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So Glaeser is suggesting that libertarianism is one giant reductio ad absurdum along the lines of, "We can't do everything well, therefore we can't do anything well..."?

That belongs in an episode of "Yes, Minister" and not a NYT piece.

Good governance is just as important as small governance. There is nothing inherently bad about government, so long as there is competition and good incentives, etc. Empirically, it may be the case that government rarely has those factors, but consider Singapore Airlines. Despite being owned by the government, they are fairly profitable because they a part of a competitive industry.

By North's definition of government (an organization with a comparative advantage in violence), there will never be anarchy. One person picks up a gun, and *poof* they're the government. I believe it is better to focus on ways of limiting the influence of government in areas they do not excell, and making whatever parts of society government does influence run smoothly. Denmark-like governance is a fine goal for a country to shoot for.

More people should be anarchists?

We should compete with ideas on how to further minimalize the state. When we run out of ideas, that is the size of the minimal state.

Judge Andrew Napolitano thinks that, if the US Constitution were strictly followed, the federal government would be no more than 10% its current size. Is anyone dissatisfied with cutting the federal government by only 90%?

I don't know "many" people who call themselves libertarian (as opposed to "conservative") that are in favor of the negative income tax or anti-poverty spending.

I am initially, at least, turned off by the format of Miron's book: A to Z entries. But, hey, in our attention-deficit society this may be a good idea. But, if it is, then we are doomed as a culture. After all, "How Government Can Solve Our Problems, A to Z" would be even easier to comprehend.

I don't claim to speak for "Libertarianism" or other libertarians, but Glaeser seems to misunderstand the limits of it.

I acknowledge that we cannot immediately transform ourselves from a welfare state to Rothbardian anarcho-capitalism. Private institutions would take decades of creative destruction to come up with something remotely useful. In the meantime, violence and socialist populism would inevitably defeat it.

I also realize that anarcho-capitalism would not be perfect per se. There would still be injustice, unfair wealth disparity, organized violence, war, environmental catastrophe, drug abuse and pestilence. I only argue that the subjects of these social ills would be more deserving of them than they are now - just as unwarranted profit would be diminished, while warranted profit would be raised.

The stipulations are not really knocks against Libertarian ideas - simply an acknowledgement of their limits. It is not a utopia. There are no utopias. The idea that we can combine libertarianism with small government to make a "perfect world" is equally as absurd as socialist utopianism or capitalist utopianism. Libertarianism seeks "what is moral" or it emphasizes the social benefit of mutual exchange without obstruction. But nowhere does it claim to be perfect - at least not my interpretation.

But I can see how those deluded by a pursuit of utopianism can be persuaded to think that these acknowledgements indicate some sort of fatal flaw in libertarian ideas.

The belief in omniscience/omnipotence is not easily dispelled. Evidently for those sympathetic to our ideas as well.

These quibbles seem very small to me.

"[If] the need for positive state action is admitted, the difficult question is where actually you can draw the line on what is required to define and enforce private property rights and contracts"

Not really. Classical liberal thinkers spent many years and treatises on these subjects, rule of law is well defined, the edges may be rough, but the basic requirements are well understood. Certainly, more well understood than the requirements for a workable socialist system, etc.

"second, since libertarians have admitted that positive public action is required, they implicitly entrust the public sector to work effectively on that particular issue."

Yes - but again, there is plenty of theory to explain why. The role of enforcing law is one that is more natural for a monopoly provider than many other roles -- for public goods reasons, etc. It is also relatively simple compared to something like health care, and less likely to completely fail without innovation and competition than something like producing the next line of mobile phone and internet devices.

This is close to the subject I was trying to discuss in the comments thread on the previous post.

Jerry writes: "We should compete with ideas on how to further minimalize the state. When we run out of ideas, that is the size of the minimal state."

I think it's more complicated than that. In "The Origin of Virtue" Matt Ridley discusses lobster fishing off the east coast of the US. He says that getting a license to fish is easy and so is getting a boat and lobster pots. That sounds like a recipe for over-exploitation. But, the local lobster fishermen have created "habour gangs" that operate in particular areas. Those gangs regulate who can fish in a particular area and they vandalise the lobster pots of those who aren't given authorization. Ridley calls this a form of defence of a communal property - the lobster population.

Is this sort of thing a problem or not? Is it to be encouraged, discouraged or made into formal law?

I think part of what this article reveals is an inherent difficulty with conversations that take the form, "Oh yeah? Well what's the libertarian view on THIS?"

Taking the risky industry example, for instance, one could point to Gerald Sauer's "Imposed Risk Controversies: A Critical Analysis" or Murray Rothbard's "Law, Property Rights, and Air Pollution" as examples of libertarian thinkers wrangling with the tricky subject of risk (with varying success). Or you could point out that libertarian views of risk can quite coherently draw on any number of rights-based analyses from outside of libertarian circles, like Judith Thomson's Rights, Restitution, & Risk or Douglas Lackey's "Taking Risk Seriously."

But I suspect that most libertarians would react by trying to come up with "the libertarian answer to risk." It's a move that's right at home in talking-point-ridden discussions between democrats and republicans, but goodness is it counterproductive to actually working towards the truth!

I know nothing about Miron and Glaeser but I'm very interested in Current's comment.

Is the lobster mafia a better way to produce public goods than the unhampered market (with its potential of overexploitation)? Is coercion against other people's property rights a low transaction cost approach to avoid a tragedy of the commons?

If so, that's the way governments have been born: arbitrary (non-libertarian) coercion may solve some problems, but mankind failed in controlling the consequences of this process, and ended in the hands of an unchecked and unbalanced ruling elite which controls most of our society (much more in Europe than in US), through legislation, regulation, taxation and inflation.

The failure of classical liberalism is thus a failure of controlling the evil consequences of something that may be necessary, for human cooperation to be possible. The Pandora's box of arbitrary coercion has produced power in its purest form in the totalitarian regimes, and we are relatively lucky, given our corrupt lobbyists' and politicians' rule over our lives. It is a little miracle, forgive my irony, that despite F. D. Roosevelt or A. Greenspan the US is still a good place to live.

This may be the best we can aim at, given that power is a public evil (others pay my costs) and liberty a public good (others benefit from my efforts). Liberty is just a utilitarian means the elites use to maximize their own power, because markets deliver much more than socialism. Without this higher efficiency, slavery would have never ended. Our liberty is protected by the first welfare theorem (it's a poetic licence, I don't believe in it), not by libertarian ideals or constitutions.

It is almost impossible to achieve more liberty than the amount of it compatible with the interests of the ruling elite, because they are a concentrated interest group. Liberty arose in the West because of political impotence, liberalism died when the state grew strong enough. Markets stil exist only because slavery/socialism doesn't work.

Azmyth: I see no reason to assume that competition in politics is good as competition on markets.

Rothbard said - quite ideologically - that competition in the use of coercion is no good.

I think there is something in this argument, although I don't like his philosophical approach to politics.

Coercion is a way to shift costs and benefits from one person to another.

Competition in coercion, thus, is a common, because it implies widespread negative externalities against the losing party and positive externalities for the winning party.

THere is no reason to assume that this process will end up in an efficient outcome: it's not a walrasian market with private goods, it's a tragedy of the common.

Politics is the rule of a restricted elite for the benefits of organized groups, paid by the collectivity with coins of low denominations so that noone notices the problem.

A cooperative solution may be the best, but it is not possible to put hundreds of thousand people together to contract the externalities away. Small organized groups will always get the upperhand.

Even constitutional reform is useless: constitutions are not imposed on peoples by gods. They are the result of political processes, which are as unreliable at the constitutional level than they are at the lower levels of political activities.

I don't mean to say that liberty is impossible. I just want to point out that liberty goes against the rules of the political game. It is highly unlikely.

Pietro M,

"Is the lobster mafia a better way to produce public goods than the unhampered market (with its potential of overexploitation)? Is coercion against other people's property rights a low transaction cost approach to avoid a tragedy of the commons?"

Yes, that's exactly the point. And, what that means is that rolling back the state is something we have to be quite careful about.

As you say, it's public welfare that's important. I don't think the masses are that bothered about their own liberty per se. So, what is needed is clear demonstrations that reducing the state leads society in the right direction.

In doing that there are two kinds of problems. The first is that changes can lead to problems in the interim. The classic example of that would be the enclosure acts in England, they produced a superior system of land ownership in the end, but the transition was sometimes messy. I think a change to free banking could entail the same sort of problems, and I think it almost certainly would. This problem is what Roger Koppl talks about here often.

The second problem is the understanding of what structures of ownership can actually work well in practice. The lobster mafia works at preventing over-exploitation. The Ostroms have found other examples. Should those be brought into the normal structure of property law? I think they should.

We need a system of identifying working forms of property law. We need to know when simpler forms of private property are possible. Such as the simplification of the feudal three-field system with it's common land and manor court. But, we need to know when only more complex forms like lobster mafias can work.

I don't think that simple approaches like Coase's theorem can really work. Because when the laws change the transaction costs change with them. If you were to explain to a feudal peasant how enclosure worked he would probably consider it impractical compared to the feudal system. But, once implemented it was possible to make changes quite quickly to rectify the problems.

What we need to know in the future is how to prepare for those changes in advance.

I agree, but I'd add a thing.

A great part of political activity consists in hiding costs and postponing problems, not in solving public goods problems*. This cost-shifting strategy may not be consistent with long-term economic and social stability.

It requires either periodic restructuring crises (like Volcker's disinflation), or a reversion to free markets (which by itself would cause a crisis, but una tantum and not recurrent), or a slow decline into poverty and anomy (the path Italy has chosen for its own future).

In the case of the US, for instance:

1. financial markets cannot work in the way they are forced to work, either a recession removes structural problems (and it isn't happening with this recession) or the system will become inefficient and unworkable.

2. it is likely (although I have to check the literature) that it will be impossible to fund social-security liabilities in the future, without cutting social services or increasing taxation to levels capable of strangling the economy.

I think that the allocative inefficiency of interventionist monetary policies and the rising costs of the welfare state will at the end cause a severe reduction in the well-being of Americans (the same is true in Europe, of course), but at the moment no one notices it.

So, the problem is not higher or lower welfare. It is a working economy withing, let's say, 30 years, or a secular stagnation (like Japan's) or a collapse (like the Roman Empire). All is possible.

More or less, it is the same situation as in the '60s: no one noticed inflation, until a decade later. And no one had solution, except creating a widespread recession another decade later. At the end the problem was solved, although with much pain, and although the solution was exploited and ruined by Greenspan in the successive two decades. I hope we will be as lucky as in the past.

I'm convinced that sooner or later the elites will understand the problem. Maybe some millions people will live with a 500$ pension, or another 20% unemployment, or 15% inflation (politicians are not very good with policies), but at the end they will understand that the golden goose (i.e., us) will die, and make unwillingly and lately a step toward freer markets. Just because they work, surely not because they care.

* Also because publicity is a property of the institutional structure, and thus there are problems of public goods also in the public sector. For instance, information by part of voters is a public good.

I want to react to several points.

Pietro said that "liberty arose in the West because of political impotence." Not quite. In England it arose because of Parliament achieving supremacy over the monarch. Parliament was dominated by property owners wanting to curb taxation by curbing the King's power to spend. That was quite potent.

Sometimes property rights are established by force. Richard Pipes sees the orgin of real property rights in the acceptance of inheritance. That acceptance was brought about originally by force.

It sounds like the lobstermen are coping with a situation in which there are obstacles to evolving property rights in fishing. (That has been solved elsewhere, notably in Iceland.) The state has obviously failed to solve the problem, so I don't udnerstand the urge to turn to it. Before recommending a remedy for a social problem, we need to understand its origins. We need more information.

Pietro M,

I mostly agree with you. The problem is that governments are judged by what happens during their term in office. I remember having a conversation with a very informed and intelligent conservative you argued that it is ridiculous to do it any other way. He couldn't see how counter-factual understanding could help. That is a major hurdle.


> It sounds like the lobstermen are coping with a
> situation in which there are obstacles to evolving
> property rights in fishing. (That has been solved
> elsewhere, notably in Iceland.)

Yeah, that's right.

> The state has obviously failed to solve the problem,
> so I don't udnerstand the urge to turn to it.

Here's the problem.... When I described the situation I didn't use the word "mafia" I only used the word "gang". It was Pietro who used the word "mafia", and he is a libertarian.

When property rights of this sort are enforced outside of the state framework then to many they become suspect. They become close to criminal activity in the eyes of others.

This is another reason why we need to think about these sort of local problems more closely. Its difficult without quite careful examination to differentiate between local non-governmental law enforcement and criminality. Part of the task of economists should be to confer some measure of respectability on those who are doing local law enforcement. On way of doing that is to make them part of the state, but that has upsides and downsides too.

"It was Pietro who used the word "mafia", and he is a libertarian."

I expected to read "it was Pietro who used the word "mafia", and he is italian" :-D

The trouble I have with vandalizing lobster pots (whatever they are) is: when does the use of coercion stop being a way to define property rights and start being an attempt at rent seeking through intimidation (like Mafia)? The very same means can be used for both ends.

I'm not even asking a normative question, I'm asking to what oucome this process leads. Does it lead to closed guilds defending their markets from competition? Does it lead to libertarian outcomes?

I know there is no single answer to the question, as it depends on circumstances: better to ask under which conditions the process leads to an outcome or another. I think it's the problem of the relation between anarchy and libertarian values, in a tastier case.

I'd love to go back to Boston and eat a lobster and some oysters. :-)

Yeah. In the Lobster example Ridley says the other fishing areas where this sort of thing isn't done are over-fished. That seems to indicate that some sort of coercion is needed to maintain property rights.

It would be difficult to enforce private ownership over a small number of hectares of sea. But, on the other hand it isn't so difficult to enforce communal ownership over a larger area. But, it doesn't show that exactly the sort that's used is needed. If the gang had legal authority it could impound equipment rather than vandalising it. Also, it could charge membership fees and there could be price competition between different gangs, as there is between landowners.

But, there may be many other ways that more functional property ownership could be devised.

Two related blog posts...

At the risk of repeating myself, we don't have enough information in the lobster case to say much. More generally, we need more reference to facts and history. How have property rights systems in fact evolved (not "devised")?

I understand that Jerry. Ridley doesn't give that much info in his book either except what I've said. I was trying to say a few things about it without going beyond what Ridley says.

Ridley never gives the history behind the system.

This is why classical liberalism failed. It is inconsistent and therefore unjustifiable. Same for advocates of "limited government" or "small government."
All I have to say to people who have so much trust in state action is: Good luck with that.
Let me know how it works out for you.

By advocating violence against innocent people "minarchists" are no help to the cause of liberty

Sorry. Well I guess as long as they dont engage in behavior along the lines of that mistake of Leonard Read in publishing the dastardly Government: An Ideal Concept. If they are sufficiently radical and never put forth positive programs for state actions I take back what
i said about "minarchists." Of course this is rarely the case, but there are some great exceptions

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