their competitors all agreed on what to charge.)

Unlike a market setting, collusive behavior is generally encouraged (Just imagine how you would react to find that your phone service provider was suggesting rates to their competitors as freely as the executive branch suggested the PATRIOT ACT to the legislative branch!) and once collusive practices are taking place, no party has any incentive to defect from the collusive arrangement.

Unfortunately for my blogging aspirations, Michael Rozeff has managed to sum up the entire argument in one sentence.

"The state has the incentive to destroy institutions that exist to control agency costs so that it can have greater freedom of action and shift these costs back to the citizens."

The full article is here. Part I is here.

Seeking Co-Blogger. Interested?

Degrees of Freedom