Hayek on Social Justice & Minimum Income

Kevin Vallier tries to sort it out:

On Hayek’s view, the UBI is required as a condition of democratic legitimacy within the framework of a social contract. I’m not saying Hayek is a social contract theorist, but he sounds like one in this passage. In order for a democratic government to be legitimate it must treat people as equals by imposing only abstract rules on them. Government gives no one special privilege, and this requirement is compatible with providing them with means to secure basic goods and services.

via Hayek: against social justice, for a minimum income | Bleeding Heart Libertarians.

James Otteson on the Morality of Capitalism

Otteson makes a Smithian case:

What the free-enterprise system—Smith’s “obvious and simple system of natural liberty”—proposes, then, is the adoption of those political and economic institutions that manage to combine not one but two great moral imperatives: allowing people the opportunity to rise from the impoverished existence that seems to be humanity’s miserable, if equal, status quo; and respecting people as the irreplaceable and precious individuals that they are. That is a sublime conjunction of material prosperity and moral agency, the likes of which no other system of political economy has ever contemplated, let alone achieved.

Capitalism is not perfect. But no system created by human beings is, or ever will be, perfect. The most we can hope for is continuing gradual improvement. To this end, we must honestly examine the prospects of the available systems of political economy. The benefits of the free-enterprise society are enormous and unprecedented; they have meant the difference between life and death for hundreds of millions of people and have afforded a dignity to populations that are otherwise forgotten. We should wish to extend these benefits rather than to curtail them.

Would you say that the United States political economy is a “free-enterprise system”? That Smith’s “system of natural liberty” tends to function rhetorically as a justification of capitalism-as-we-know-it suggests some confusion.

via Issues 2012 | An Audacious Promise: The Moral Case for Capitalism.

Podcast: Schmidtz on Rawls, Nozick, and Justice

David Schmidtz talks with Russ Roberts about Rawls, Nozick, and Justice. MP3 file here.

When Intellectual Property Is Theft

I liked Julian’s observation that legislated extensions of copyright terms are more like theft than copyright infringement:

[I]f the defining characteristic of theft is that it deprives the victim of something they were entitled to use and enjoy, then there are things that can accurately be described as “intellectual property theft.” When legislators—many of whom now support censoring the Internet to stop “piracy”—rewrote the copyright bargain with the Sonny Bono Copyright Term Exension Act, they retroactively extended the monopoly of rightsholders over existing works by 20 years. That retroactive extension, of course, did nothing to incentivize new creation. And since economists have estimated that the present value of a copyright monopoly was already barely distinguishable from the value of an unlimited term, it’s doubtful that even the prospective extension bought us much additional creativity. But it did mean that the general public would be denied, for another 20 years, the free use of works that had been slated to fall into the public domain under the original copyright bargain. That sounds more like “theft” of intellectual property—and not just theft from a particular creator or industry, but from the whole of the public.

If you’ve ever had a hard time understanding what Prudhon had in mind when he said “Property is theft!” you could do a lot worse than reflect on the Sonny Bono Copyright Extension Act. To define and assign property rights just is to rig the economic game a certain way. To divide a common meadow into private parcels does deprive the public from the use and enjoyment of the meadow. And this does amount to theft if members of the public cannot see the new assignment of rights to have merit by their own lights. It’s often (but not always) the case that dividing the commons is the only way to satisfy Locke’s requirement that everyone be left with as much and as good. If you’re duly compensated for losing access to a resource that would be otherwise depleted, we tend to think it’s a fair arrangement. Likewise, keeping intangible creative works out of the commons through the assignment of intellectual property rights is justified if it leaves us better off than we would be in a world with no IP.

I happen to think copyright does induce creation and that creators and consumers as classes would be worse off without it. And I think returning creative works to the commons in, say, 20 or 30 years also induces creation and that creators and consumers both are made worse off by longer copyright terms. That’s just a guess, but presumably there’s some vague fact of the matter about optimal terms for various types of creative work. Whatever that is, that’s what we’re entitled to. Extending terms past the optimum, locking down more than a lifetime flow of monopoly rents for a few at the expense of the many, doesn’t strike me as like theft. It’s a straightforward plundering of humankind’s common cultural inheritance.

Like Freddie de Boer, I’d like to have a serious, non-utopian conversation about the regime of intellectual property rights and intellectual property protection that would best encourage creation by making it possible to make a living selling the dearly created but easily and cheaply reproducible. (Unlike Freddie, I think a good place to start would be not to seethe with open contempt for those with whom we mildly disagree and not to preemptively ascribe irritation from those we’ve unfairly impugned to bad-faith tribalism.) One hopeful possibility here is that fair rules inspire respect and respect induces compliance. A more modest and limited scheme of copyright clearly focused on incentivizing and rewarding creators rather than on minting money in perpetuity for corporate copyright owners might make less draconian enforcement mechanisms sufficiently effective.

Liberaltarianism Lives

On Tim Lee’s blog as “bottom-up liberalism”.

Tim’s right that liberals have internalized a fair number of libertarian arguments, and this is heartening. At the same time,  it’s  important not to overstate this. Also, few libertarians have yet to internalize liberal arguments that they should accept. Convergence is a two-way street.

The exchange between me and Matt Steinglass at Democracy in America over whether Obamacare incorporates Hayekian insights is an excellent example of they way libertarians and liberals continue to fail to connect. And most liberals remain pretty hostile to these common libertarian ideas:

• Democracy sucks.
• Unions hurt more than they help.
• Campaign spending is political speech.
• Economic inequality does not undermine democracy or democracy’s role in establishing and protecting equal liberty.
• Economic rights are as important as political and civil rights, and should be just as vigilantly protected, even if  that leads to huge inequalities, which do not, by the way, threaten democracy or the value of political and civil rights.
• Taxation is coercive but imprisoning the guy who nicked your lawn gnome isn’t.

One could go on. Some of these ideas are correct, some incorrect. Together they amount to a towering impediment to joyous liberal-libertarian comity.

Even if you’re a moderate Hayek-Friedman pro-welfare-state libertarian who does not think taxation or inflation are indistinguishable from theft, it’s still impossible to convince most liberals of this:

• It’s best to just maximize growth rates, pre-tax distribution be damned, and then fund wicked-good social insurance with huge revenues from an optimal tax scheme.

It’s not even clear to me what’s especially libertarian about this. It’s sorta just anodyne welfare-state liberalism plus economics. I’d be elated to get just this. When a not insignificant group of liberals start saying, “Of course! Of course this is what we should do!”  then I’ll feel we’re really cooking with gas, and I won’t care what we call it.

Here's Why Not

From Herb Gintis’ excellent review of the lately-departed G.A. Cohen’s Why Not Socialism?:

Cohen argues that markets are morally offensive institutions that most people would be happy to get rid of if they could figure out some alternative compatible with the standard of living we are accustomed to in advanced market societies. “The market” says Cohen, “is intrinsically repugnant…Every market, even a socialist market, is a system of predation.” (pp. 78,82)

In place of the market, Cohen celebrates the caring and voluntary mutual aid that occurs in small groups of friends (he never mentions family), and believes this can be extended to a community of strangers as well. He calls this “communal reciprocity.” (p. 39)

[…]

Rather than lamenting the incompatibility of socialist community and human nature, Cohen faults our meager social technology; there is simply no known machinery for harnessing natural human generosity. He calls this an “insoluble organizational design problem.” “In my view,” he remarks, “the principal problem that faces the socialist ideal is that we do not know how to design the machinery that would make it run.” (p. 55)

I think there are two problems with Cohen’s argument. First, there is a reason why we lack the organizational institutions that harness human generosity, and it has to do with a side of human nature that Cohen does not recognize. There is a great deal of heterogeneity among people in the degree to which they privilege the personal, including self and family, over the social. Everyday observation, reinforced by a huge body of empirical evidence—see my book, Bounds of Reason (Princeton, 2009) for details—that unless there are safeguards against the free-rider tendencies of the selfish, the natural tendency for the majority to cooperate will be undermined, and cooperation will unravel. Moreover, the larger the group, the harder it is to identify and punish the free-riders, even though most people are willing to incur personal costs to do so. Markets work because they discipline firms, who then discipline workers, thus solving the free-rider problem. Moreover, markets discipline firms by forcing them to compete and therefore reveal to the public exactly what are the limits of the possible in satisfying consumer needs and using technology efficiently. The knowledge of production possibilities unleashed through market competition cannot be revealed in any other way that we know of.

Gintis’ second problem is another good reason also why not.

I’ve read a good number of Cohen’s papers and books. I’ve always enjoyed them, and I’ve always come away feeling he has clarified for me the contours of the debate. The great thing about Cohen was how transparently and unabashedly he angled for the result he wanted to get. But he wasn’t one to pack the conclusion into his premises, so when he would land short of his longed-for conclusion, you could be pretty certain that’s as close as you can get with those particular premises. And you could be pretty sure that if there were some other premises out there both more plausible and more amenable to producing the wanted result, he would have found them and started from there. For many years Cohen was to Anglophone analytic political philosophy something like Ted Kennedy was to American politics: he marked the outer bound of the reasonable left. I think now that contemporary political philosophers have begun to lose their “studied ignorance of standard social and psychological theory, common among philosophers of the mid-Twentieth century,” as Gintis puts it, the bounds are shifting, leaving Cohen’s views well past the edge of a receding tide.

Is Poverty a Violation of Human Rights?

I’ve been meaning to blog about William Easterly’s exchange with Amnesty International about the notion that poverty is a rights violation. I’ve found my own view much harder to pin down than I thought I would, so it took me forever to actually write this post, which goes far afield, and amounts to a lot of thinking out loud. I remain unhappy with my thoughts (or this not-very-rigorous way of putting them), but I found writing it very useful, and maybe some of you will find it useful. So I’m throwing it out there. Dive under the jump at your own peril.

Government, Civil Society, and the Utility of Cooperativeness

Here is a point that I’m sure I’ve made before but I want to make again. There is a kind of higher-order public good you can call “trust,” “cooperativeness,” or something else. The idea is that some communities are able to overcome certain kinds of challenges involved in coordinating group behavior. The capacity successfully to solve collective action problems at a large scale, with a large population, is the Holy Grail of human society. If you can do this, you can do anything… which is a point I don’t think ideologues have really been able to get their heads around.

Suppose you have a super-cooperative, high-trust society. This is the kind of society where the need for coercion to solve collective action problems is least necessary. Voluntary civil society associations will thrive. But if you’ve got the super-cooperative, high trust conditions for a thriving voluntary civil society, you’ve also got the conditions for a really effective government in which corruption will be minimal and power will tend not to be abused. If there are limits to non-coercive social coordination even in super-cooperative, high-trust societies, states in those kinds of societies will tend to do a pretty good job in deploying coercion responsibly to secure the otherwise foregone gains from successful collective action.

So: The world in which there is little need for state coercion, states will tend to be pretty effective and non-abusive. And worlds in which states work pretty well are worlds where states don’t need to do all that much. Reduce the level of cooperativeness and trust, and the quality of government gets worse. But then civil society gets worse, too. So whatever you want, whether it be good government or a flourishing voluntary civil society, you want the conditions for the other thing.

The trick is that in large modern states jurisdictional boundaries cover many communities with highly variable levels of cooperativeness. So here’s a question. Will the quality of the government of widest scope tend to average out unequal levels of cooperativeness, such that high-cooperativeness communities will tend to get worse governance than they could provide alone (maybe even worse than they could do without a state) and low cooperativeness communities will tend to get better governance than they could provide alone? It seems that the answer has to be “yes,” but what does this imply?

Are We Flirting with Fascism?

Folks are loose with ‘fascism’. The cops are fascists because they’re cops. Bush was a fascist because he blew new life into the military-industrial complex and herded protesters into “free speech zones.” And now, Obama is a fascist for sacking the executive of a private corporation and saying the government will back the warranty for your Yukon Denali. Is this fascist?

Fabio Rojas says no. He says fascists want to control capitalism, “but mainly as a tool for nationalism and clientelism, rather than redistribution.” He goes on:

Instead, we’ve got “quarterback capitalism.” The idea is pretty simple: don’t challenge the major features of capitalism, but opportunistically fix what you can with buy outs, loans, subsidies, and other ad hoc interventions. Reminds me of the great quarterback Randall Cunningham, who could scramble his way out of any mess. The idea behind Bush-Obama policy is that what ever mess you’ve got, you can probably fix with the right hodgepodge of incentives. The Federal government is the nimble quarterback who can get you out of the squeeze.

With regard to GM, Obama didn’t do what the fascists actually did – which was to make everyone dependent on the state so they could engage in militarism. Basically, the current strategy is to do what one can to save the financial and manufacturing infrstructure of United States, but not in ways the challenge the underlying structure. Better regulations for banks; new management for the auto people; a little help for homeowners. For GM, it was pushing out old management in exchange for money, a typical move in the private sector. Whether this is good is certainly for debate, but it certainly isn’t a return to fascism, socialism, or laissez-faire economics.

Sheldon Richman’s Concise Encyclopedia of Economics entry says:

Where socialism sought totalitarian control of a society’s economic processes through direct state operation of the means of production, fascism sought that control indirectly, through domination of nominally private owners. Where socialism nationalized property explicitly, fascism did so implicitly, by requiring owners to use their property in the “national interest”—that is, as the autocratic authority conceived it. (Nevertheless, a few industries were operated by the state.) Where socialism abolished all market relations outright, fascism left the appearance of market relations while planning all economic activities. Where socialism abolished money and prices, fascism controlled the monetary system and set all prices and wages politically. In doing all this, fascism denatured the marketplace. Entrepreneurship was abolished. State ministries, rather than consumers, determined what was produced and under what conditions.

If Sheldon’s right, it’s hard not to see the U.S. moving in a fascist direction. The government is indeed in the business of setting some prices and wages politically, which is troubling. But it’s pretty clear that we’re still pretty fully in the “mixed economy” mode. As Richman writes:

Fascism is to be distinguished from interventionism, or the mixed economy. Interventionism seeks to guide the market process, not eliminate it, as fascism did. Minimum-wage and antitrust laws, though they regulate the free market, are a far cry from multiyear plans from the Ministry of Economics.

Yet I think it’s clear that we are in fact seeing fascism in vitro, though I don’t think that’s anyone’s intention. Nevertheless, we’d better swallow some gunpowder pretty quick. Like Tom Palmer, I find it extremely troubling to see Barack Obama talking like he personally looked over the GM situation and finally made some decisions because that’s obviously his job, to be the decider, and because the managers of private corporations can’t possibly do the right thing. It’s a very, very, very bad precedent. Tom says:

I was so happy to see the back of George W. Bush and his administration, with their disregard for the Constitution, foolish and unnecessary war, attempt to subvert habeas corpus, reckless spending, and overall arrogance and disregard for limits on power. His successor has decided to follow even more carefully the examples set by Benito Mussolini and Vladimir Putin, and has sacked the head of a company. That is a decision for the shareholders of a private firm to make, not for the head of state. What next? Will private firms end up in the hands of friends of the president? Will the White House Chief of Staff serve simultaneously as head of a major state-directed company? Will journalists who criticize the president end up shot in the head in elevators?

I predict that the answer to Tom’s three concluding questions will be “no.” That doesn’t mean they don’t need to be asked. It happens, and it can happen here. Asking these questions helps ensure the answers will be “no”, prepares us to stand up against overweening power. But it ought to make you a bit sick that it has become  necessary to say that, no, the President doesn’t run everything. Perhaps we’re getting “quarterback capitalism” and not yet “fascism,” but it’s still pretty troubling to anyone with a liberal bone in his body.

The Permanent State vs. Democratic Government

This WSJ piece nicely illustrates the difference between the permanent apparatus of the state and the impermanent apparatus of elected government. It also illustrates nicely the problem of legitimacy in the context of a large state. The legitimacy of government coercion and redistribution, according to most contemporary liberal theorists, flows from decisions having passed through fair democratic procedures. But much de facto government comes from the unelected state, even under normal conditions. 

Much of the planning required to give out the funds is being done by career bureaucrats, because top political appointees at many agencies have yet to be nominated, much less confirmed.

At the Interior Department, an eight-person task force is mostly made up of career employees who have been named acting bureau chiefs.

Longtime employees also have been running the show at the Commerce Department, which remains without a secretary after the Obama administration’s first two candidates dropped out, and the third, former Washington Gov. Gary Locke, awaits confirmation. It took a week for the agency to provide any information about its stimulus plans. The agency has almost $8 billion to give out, including $3.9 billion for broadband grants.

All the so-called liberal democracies have a permanent civil service or bureacracy. I don’t see how they could function without them. But I also don’t understand how this fits into contemporary liberal accounts of the democratic legitimacy. Is this a problem?

[Note: Just in case… let me say that is a post about political theory, not anything about the Obama government in particular.]