Archive for February, 2011

Epstein for philosopher king!

I have long been impressed with the legal thought of Richard Epstein.  Lately I’ve been reading from Simple Rules for a Complex World (Harvard, 1995).  I’m struck that the simple rules he comes up with are something that would have a broad appeal to libertarians of many stripes.  The rules are:

  • Self-ownership and autonomy
  • First possession
  • Voluntary exchange
  • Protection against aggression
  • Limited privilege for cases of necessity
  • Taking of property for public use on payment of just compensation

Wouldn’t most libertarians love moving to this type of a minimal state compared to where we are currently in the Western world?

Of course, many can’t stand his type of reasoning, though I love it.  He pursues consequentialist logic with a vengeance.  Thus he ends up moving “backwards” from “social consequences” to these rules (what he calls a “reverse engineering”) rather than forward from a starting position founded in, say, Locke’s state of nature.  By doing so he avoids the “clash of moral absolutes that has so dominated philosophical discourse in this area.”

One of the most appealing features of his analysis is that the limits to his rules are built right in.  As he says, “precisely because the justification for the rule is empirical, it is possible to state something of a the limits of its desirability, given the familiar trade-off between administrative simplicity and desirable incentives.”

So what we end up with is strong protections of native rights as well as a system of building in the limits to rules that all well-functioning societies must have.  In his chapter on property (from which I’ve quoted above), his approach is also flexible enough to both justify private property and to argue why common property needs to exist and must be governed by slightly more complex rules.  Brilliant.

He gets my vote for philosopher king.

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I am quite pleased to announce that Elizabeth Price Foley will be joining Pileus as one of our Authors.  Elizabeth is sure to be a great addition to our lineup, especially given that she has an expertise in health care and constitutional law.  Here is her impressive bio:     

Elizabeth Price Foley is Professor of Law at Florida International University College of Law. Her research centers on the intersection of health care and constitutional law. She is the author of Liberty for All:  Reclaiming Individual Privacy in a New Era of Public Morality (Yale 2006), The Law of Life and Death (Harvard 2011), and is currently working on a book about the tea party for Cambridge University Press. 

Professor Foley clerked for the Honorable Carolyn Dineen King of the U.S. Court of Appeals for the Fifth Circuit and spent several years on Capitol Hill as a health policy advisor, serving as Senior Legislative Aide to U.S. Congressman (now U.S. Senator) Ron Wyden (D-OR), Legislative Aide for the D.C. office of the Health Insurance Plan of Greater New York, and a Legislative Aide for U.S. Congressman Michael Andrews (D-TX). She served as a member of the Committee on Embryonic Stem Cell Guidelines of the Institute of Medicine, National Academy of Sciences, and as a Fulbright Scholar at the College of Law of the National University of Ireland, Galway.

Foley is a converted ex-progressive who now unabashedly embraces classical liberalism. She lives in Key Largo, Florida with her husband, daughter, two cats, and a dog named Thomas Jefferson.

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The following is from the Winter 2010 issue of the Harvard Journal of Law and Public Policy:

Although some libertarians propose to “privatize” marriage, treating marriages the way we treat baptisms and bar mitzvahs, supporters of limited government should recognize that marriage privatization would be a catastrophe for limited government.   In the absence of a flourishing marriage culture, families often fail to form, or to achieve and maintain stability. As absentee fathers and out‐of‐wedlock births become common, a train of social pathologies follows.   Naturally, the demand for governmental policing and social services grows.

…Strengthening the marriage culture improves children’s shot at becoming upright and productive members of society.  In other words, our reasons for enshrining any conception of marriage, and our reasons for believing that the conjugal understanding of marriage is the correct one, are one and the same: the deep link between marriage and children.

In an idealized world where government simply does not respond to increases in a demand for services, the argument above would not be relevant.  But in the world we actually live in, it makes a lot of sense.

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No two things are more inseparable than liberty and life.   Don’t miss Robert George’s eloquent tribute to Bernard Nathanson:

There are many lessons in Bernard Nathanson’s life for those of us who recognize the worth and dignity of all human lives and who seek to win hearts and change laws… [T]he edifice of abortion is built on a foundation of lies.   Nathanson told those lies; indeed, he helped to invent them. But others witnessed to truth. And when he was exposed to their bold, un-intimidated, self-sacrificial witness, the truth overcame the darkness in Nathanson’s heart and convicted him in the court of his own conscience.”

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I caught a little bit of flak around the Internet for my piece, “Why Isn’t Violence the Answer?,” during the early days of the Egypt protests. I was galled by official demands from the U.S. government and other places that Egyptian protestors remain nonviolent, no matter what. Thankfully, significant violence wasn’t required to get rid of Mubarak, although if protestors had not fought back against the thugs that invaded Tahrir Square, who knows what would have happened?

Libya is an even clearer case of just rebellion. Gaddafi has been one of the region’s most repressive dictators, and his reaction to what started as peaceful protests shows us all we need to know about his regime. But if Libyans hadn’t undertaken an armed rebellion, there would be no chance of getting him out of power.

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At Hit & Run, Ron Bailey expresses a surprisingly confident explanation of Arab countries’ economic and political woes: oil. Yes, the resource curse is back in the news. But as longtime readers of Pileus know, recent research suggests that the resource curse may be a myth. To the extent that oil wealth explains poor economic performance, it only seems to do so contingent on other factors, such as the ownership of the resources. State oil companies are notorious failures, while private ownership of the means of extraction is associated with better growth.

Bailey points out that Saudi Arabia’s GDP is lower today than it was in 1981. True enough. But it doesn’t follow that oil has hurt Saudi Arabia’s economy. Oil prices were very high in 1981 but declined substantially in 2009 and 2010. Of course petrostates have lower GDP when oil prices are low. Just think about it for a moment: if Saudi Arabia had no oil, would it be even half as wealthy as it is? Of course not! Oil is no economic curse to Saudi Arabia. But might it be a political curse? Again, once the counterfactual is properly conceptualized, it seems unlikely. If Saudi Arabia were simply just another low-income, intensely religious country in southwest Asia, the predicted probability that the country would be democratic or at all liberal (in the Freedom House sense) would be tiny.

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Justin Logan – Cato Institute colleague of Pileus guest blogger Christopher Preble – takes on Robert Kagan and “benevolent global hegemony” in the American Conservative.  My favorite part of the post is this:

The disconnect between the academy and the Beltway foreign-policy community could hardly be starker. Forty-five years ago, Mancur Olson and Richard Zeckhauser sketched what they termed the “economic theory of alliances.” They explained that when several countries join together to protect a shared interest, smaller members have an incentive to free ride in the presence of a much larger, wealthier partner. Once the large, wealthy partner has stated its own vital interest in the objective—in this example, security—smaller countries believe that the larger contributor will pay for the goal itself even in the absence of “fair” contributions from the other partners.

The basic insight has stood the test of time. Ignoring this reality, Washington blindly subsidizes allies’ domestic welfare programs by allowing them to channel resources away from self-defense. There are many terms that could describe this phenomenon, but “fiscal responsibility” is not one of them.

And the almost inevitable result of this is that the collective goods provider goes into relative decline.  Sounds like a great plan to sustain American interests, no?  Time to gently nudge the allies out of the nest and to restore a realistic foreign policy to Washington.

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 European commentators on US healthcare are often misguided in their description of the American system as a ‘free market’ model – when that system involves significant levels of government regulation and funding. Equally, American commentators are often misguided in their accounts of ‘socialist’ healthcare in Europe. Europe contains a diversity of healthcare systems. Some, such as Switzerland are based predominantly on private insurance while others such as Germany and France combine elements of public and private funding and supply. The one European healthcare system that might genuinely be described as socialist is that of the United Kingdom. In the UK system of compulsory ‘free’ health provision, competition and the price system have been almost entirely eliminated from the patient-provider relationship, and even co-payment schemes which allow citizens to ‘top-up’ public funding with their own savings of the sort that are widespread in continental Europe, are prohibited.

 Both European and American citizens have got much to fear from any move away from their current ‘mixed’ systems to anything approaching the UK model. The following extract comes from a report by an independent ombudsman charged with examining the quality of care for the elderly under the UK’s ‘National Health Service’. Having catalogued an appalling number of cases where patients were regularly starved of food and pain-killers, she concludes in the following vein:

 “The findings of my investigations reveal an attitude- both personal and institutional-which fails to recognise the humanity and individuality of the people concerned and to respond to them with sensitivity, compassion and professionalism.

 The reasonable expectation that an older person or their family may have of dignified, pain-free end of life care in clean surroundings in hospital is not being fulfilled. Instead, these accounts present a picture of NHS provision that is failing to meet even the most basic standards of care.”

 This parlous state of affairs, it should be noted, follows a ten year period which has seen real expenditure on health care in the UK more than double. Where, one might ask, will Michael Moore choose to spend his retirement?

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Jim beat me to blogging this, but I have a slightly different take from the one he had. The Chronicle of Higher Education characterizes the new book Academically Adrift as a “damning indictment of the American higher-education system.” The headline finding? “[M]ore than a third of American college seniors are no better at crucial types of writing and reasoning tasks than they were in their first semester of college.” The finding is based on a survey of a sample of college students who were tested on entering college and again in their second and fourth years.

That finding, shocking as it ought to be, does not actually surprise me very much. In my classes, despite my best efforts, I have always observed that a nontrivial fraction of students seems to be interested only in doing the minimum necessary to pass the class and get the degree. However, what I thought was more interesting about the study was what they found to correlate with learning.

The largest observed learning is found in students who say that their professors had “high academic standards.” Also, students at more selective colleges and who did more writing and reading in their classes did better. Finally, students in traditional arts and sciences majors improved more than students in nontraditional majors. The authors note that academic rigor is declining at American universities. One of the authors told NPR his explanation, with which I strongly agree: “There’s a huge incentive set up in the system [for] asking students very little, grading them easily, entertaining them, and your course evaluations will be high,” Arum says.

Overall, the results vindicate the liberal arts model of college education. My own experience as an undergraduate at a highly selective liberal arts college and a graduate student and lecturer at an Ivy League university leads me to believe that the quality of education that undergraduates receive is higher at one of the top liberal arts colleges than at the Ivies – although the extracurricular and service opportunities at the Ivies are unparalleled. (Let alone most state universities, of course.)

To restore academic rigor at American universities, step one has to be the abolition of all the gimmicky, substandard majors: “communication,” “business,” “hotel management,” etc. I would even argue against teaching subjects like accounting and engineering as majors at the undergraduate level. If you want to be an accountant or engineer, you should do an internship or an apprenticeship or take classes at a technical school, possibly after having done a B.A. in a related discipline like economics or physics.

Step two is to restore teaching as the primary role of the professor at undergraduate universities. This would be a total revolution, one that faculty at most places will strongly resist. But if we want to have government subsidize basic research, then we need to separate that research from undergraduate education, freeing the best researchers from undergraduate teaching responsibilities altogether. Right now we have the top researchers doing indifferent lecturing and outsourcing the interaction with their students to teaching assistants – even in the Ivy League schools. There are plenty of academics who are extremely smart and follow the latest research, who would happily see teaching as their primary responsibility if our tenure standards were different.

These changes are not going to happen until voters demand them. The faculty won’t demand them – their prestige, for many of them, requires contempt for undergraduate teaching. The students won’t demand them – most of them don’t know what’s good for them, as the evaluations problem indicates. The only solution, it seems to me, is for businesses, who have to hire substandard workers who can’t reason or write, to undertake a massive policy campaign for radical reform of American university education.

American universities remain the cream of the global crop, unlike our K-12 system. But as Academically Adrift discovers, the continuation of that supremacy is increasingly uncertain.

UPDATE: My U at Buffalo colleague Phil Arena asks a good question about AA‘s findings: are colleges increasingly failing to teach, or have they simply lowered admissions standards substantially? No one disagrees that college admissions standards have fallen quite a bit since the 1970s. Now, are these new students in college less capable of learning? One might think the opposite: that students who learn less in high school and would not have gotten into college in earlier days might be more susceptible to the intervention effects of college – sort of like how poor countries grow faster than rich ones, all else equal. But all else isn’t equal, and it seems to me that students who learn less in high school are also likely to learn less in college, because the amount of learning one achieves at both levels has more to do with effort than native intelligence. Of course, falling admissions standards probably have a lot to do with the introduction of “easy-A” nontraditional majors as well.

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Local Option

Harry Reid of Nevada wants to outlaw brothels state-wide.  Not surprising given that he is a scold and centralizer - among the worst combinations in an American politician (though scolds on their own have a place to play in a free society in which social change should come from the use of reason, speech, and disapprobation).   Critics of Reid’s speech point to the state’s respect for local option in the case of prostitution.  For example:

“When I initially heard he was going to mention it I was very surprised, just because it hasn’t been an issue for many [legislative] sessions and there haven’t been any problems,” said Senate Minority Leader Mike McGinness, a Republican with brothels in his district. “It’s always been a local option, and I think that’s where we ought to leave it.”

But is local option really the first-best policy option for those who believe that adults should be allowed to engage in any consensual activity even if others believe it to be immoral?  There is a large danger of “grassroots tyranny” in giving localities too much power to regulate various occupations and activities.  However, local option is clearly preferable to centralization in many cases as it allows people to vote with their feet and to live in approximations of Nozick’s “utopia of utopias.”  It is also a bulwark to one size fit all “solutions.”  I think libertarians are rightly torn on this issue. 

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A couple of weeks ago, one of the NZ student delegates to the US NZ Future Partners Forum popped in asking about the Trans Pacific Partnership. Since he offered me a decent beer, I was happy to have a chat.

In 2005, New Zealand joined with Brunei, Singapore and Chile in a free trade zone called the P-4; this supplements New Zealand’s tight market integration with Australia and its more recent free trade deal with China. Now Australia, Malaysia, Peru, the US, and Vietnam are negotiating to join in with the P-4 as the Trans Pacific Partnership. There’s some chance Japan joins up down the track; they’d need to open up their agricultural markets.

I suggested New Zealand might do best by sidelining the US for now. The biggest potential gains to New Zealand from a free trade deal with the States would be an opening of American dairy markets to New Zealand dairy products. But that won’t happen – a trade deal that would actually open up American dairy markets to New Zealand product would never make it through the Senate. I’d expect Vietnamese catfish farmers would sympathise. I don’t much agree with New Zealand leftist political commentator Gordon Campbell on the overall merits of free trade, but I don’t think he’s wrong on the US political situation.

Even if he wanted to – and he shows no sign of such a desire – Barack Obama is simply not able to steer through Congress a trade deal that would be meaningful to New Zealand exporters, and certainly not a bilateral trade deal worth anything like “the billions and billions” of dollars that [New Zealand Prime Minister] Key was burbling about in Singapore. There is a new and strong mood of protectionism in Washington – and any deal that would further jeopardize American jobs or markets would be dead on arrival in Congress.

Last year, Tim Watkin on Pundit offered a thorough analysis of US press reaction to the free trade stance with the Pacific region that Obama briefly enunciated at APEC, and it should have been sobering news for exporters. We’re simply not on the US radar for a bilateral deal. Even within any multilateral arrangement, the chance of meaningful concessions to our exporters on agriculture is a pipe dream.

Is it better to have a serious free trade deal among a smaller set of countries, or a weaker deal that brings in the States?

I’d put decent money that, if America signs onto the deal, there’d be years of costly arbitration before New Zealand had any kind of increased access to American dairy markets. For starters, American dairy farmers would argue that failure of the New Zealand competition authorities to prosecute New Zealand dairy cooperative Fonterra as a monopoly constituted a subsidy under US law and justified counterveiling duties. Never mind that Fonterra has to rely on farmers voluntarily choosing to supply it with milk rather than supply one of its competitors, and that it’s legally required to supply some of its milk to some of its competitors, while the US dairy compacts and market orders are state-enforced cartels that do everything but shoot potential competitors. If the United States was happy to continue trade action against imports of Canadian softwood in the midst of Hurricane Katrina rebuilding, despite NAFTA, why ought we expect any better for New Zealand dairy?

In exchange for the illusion of access to American dairy markets, we’d likely get some pretty restrictive copyright and intellectual property rules. The hubub over investor protection provisions don’t much worry me – odds are that such provisions would only give a slap to the parts of our Overseas Investment Act regulations that need the slap.

I don’t think the United States has any credibility on free trade when it comes to agricultural products. They can’t make time-consistent pledges. At point of signing it’s all friendly, then you’re straight into arbitration over whether you’re hurting US domestic competitors – never mind the benefits to American consumers who are paying double what Kiwis are paying for baby formula.

And so it’s better that New Zealand sidelines America in the Trans Pacific Partnership negotiations so the rest of us can have a serious free trade zone. Get a serious free trade zone, then look to widen it by inviting China. The threat of a Pan-Asian free trade zone that includes China is about the only thing I can imagine that would bring the States around on agriculture. Since New Zealand already has a free trade deal with China, it’s not implausible that China could someday join the TPP.

That’s what I suggested to the student delegate. Any Americans more optimistic about the potential for getting a substantive trade deal including agriculture through the Senate? If the ultimate goal is the greatest reduction in trade restrictions over the long term, I think it’s better to have a small group with a deeper commitment to free trade, which then adds on others as they’re able to make the same commitment, than to have a weak agreement that includes more countries. But I’d be happy to be wrong.

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The drama continues in Madison as Governor Walker and the GOP majorities try to find a means of moving forward without conceding to protestors. Absent a quorum, the Senate cannot vote on a budget-repair bill that would significantly limit the collective bargaining for public sector union members and force higher contributions for pensions and health care. The unions claim to be willing to accept the higher contributions; the sticking points are changes in the institutional framework for future collective bargaining, forcing the unions to submit to annual recertification, and threatening the automatic flow of resources from state paychecks to union coffers.

The strategic question for Republicans: how to draw Democratic state senators from palatial Rockford, Illinois, to create a quorum. The cheese in the trap: voter ID. As reported in today’s Milwaukee Journal-Sentinel:

In a move meant to lure boycotting opposition senators back to Wisconsin, the Republican leader of the state Senate threatened Monday to force a vote soon on a bill that is abhorred by Democrats: requiring people to show an ID at the polls.

Although the voter ID bill as currently written would require a quorum of 20 because it would use public funds to provide IDs to poor citizens without state-issued driver’s licenses, Senate Majority Leader Scott Fitzgerald seems willing to strip these provisions to facilitate passage.

The stakes for Democrats are quite high. According to the Journal-Sentinel, some 26 percent of Wisconsin voters are from union households, and in the last gubernatorial election, the Democratic candidate Tom Barrett won 63 percent of this vote. Poor voters—those without driver’s licenses—constitute another relatively secure voting block for Democratic legislators. If the voter ID strategy is implemented, Democrats may have to address a difficult question: which constituency to sacrifice?

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David French writes of what he calls “Entitlement Derangement Syndrome,” which he thinks is motivating what we’re seeing in Wisconsin—namely, aggressive protesting over benefits and pensions, as if we had some kind of natural right to them. He likens the Wisconsin protesting to what went on in France last October when they wanted to raise the retirement age to 62.

I think this points to an unanticipated negative consequence of the welfare state: It corrupts people’s moral sensibilities. More specifically, it encourages people to ignore, violate, and even pretend does not exist a central, foundational moral premise of politics, namely that it is wrong to live at others’ expense.

Now of course that premise has to be properly qualified. Children may live at their parents’ expense; adults who have entered into marriages, partnerships, contracts, or other voluntary associations may live at each others’ expense; and sometimes people have to live at the expense of others’ charity.

But able-bodied adults should not live at the unwilling expense of others. And they certainly have no right to live at unwilling others’ expense. That is why forced labor and slavery are wrong. Forced labor and slavery are wrong not because they are costly or because they are inefficient; they are wrong even if they were inexpensive and efficient. They are wrong because it is wrong to live at unwilling others’ expense.

The welfare state clouds that moral intuition, which should be among our most deeply held. Indeed, the welfare state has not only clouded that intuition, it seems it has entirely inverted it. Thus we have people who believe they are entitled to live at others’ expense, even when those others are in debt, having great difficulty of paying their own way, and thus want to pay less.

It is demeaning for adults to live from the charity of others, even when the charity is voluntary. Even when offered with the best of intentions, it can weaken the recipients’ moral fiber and the power of their independent judgment, reducing them to “kept” status—which is why it is to be avoided except when absolutely necessary. But when the support is not charity and thus not voluntary, it is all the more morally suspect.

The fact that so many people, in Wisconsin and elsewhere, can behave and speak as if they nevertheless have a right to the fruits of others’ labors does not change the character of the reality. If they thought that their case warranted overriding the standard moral prohibition of living at others’ expense, then they should, and presumably would, make the case for why that is. But they make no such case. That suggests they don’t believe any such case has to be made. And that is the kind of moral confusion that I think the welfare state can foster.

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Sort of.  Here it is.  Should we start calling him Watson?

And thanks to Will Wilkinson of the Economist‘s “Democracy in America” blog for bringing Jason’s series on American exceptionalism to the attention of his readers!  Here is Will’s post on it (with kind words as well for Pileus as a whole).

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Moving to freedom

Thanks to President Cleveland for the invitation to guest blog here at Pileus. Grover’s invitation came shortly after Marginal Revolution linked to the minor challenge I threw to American libertarians: if libertarians love freedom so much, why do so many libertarians live in such unfree places?  I probably ought to follow-up on that a bit here.

I moved to New Zealand in 2003. The academic job market was looking a bit thin the year I went out – state budget crises were bad enough that some places that offered flyouts had to cancel them after their positions were canned. Fortunately, I’d applied very broadly. I sent applications to universities in any country where my wife and I could imagine living. When the offer came from the University of Canterbury in Christchurch, New Zealand, I was ecstatic. The pay was not good compared to U.S. offers, though the overall package wasn’t bad. But what had me over the moon was New Zealand’s spirit of freedom. The safety nuts who’d taken over Northern Virginia – none of them seemed to have made it down here. Narrow winding mountain roads without safety rails, a hike up a river through a long natural limestone cave in a national park with only a sign suggesting you bring a flashlight and dress warmly in winter, bouldering around cliff faces that would have had a thousand American mothers screaming that barricades were needed for the sake of the children – I was in heaven.

What’s the point of liking freedom if you can’t live the parts of it that matter most to you?

We weighed our options and made the move. And New Zealand hasn’t disappointed on the freedom front. There’s been a bit of backsliding, but our relative position has probably gotten better rather than worse.

The Libertarian Standard posted recently about an American in Maryland who wanted to start a business distilling vodka. The regulatory regime meant he’d have to have all the plant in place before applying for permission, then it would have to sit there for two years. Since home distilling is illegal, he couldn’t even try out his recipes. In New Zealand, a guy in Queenstown started making vodka at home (legal), then started selling it to local bars (also legal), then was bought out a few years later by Baccardi.

There is no chance that the would-be Maryland distiller can get the regulations changed. But he could move to a different US state with better regulations, or he could move internationally. Jason Sorens and William Ruger have put together a very handy guide listing which states tread most heavily on different dimensions of freedom. Pick whichever list of American libertarians you like – Walter Block’s list of autobiographies, the membership list for the Mont Pelerin Society – lots of American libertarians live in places that are fundamentally unfree.

Sure, there can be plenty of reasons for living in a less free state. If marijuana access is the freedom that matters most to you, then the other ways that California infringes on freedom might matter less. And if we have a few dimensions that yield rather different rankings for the different states, we can always come up with a weighting of dimensions such that the state you live in doesn’t fare too badly. But let’s avoid that kind of ex post rationalisation for now. If we can derive measures of the value of a statistical life by comparing house prices close to and far away from toxic waste dumps, we could similarly estimate how much value folks put on liberty. If you’ve moved from a more free to a less free state for a slightly better job, the difference in freedom is worth less than the difference in jobs.

It’s easy to reply that differences in freedom across states aren’t big enough to matter that much. But if that’s true, what’s the point of expending any effort at all in trying to achieve policy changes in your state that, if you’re incredibly lucky, might make your state move up one or two positions in the state league tables? Think about all the time and effort you’ve put into achieving one incremental change. Folk activism feels good and it can be fun. But why not do it after moving first to the state that offers the bundle of freedoms you find most attractive? You’ll be more effective in persuading a set of voters who are more inclined to agree with you than a set of voters who think you’re evil, and you can help your new state be a better beacon unto others.

You don’t have to move as far as New Zealand either. Just crossing a state line can make a difference: Virginia beats Maryland on every measure of freedom and is right next door. The ranking of states by respect for personal freedoms puts Virginia ninth of fifty and Maryland dead last. But Jason Sorens found there are about as many libertarian voters in Maryland as in Virginia. If libertarian voters won’t suffer a longer commute from Pennsylvania or Virginia to a job in Maryland, how much value do we put on freedom? And if we personally put little value on freedom in the personal sphere, our calls against eroding it in the political sphere might ring a bit hollow.

Nobody’s demand curve for freedom is or should be completely inelastic. New York and Boston are awesome cities filled with great amenities; that’s one reason their mayors can afford such awful policies. I can imagine living in unfree places if the compensation bundle were good enough – liberty matters, but so do wealth and other amenities. But I wonder how cheaply we’re trading freedom. Give me Liberty or give me … a one course reduction, an accelerated tenure clock and a corner office?

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The Heritage Foundation has put together a short video of interviews with a handful of people in Wisconsin who are protesting Governor Walker’s proposed “budget repair bill.” The video opens with a person saying, “What did Hitler do first? He busted the unions. First you take away the unions, and then you take away the Jews.” Near the end of the video, another person says that the current state of Wisconsin is “like pre-Nazi Germany.” Well.

The final person in the video says that she does not want Walt Disney and Wal-Mart teaching our kids, which is what she apparently thinks will happen if the Wisconsin governor succeeds in reducing Wisconsin teachers’ legal rights to bargain collectively. It is hard not to wonder whether even the rather ahistorical Walt Disney corporation would do any worse, but that is by the by.

In the circumstances, I have a recommendation to make to Wisconsin’s Governor Walker, and by implication to other governors and state legislatures around the country who are or will be facing similar budget deficits and debts and are or will have to figure out ways to address them: Go for the jugular now.

The proposed budget in Wisconsin would increase public employees’ contribution to their own pensions to approximately 6% and their contribution toward their own health care benefits to approximately 12%—both numbers still well below state and national averages for the private sector.

Their reason for protesting is, they say, not the money, but the fact that the governor wants to “bust the unions.” According to the Milwaukee Journal Sentinel, “Under the bill, the unions could not bargain over anything but wages, would have to hold annual elections to keep their organizations intact and would lose the ability to have union dues deducted from state paychecks. Employees would no longer have to automatically pay union dues, but could choose whether they want to do so.”

That is not quite “busting the unions.” Under Walker’s proposed legislation, union members would still be able to exist and would still be able to bargain collectively about wages. But they would have to hold annual elections, and they couldn’t have their union dues automatically drafted from their paychecks—hardly objectionable, it would seem, let alone worthy of such aggressive protest. They would lose their ability to bargain collectively about their pensions and health benefits, yet even here it is not as drastic as it initially sounds: police, firefighters, and state troopers would all be exempt and thus allowed to continue bargaining collectively about everything.

But the union members and their allies are nevertheless willing to employ the reductio ad hitlerum, even for such a relatively small fiscal change. The right-leaning Media Research Center has a story (with pictures and a link to video) about the climate of hate that protesters are creating with references to Hitler, the Nazis, Mussolini, and Mubarek, as well as pictures of the governor in crosshairs and other eliminationist rhetoric.

I don’t think public-sector employees should be allowed to collectively bargain or unionize at all, because the people paying their salaries and benefits have no place at the bargaining table and because conflicts of interest are everywhere. (For example, the former governor of New Jersey used to date a former state union boss.) But when public-sector employees average better pay, better retirement plans, better health, sickness, leave, and vacation plans, and better job security than their counterparts in the private sector, then they have lost the moral high ground and have become instead mere special pleaders for their special privileges.

In circumstances like these, one does not begin the negotiations with them with such small requests. As long as you’re going to be called a Hitler anyway, then why not begin the negotiations with something rather more real-world-like? Why not start with proposing to outlaw altogether unionizing and collective bargaining among public workers, and requiring them to pay 50% of their pensions and benefits?

For too long many of them have been living in an economic fairytale land, where more money comes from “demanding” it, not from inceasing marginal productivity and wealth. If we had all the money in the world, I would still say it is not healthy for so many people not to understand the necessities of wealth production (not distribution), and the realities of what people in the private sector face. But we don’t have all the money in the world.

So I say to Governor Walker, do not merely wait them out; proceed all the more boldly against them. If they are already calling you a Hitler, and thus already dealing with you in bad faith, what more do you have to fear?

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[Editor's Note: The following is a guest post from a regular reader and commentator to Pileus, Mark LeBar. Professor LeBar teaches philosophy at Ohio University and is currently visiting in the Freedom Center at the University of Arizona.]

You’d think gun-control proponents would have had their statistics shot down enough that people would know better. Certainly it is tiresome to see the same sorts of manipulations of gun fatality statistics over and over. But credulous reporters seem to eat them up, so it is likely worth repudiating them.
This story ran in today’s (Tucson) Arizona Daily Star. In light of last month’s horrific shooting, it is a sensitive issue at a sensitive time. And who better for thoughtful, sensitive treatment of such things than the Brady Campaign to Prevent Gun Violence? Well, anybody who can actually understand statistics, that’s who.
The Brady Center provides this handy map, indicating where 14 “mass shootings” have occurred since 1999. Then, lest someone actually understands what the map indicates, they provide this “helpful” caption (in the print version; I don’t see it in the online version):
“Of the 14 mass shootings since 1999 in the U.S., 10 have occurred in states identified by the Brady Campaign to Prevent Gun Violence as having the weakest or second-weakest gun laws. With a score of 2 out of 100, Arizona is tied with five other states as having the second-most-lenient gun laws in the country, behind only Utah.”
If you look at the map, you can see that what they say is true. Of course, it is also true that the category of “weakest or second-weakest gun laws” includes 41 states; states in the three strongest categories of gun laws number 9. So, in the past 12 years (according to the Brady Campaign; I’m taking their numbers at face value), we have 4 mass shootings in 9 “strong gun control” states, and 10 in 41 “weak gun control” states. Only the Brady campaign could construe that as a recommendation for gun control.

Suppose you are thinking of buying new tires for your car; you want ones that will not fail catastrophically. You do some research, and find that in the last 12 years there have been 14 catastrophic tire failures. 10 of them are Liberty tires, and only 4 are Brady tires. Only if you are foolish do you conclude from that that the smart thing to do is to buy Brady tires. If Liberty tires are more than 80% of the market, the failure rate of Brady tires is almost double the failure rate of Liberty tires. Only someone silly or ignorant of statistics would buy what Brady is selling. But that seems to be what they are counting on.

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A group called the Peace Alliance is seeking out people to sign a statement supporting the United States Institute of Peace in the wake of the U.S. House vote to cut all of that institution’s federal funding ($42 million).  I don’t have a dog in this particular fight right now for a number of reasons.  First, I think that such government-supported institutes could play a useful and legitimate role even for a state grounded in a classical liberal political philosophy.  Given that the proper conduct of defense and foreign policy is an important, necessary, and legitimate state activity for classical liberals, it might be helpful to have research institutions that assist in developing, testing, and implementing the proper means to meet state ends in those realms.  Moreover, it might be useful to have institutions with different perspectives or tasks to provide a make-weight to other parts of the government (so the USIP could be a useful voice that might offer a different perspective to civilian leaders than the U.S. Defense Department).  Of course, the for-profit and non-profit market might adequately provide such services – and thus there might be less of a need for a government arm.  But there may be important reasons to have government-funded and/or administered institutions as well.  However, another reason I’m cautious about the particular case of the USIP is that I haven’t properly studied the institution to know if this particular place is providing the state with a useful or necessary product and thus worth funding.  My guess is that the government is getting a lot less bang for the buck than it should – but that is not necessarily a sufficient argument for complete defunding.       

So bottom-line, I’m not sure whether it is a good or bad idea to defund the USIP given the costs/benefits involved (and keeping in mind the overall need to reduce the federal budget significantly).  Here is one case for the USIP by its president Richard Solomon.   Here is part of the case against it, referencing a gated article in the Wall Street Journal by Republican Jason Chaffetz and Democrat Anthony Weiner.

Nonetheless, it is worth noting that the letter the Peace Alliance is asking people to sign does not lend a lot of confidence in these particular friends and supporters of USIP.  Why not?  Here is a large portion of the text:

Secretary of State George Schultz wrote: “At a time when our country is grappling with budgetary challenges, the minuscule budget of the Institute—less than one-tenth of one percent of the State Department appropriation—represents a highly effective investment in our foreign policy and national security capabilities.”

According to General David Petreas: “In Iraq the Institute stepped up to the plate beginning in August 2007 to assist the 10th Mountain Division in a reconciliation effort in Mahmoudiya, a community on the southern edge of Baghdad that was once known as the ‘Triangle of Death. Since then, General Odierno and I have often cited Mahmouidya as a striking success story. USIP’s continuing reconciliation efforts at the community level…hold great promise for the future.”

USIP has also played a critical role in Afghanistan. According to General Patreus: “USIP’s work on the informal justice system has been invaluable as we work toward improving rule of law at the provincial level. Their plans for reconciliation efforts at the community level on the Afghanistan/Pakistan border are likewise a potential key to success in the enormous challenges we face.”

Notice anything odd?  General David Petraeus’s name is spelled improperly twice (and differently in each case!).  Secretary of State George Shultz’s name is also misspelled.

Now admittedly, these are not easily spelled names.  But I’m not exactly confident in the foreign policy knowledge of those who can’t properly spell the names of these two well-known figures in American public life.  And that matters to at least a tiny degree since these petitioners are arguing that they believe USIP plays an important role and we should listen/trust them.

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It is a pleasure to introduce Eric Crampton as our guest blogger this week at Pileus.  Eric is an economist at the University of Canterbury in Christchurch, New Zealand. He is currently working on projects relating to voter knowledge, electoral stock markets, alcohol regulatory policy and paternalism. He hails originally from Canada but earned his doctorate at George Mason University. He blogs at Offsetting Behaviour.

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Will 2011 be thought of in the future as something akin to 1848 in the sense of a year of consequential revolutions?  Or is this a blip on the historical radar?  Does it depend on what happens in the Gulf?  China?  Whether Egypt actually changes?  Or is 2011 already a red-letter year in history?

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As a Wisconsin native (and former resident of the People’s Republic of Madison) I have watched the events of the past few days with some interest. The Milwaukee Journal-Sentinel has had decent coverage (here). Madison’s progressive daily, the Capital Times, has some interesting coverage as well (here).

The controversy involves the new Republican Governor Walker and GOP majorities in the state legislature attempting to make a first step toward controlling long-term liabilities by forcing public sector employees to assume a greater share of their insurance premiums (12.8%) and pension contributions (5.8%). More important, Governor Walker is seeking to place new restrictions on future collective bargaining (e.g., raises would be limited to inflation unless greater increases were approved via referendum) and unions would be required to hold annual elections to retain their representational role; they would also no longer be able to deduct union dues from paychecks.

While the Republicans hold a majority in the Senate (19-14), a quorum of 20 is required to conduct business. The Democratic minority has thus retreated across state lines to a resort in palatial Rockford, Illinois, beyond the reach of state troopers. The schools have been shut down in Madison, Milwaukee and elsewhere due to “sick outs” and the demonstrations at the Capitol have drawn thousands (including the AFL-CIO’s Richard Trumka, scheduled to speak Friday at noon).

The stakes for public sector unions—now representing a majority of organized labor—could not be greater, so one should anticipate an ongoing flow of resources into the state until the state legislature has completed its business. Given that its Madison, the Socialist Party of Wisconsin has joined the fray, along with the National Education Association and the Tea Party. All in all, it is proving to be quite an event.

Wisconsin has led the way in the past with key welfare state initiatives (e.g., workman’s compensation, unemployment compensation). One may wonder, given the fiscal crises being faced by so many states, whether it will be leading again, this time in clawing back some of the power claimed by public sector unions. Will states facing even greater fiscal challenges follow suit?

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Bias in Academia

Megan McArdle at the Atlantic has had some interesting posts lately on the left bias in academia. Her most recent installment, “What Does Bias Look Like,” might prove of interest to readers.

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Ronald Coase is one of my favourite living economists (he is now 100 years old). His work on the significance of transactions costs and dealing with problems that these costs raise is fundamental to a proper understanding of the market economy and the institutions that support it.  Alas, though his work was recognised with the receipt of the Nobel Prize in 1991 the implications of Coase’s ideas are not widely understood by contemporary economists and indeed they are often completely misrepresented by those who should know better (in my book Robust Political Economy I target Joseph Stiglitz as being particularly guilty of this charge).

One of the most interesting but neglected of Coase’s ideas is presented in a brief essay on ‘The Market For Goods and the Market For Ideas’ , originally published in the American Economic Review in 1974. In this essay, Coase points out the inconsistency of those who cite ‘imperfect’ and ‘asymmetric information’ as constituting a case for government regulation in markets for private goods and services, while remaining steadfast in their support for free speech in the political market for ideas. For its proponents though the ‘free market in ideas’ is plagued with various ‘imperfections’ – such as deception, misrepresentation and downright lying by politicians and pressure groups, coupled with the ignorance of the general public (i.e. voters), over time free speech and the competition it engenders offers the best prospect of ensuring that good ideas prevail over the bad. Attempts to regulate political speech to ensure that only ‘accurate’ and ‘truthful’ information is presented to the public are doomed to fail. Who would decide what is to count as ‘accurate’ and ‘truthful’, and who would ‘guard the guardians’ of public truth should they seek to abuse their authority?

If the above argument holds in the market for political ideas, however, then it is equally if not more valid in markets for private goods and services. As Coase notes,   ‘It is hard to believe that the general public is in a better position to evaluate competing views on economic and social policy than to choose between different kinds of food’. Although consumer goods markets are plagued by imperfect information, misleading advertising and the existence of fraud, competition remains the best protector of consumer interests. Indeed, competition is likely to be more effective in the market for most goods and services because the costs of failing to be adequately informed are more likely to be concentrated on those who actually make bad choices– thus incentivising the critical scrutiny of advertising claims. In the market for ideas by contrast, failure to be adequately informed has externality characteristics – the decision to vote for a bad idea has consequences not only for the individual concerned but for the wider society at large. By making this point, Coase anticipated the argument made by Brennan and Lomasky (Democracy and Decision, Cambridge University Press, 1993) and more recently by Bryan Caplan (The Myth of the Rational Voter, Princeton University Press, 2007) that democratic politics is afflicted with the problem of ‘rational irrationality’ and that the ‘market for ideas’ is more likely to ‘fail’ than is the market for private goods.

What though is the best way of resolving the theoretical inconsistencies that Coase exposes? In his 1974 essay the man himself challenges economists and public policy analysts to choose one of the following options. The first would be to abandon free speech and concede the case for ‘expert rule’ in all spheres of life. In contemporary politics, this approach seems to be favoured by the acolytes of Cass Sunstein with their desire to regulate for ‘balance’ on the internet and other public media (no place for climate change sceptics etc.) – yet this approach has no answer to the question of ‘who should guard the guardians’. A second option attractive to many classical liberals would maintain the case for free speech in the market for ideas but would recognise that the argument for ‘de-regulation’ is equally if not more valid in the market for private goods and services. The third and final approach would recognise that ‘market failure’ in the realm of ideas is indeed more likely than in the sphere of private consumer choice and would thus argue for the de-regulation of economic markets, and increased regulation of free speech. He does not endorse this view per se, but the latter position might be implied by Bryan Caplan’s suggestion that greater influence should be given to economists in determining the contours of public policy. 

That Ronald Coase was able to anticipate these issues in the early 70s is proof enough of the relevance of his work today. How though would Pileus readers answer Coase’s challenge?

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Freedom to wrestle

Joel Northrup, a standout high school wrestler in Iowa (sort of the wrestling capital of the world, if I remember correctly), has foregone his chance to win a championship because he would not wrestle a girl in the tournament.  He cited his religious faith (Pentacostal) as the main reason he would not participate.  At the same time, he also graciously praised the accomplishments of the two girls who made the tournament.

How should we think about this?  Here are some possibly relevant points:

  • The state should not be running wrestling tournaments or sporting events in general.  (I agree, but this is sort of a cop out argument).
  • Few post-pubescent high school boys (see next point) wrestling in the 112 lb. class can make that weight without serious weight loss programs that constitute, essentially, state-sanctioned self abuse by children.  OK, this is only marginally relevant, but as someone who does research in the health sciences, I had to say it anyway.  (This is a non-libertarian support for the above point.)
  • Quite a few of the boys who make the cut at 112 pounds do so because they are late bloomers.  Thus, they are not really boys being beaten by girls, but old boys being beaten by young women.
  • Furthermore, the physical differences (especially in terms of upper body muscle mass, but in almost all ways that affect athletic performance) between post-pubescent males and females are so dramatic, that the ability of girls to compete successfully with boys will be highly rare events.  Even in sports with minimal athletic demands (golf, for instance), we do not see women successfully competing against men when they are held to the same standards.  Should this mean that those rare cases who can compete should be allowed to, even when there is really no chance of winning the tournament, or does it mean that allowing girls to compete undermines the hard work and accomplishments of those boys who feel it is not appropriate to wrestle with girls?
  • In general I am a fan of giving girls the same opportunity to compete as boys.   There is something to be said about letting the issue be settled on the mat, court, or playing field, not by adults in school board rooms.
  • Some people have religious values that clearly should not be sanctioned by the state because they are sexist.  Not letting women into medical school, for instance, is sexist.  But doctors are not required to grope each other for several minutes at a time in order to advance their careers (even though Grey’s Anatomy tells a different story).  This case seems qualitatively much different, however.
  • Sending the message to young boys that throwing women to the ground and pinning them there is not a good idea.  One could say the same thing about throwing men to the ground, but the rates of violent sexual assault we have in our society suggest a particular need to reinforce non-violent behavior between the sexes (where, on average, there is such a difference in physical strength).
  • Many see a religiously based prohibition against this kind of inter-sex contact as quaint and old-fashioned, which is exactly why they would promote girls wrestling in the first place.  After all, a little wrestling is far less sexually charged than your average teen drama on TV, isn’t it?  A decline in moral values in one area, though, does not justify abandoning those values in all arenas.
  • Finally, let’s be honest here:  Duh!

I’ll be interested to see how this plays out.  Here is a boy who has devoted many hours of sweat and hard work (as I said, probably to a level of self abuse) to reaching the state tournament.  He now walks away from it because of his personal values.  It would have been much easier to just pin her to the mat and be done with it.  But whether or not one agrees with his values, shouldn’t we applaud a kid that actually has some values and sticks with them?

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The dynamics of American conservatism are fascinating. As those who have read some of the key accounts (my recommendation remains George Nash’s The Conservative Intellectual Movement in America) remember the efforts of Frank Meyer to promote fusionism in the early 1960s, an effort that was reinforced by the existential threat posed by the USSR. One might argue (following Nash and others) that Reagan was a great fusionist figure who could appeal to various factions. Social conservatives loved his emphasis on traditional values. Neocons embraced his defense policy and rejection of détente. Libertarians were attracted by the promise of reducing the role of government, revivifying markets, and controlling regulatory sprawl. Even if we question (as I do) his long-term legacy, I remain impressed by Reagan’s capacity to be like St. Paul, all things to all men.

With Reagan’s passing from the scene and the collapse of the Soviet Union, the conservative movement seemed to enter an extended period in the wilderness. The War on Terror could never serve the same role as Cold War. While George W. Bush appealed to the neocons and (at least initially) to social conservatives, his breathless expansion of entitlements and the constraints placed on civil liberties via the War on Terror proved repellant to libertarians while Iraq and nation-building alienated paleocons.

There appears to be growing disunity among the factions that were once united, however temporarily, under the banner of fusionism. Rep. Mike Pence (R-Ind.) is doing his best to mobilize social conservatives with his efforts to defund Planned Parenthood, much to the disquiet of fiscal conservatives who would rather not muddy the waters (and the 2012) elections with hot-button social issues. And while some high profile libertarians have received a good deal of attention on entitlements and defense spending cuts, there is little evidence that the GOP took them seriously enough to incorporate their ideas into the so-called Pledge to America.

A few months back, Grover Cleveland had some thought provoking posts of fusionism. Perhaps it is time to return to those debates and consider whether fusionism has a future. Is it possible in a world without a unifying figure like Reagan or an existential threat comparable to the Soviet Unions?

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To my knowledge, HB 569 is the first bill ever drafted and introduced in a legislature that would abolish government marriage licensing. The bill is the brainchild of libertarian Republican members of the New Hampshire state house. Currently, New Hampshire has same-sex marriage, but with the current Republican supermajority in both houses of the legislature, that policy is in serious jeopardy.

The libertarian position on marriage is that it is a contract that should be recognized and applied by the courts, but that the government has no business, in general, decreeing who may or may not make the contract or imposing any prior conditions, as licensure does. (There is a libertarian case against recognizing consensual adult incestuous relationships.)

While some conservatives are making positive noises about HB 569, it has come under harsh attack from the left. Check out this discussion at the shrill left-wing site bluehampshire.com if you have the stomach. Democrats are insisting that the bill “abolishes marriage,” because (more…)

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EDITOR’S NOTE:  In an arrangement with the Institute of Economic Affairs in the United Kingdom, Pileus will be posting occasional commentary by historian Stephen Davies.  Davies holds a Ph.D. from St. Andrews University in Scotland.  He is currently the Education Director at the IEA.  Before joining the IEA, he was a Senior Lecturer in the Department of History and Economic History at Manchester Metropolitan University.  He is the author of several books, including Empiricism and History (Palgrave Macmillan, 2003) and was co-editor with Nigel Ashford of The Dictionary of Conservative and Libertarian Thought (Routledge, 1991).

Steve Davies

The United States Presidency Centre of the Institute for the Study of the Americas (part of the University of London’s School of Advanced Study) has just published the results of a survey of 47 UK academics who specialise in the study of American history and politics. They were asked to evaluate the performance of every president since the Founding in five categories:

  • vision/agenda-setting
  • domestic leadership
  • foreign policy leadership
  • moral authority
  • positive historical significance of their legacy.

The results were both striking and depressing. Generally speaking, presidents from the early years of the republic did well while those from the periods both before and after the Civil War did badly. The twentieth century got a mixed response, with some presidents ranked very highly (as we shall see) but others graded very poorly.  However what is striking about the results is the kinds of president who attracted high, favourable ratings from the academics once the chronological biases have been allowed for. These show the influence of hidden assumptions about what it is that matters in history and what should count as admirable or important. The top eight in order were; Franklin Roosevelt, Abraham Lincoln, George Washington, Thomas Jefferson, Theodore Roosevelt, Woodrow Wilson, Harry Truman, Ronald Reagan. Lyndon Johnson came in at number eleven, Andrew Jackson at number thirteen.

Some of these results are questionable to say the least. Lyndon Johnson was by most standards a disastrous president, responsible for a foreign war that was, to say the least, morally dubious, and a failed domestic policy that contributed mightily to the economic problems faced by the US and the wider world during the 1970s and early 1980s. All of the figures in the top ten (apart perhaps from Washington) were highly controversial figures who attracted fierce criticism. Are we to believe that all of that criticism (as for example of Lincoln’s suppression of civil liberties during the Civil War or FDR’s economic policy during the 1930s) is simply to be discounted? The point is that the top ranked Presidents are not only ranked highly relative to others, they are given high scores on the five criteria in absolute terms.

One response, which has been made to the very similar results of polls like this in the US is that these evaluations reflect the leftish sympathies of academics who favour presidents such as FDR who pursued conventionally left leaning policies. However in that case it is hard to explain the high placings of people such as Jefferson, Reagan, Theodore Roosevelt, and Jackson. The real reason is more profound. The high marks are given to presidents who firstly, played a significant part in the founding, sustaining, and developing of the modern state and secondly, had occasion to make use of executive power. Presidents who generally chose not to use the powers they had and adhered to constitutional limits such as Grover Cleveland, James Tyler, and Martin Van Buren get mediocre rankings at best (21st, 37th and 27th respectively). Underlying the exercise and the categories employed is a narrative in which the central element is the growth and use of political power and a particular nation state (in this case the US). Ivan Eland of the Independent Institute has suggested different criteria such as respect for constitutional order, observance of civil liberties, and promotion of peace. By these Cleveland comes top and only Washington survives from the list here.

What this survey shows is that the worship of power by intellectuals is as strong as ever, along with the related propensity to admire, apologise for, and generally suck up to those who have it and enjoy exercising it. This is not a good state of affairs.

This article was first published on the Institute of Economic Affairs blog.

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Matt Yglesias argues that Friedman’s contention that a corporation’s only duty is to maximize profits, not to pursue “social responsibility” projects, logically entails that businesses should also rent-seek: lobby government for special privileges to hamper their competitors, suppress wages, or augment their profits with subsidies. Certainly, if Friedman believed that literally the only moral duty corporate management has is to maximize shareholder return, this position logically entails that they should rent-seek or, for that matter, engage in theft, fraud, and abuse whenever doing so has a net positive expected return.

But this was not Friedman’s position. Friedman argued that businesses should maximize profit subject to the constraints of ordinary morality. The whole rationale behind Friedman’s position is that in a competitive, capitalistic economy profit maximization drives innovation and growth. Social responsibility projects, meanwhile, are beyond the scope of businesses’ expertise in most cases, and it is unlikely that they will do them effectively. His rationale is essentially utilitarian. But rent-seeking (and defrauding customers and so on) has net costs to society. Therefore, Friedman would argue that businesses should not rent-seek, even to maximize profits.

HT: Peter Suderman.

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Political Haiku

Not sure I should quit my day job and try to write poetry for a living, but here is the first poem I think I’ve written since a lame attempt to woo a girl in high school:

Respect for precedent
Just query Susette Kelo.

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No free carbon sandwich

Last week there were hearing conducted by House Energy and Commerce Chairman Fred Upton, who is sponsoring a bill that would prevent the Environmental Protection Agency from regulating carbon emissions.

EPA Administrator Lisa Jackson appeared before Upton’s committee to fight back.  One might think that a responsible EPA Administrator would make the following argument: Yes, regulating carbon emissions would be very costly, but, when all the benefits are added up, it will be worth it.  This, after all, is the position of many environmental economists (and, in fact, my position).

But, no.  Jackson, instead, claims that environmental regulation not only helps the environment, but it actually creates jobs.  She used for support a new report making similar unfounded claims.

I’m having a serious case of Gore-javu.  This is what our beloved former VP used to say with some regularity: regulations create jobs because they force firms to innovate.  All those lackluster firms just sitting around with no reason to lower costs and innovate on their own.   They just don’t know what to do without some government bureaucrat sticking them with a thick new set of regulations to get them off their butts and innovating.  Thank you, EPA.  I’m just shocked that the US Chamber of Commerce doesn’t take up this approach.  I mean, regulations can be generated cheaply, even randomly.   The more regulations, the more innovation, the more economic bliss.   Forget spending our way out of the recession.  Let’s regulate our way out!

Harvard business guru Michael Porter (who is decidedly not an environmental economist), wrote a nonsensical piece in the Journal of Economic Perspectives in 1995.  He and his co-author made essentially this argument: we’ve found a few case studies (they love their case studies at the Harvard Business School, but tend to pay less attention to things like systematic analysis of representative data) that show firms making valuable innovations  in response to regulation.  Voila, we should have more regulations!

In the same issue (JEP 9(4), 1995), some distinguished environmentalist economists (Palmer, Oates, and Portney) were flabbergasted at this argument.  They could certainly point to many examples of environmental regulations that appear to pass the cost-benefit test when the social benefits of regulation are added in, but they were appropriately distressed at the idea that regulation is costless:  “…a comparison of the benefits and costs is exactly how one should determine the economic attractiveness of specific programs—not on the false premise of cost-free controls.”

Let’s be clear.  Any kind of energy regulation or taxation will have costs.  And those costs will be most highly concentrated on semi-skilled and unskilled workers in industries highly dependent on energy.  Al Gore will still have his heated pool and his giant mansion; Lisa Jackson will still be making a comfortable salary spewing nonsense before Congressional committees.  But a vast number of ordinary folks will lose their jobs, the price of many consumption goods will rise, and there will be pain.  It may be pain that it is worth it, but telling people their are painless remedies to social problems doesn’t help.

Unfortunately, very few people in either major party want to preach a no pain no gain approach to government.

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The Purge Begins…

From Jordan Marks, national director of Young Americans for Freedom, via Politico:

“Rep. Paul is clearly off his meds and must be purged from public office. YAF is starting the process by removing him from our national advisory board. Good riddance and he won’t be missed.”

We have yet to assess the long-term ramifications of this bold move by YAF.

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Given that the movie version of Ayn Rand’s Atlas Shrugged is coming out soon and that it is Valentine’s Day tomorrow, I thought it appropriate to post Rand’s observation on love from her famous – and wonderful -interview with Playboy magazine (Caveat: link may contain advertising on the edges of the screen inappropriate for the workplace and other settings).  I also thought that Rand’s words might provoke some fruitful discussion of what romantic love involves (or ought to involve):

When you are in love, it means that the person you love is of great personal, selfish importance to you and to your life. If you were selfless, it would have to mean that you derive no personal pleasure or happiness from the company and the existence of the person you love, and that you are motivated only by self-sacrificial pity for that person’s need of you. I don’t have to point out to you that no one would be flattered by, nor would accept, a concept of that kind. Love is not self-sacrifice, but the most profound assertion of your own needs and values. It is for your own happiness that you need the person you love, and that is the greatest compliment, the greatest tribute you can pay to that person (emphasis added).

And here is the trailer for the much anticipated Atlas Shrugged film

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Marc Eisner’s reflections on the Reagan Revolution are based on solid evidence. He follows in a long train of similar expose’s of the 40th president’s record respecting government growth and makes some additional serious charges. Most damning is the charge that the growth seen during Reagan’s time was really the result of Keynesian fiscal stimulus and not founded on principles consonant with ideas about limited government and free markets.

I would like to take issue with that on two grounds.

Firstly, the usual approach to understanding stimulus had already run aground in the phenomenon called stagflation by the time Reagan took office. Up till then both sides of the stimulus band wagon, monetary and fiscal, were going exactly nowhere because the basic transmission mechanism was burned out. I’d go further and say, not only the transmission, but the carburetor was hopelessly gummed up by some serious levels of uncertainty.

Secondly, I would say that those who hold Congress responsible are only 1/3 right. Those who hold the president, likewise, only 1/3 right. The other unsung part of the problem is a bureaucratic nightmare of byzantine proportions spawned by the rules and regulations of all the many federal agencies in Washington D.C. (you might think of this as the Court’s failure since they allowed this development to occur).

The population of all the boards and bureaus that populate the capital is equivalent of a medium size city all its own. The interests that comprise this population are constantly shifting their configurations with respect to whatever reforms are offered by whatever branch of government, and a push here means simply that something else bulges there. Nothing short of a unified front of all branches has any hope of accomplishing a real excision and demolition of these agglomerations of power.  

Under these circumstances, something very critical was done by Reagan that has nothing to do with stimulus, but is actually quite deserving of the appellation, revolutionary, and it was completely consistent with the ideals of limited government and free markets.

The current Federal Code runs to some fifty volumes plus. This is the list of laws passed by Congress. The Federal Registry runs to well over 200 today. That is the list of all the rules of all the various federal regulatory agencies. Four times the number of laws actually passed by the legislative branch!

So complicated are these rules with their various overlapping jurisdictions that it takes an army of lawyers to know what is even approximately there. That fact gives enormous discretionary powers to agency heads. When rules become so complex as this, those who are regulated have no choice but to rely on the regulators themselves to tell us what they mean. That is not something one can plan for in the determination of investments.

There is only one time that this body of rules was appreciably decreased of which I am aware. Rothbard criticizes Reagan for allowing an increase in the overall number of agencies on his watch, but the macro aggregations can only tell you so much. The real devil is to be found in the details and quality of the specific regulations all those agencies promulgated.  Under Reagan the number of rules was actually slashed–nearly in half. In his Wall Street Journal article of February 10th, Arthur Laffer noted that the number went from over 80,000 in 1980 to about 48,000 in 1986.

All the stimulus in the world won’t matter a wit where the rules governing investment foster uncertainty. Add stability and reduce complexity and then give people greater control over their earned incomes and you have the real source for prosperity in the Reagan years.

Yes, the take increased, but it did so largely in areas where the rules could be well established in statutory form, so-called “loop holes,” and where individual planning could then take reasonable accounting of them in determining future investments. In other words, as much as I dislike any takings, it is best to do it in ways that do not at the same time enhance uncertainty. That is a lesson consonant with the rule of law, limited government, and markets rightly understood. A lesson we have, unfortunately yet to learn.

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Are all economists stupid?

Paul Krugman has (surprise!) another partisan rant in the NY Times claiming that the GOP is the root of all evil.  In this new variant of the same article he publishes almost every week, he is picking on Paul Ryan and Rand Paul and the hearings they have been holding on US Monetary Policy.

But if we can get past all the partisan crap, this piece illustrates a profound disconnect between the economics profession and the political right.  Politicians will from time to time rant about how we are no longer on a gold standard, but serious economists never do.  I don’t follow the macro literature very closely, but I’ve never seen it.  In my days at Chicago, the free market capital of academic economics, I never remember a single lecture or class discussion on the gold standard.  The godfather of monetarists, Milton Friedman, didn’t advocate a return to the gold standard.  There is a whole lot of debate on monetary policy to be sure, but it isn’t about gold.  In fact, a good rule of thumb is that if someone is seriously advocating a gold standard, they probably have little professional training in economics and can be safely ignored.  I mean, there are enough serious debates and uncertainties in economics to spend time listening to non-serious people.

This is not to say that we shouldn’t keep our eyes open for inflationary pressures on the horizon, but Krugman is also right that inflation isn’t what we should be worried about right now.  If the economy ever heats up (or even warms up), the Fed will need to start drawing money out of the economy, just as they pumped it in during the financial crisis.  This need not be rapid, but it does need to happen.  Will the Fed have the political will to fight off inflation?   That remains to be seen.  But that question doesn’t have anything to do with the gold standard.

Ironically, the same people heaving gold bricks around Capitol Hill are the ones who really pose the greatest inflationary threat.  The value of US currency has been maintained for so long not because it was backed by hard metals but because people believe the US will pay its obligations because it always has.  Attempts to avoid raising the debt ceiling in the coming months could create a significant crack in that confidence.   Actions by other governments, such as China, influence the value of the dollar, but the only ones who can really undermine the confidence in the dollar is the US government itself.  Sadly, there are a few legislators who don’t realize that if they really care about the credibility of our currency, they need to stop behaving like they are speaking to political rallies and start behaving like the realize that they are the government now.

Addendum: This morning, NPR’s Morning Edition did a story on James Grant, a guy who writes a successful newsletter called, Grant’s Interest Rate Observer.”  He’s a strong advocate of the gold standard.  But at least he is somewhat self-aware.  He was quoted as saying, “The argument I’m making is in fact the wingnut argument,” he said. “Every self-respecting tenured faculty member in economics this country, almost without exception, would laugh it out of court.”  I don’t think a gold standard or other commodity standard is actually a wingnut argument, just that it is an argument very disconnected from what almost all macroeconomists think.  As he notes, there are a few exceptions, but it isn’t an issue most are concerned about.

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“Over the past decades we’ve talked of curtailing government spending so that we can then lower the tax burden. Sometimes we’ve even taken a run at doing that. But there were always those who told us that taxes couldn’t be cut until spending was reduced. Well, you know, we can lecture our children about extravagance until we run out of voice and breath. Or we can cure their extravagance by simply reducing their allowance.” Ronald Reagan, February 5, 1981

One of the claims often made was that the Reagan administration broke the back of stagflation—the combination of high inflation and stagnant growth—by departing from the crumbling Keynesian orthodoxy and embracing supply side doctrines. Of course, the credit for price stability can be assigned to the tight monetary policy enacted by Paul Volcker and the Federal Reserve. Let us turn to the question of growth.

Most certainly, the Laffer Curve received a good deal of play in those days with its promise that a reduction in marginal rates could not only stimulate growth but raise greater revenues. The promise of higher revenues at lower marginal rates was unfulfilled, as subsequent analyses confirmed. But what of growth? In the last posting, I noted the failure of the Reagan administration to reduce the size of government. In fact, despite the President’s analogy in the above quote to reducing the allowance of a spoiled child, the de facto policy was to hand the fat boy a credit card with no spending limit.

As we all know, the Reagan administration and Congress ran significant deficits each year, creating a high level of stimulus that looks quite Keynesian (recall that taxation is a policy instrument that can be used for Keynesian ends). The average annual deficit during the Reagan administration was 4.2 percent of GDP (the peak deficit, in 1983, was 6 percent of GDP, the largest since 1946 and greater than anything experienced in the pre-war days of FDR and the New Deal).

To place these figures in context, consider the following (calculated from OMB Historical Table 1.2):

1950s: average deficit 0.4 percent of GDP
1960s: average deficit 0.8 percent of GDP
1970s: average deficit 2.2 percent of GDP
1981-1988: average deficit 4.2 percent of GDP
1989-1992: average deficit 4 percent of GDP
1993-2000: average deficit 0.8 percent of GDP
2001-2008: average deficit of 2 percent of GDP

In terms of deficits, the Clinton presidency looked a lot like the Kennedy-Johnson years; the Bush II presidency looked a lot like the 1970s. The Reagan administration…well, it stands alone as having provided the highest level of stimulus since World War II.

And while the administration’s policy mix did result in recovery, the rate of growth (average of 4.3 percent, 1983-88) is not all that impressive when we recall that the 1960s experienced an average growth rate of 4.4 percent with annual average deficits that were remarkably lower (0.8 percent of GDP compared with 4.2 percent of GDP). See Table B-4, Economic Report of the President for percent change in real GDP.

The large deficits incurred in the 1980s reversed a long-term trend in the national debt (the following data is drawn from OMB Historical Table 7.1). In 1946, gross federal debt was 121.7 percent of GDP, a product largely of World War II. Over the course of the next several decades, the national debt declined steadily relative to the economy, reaching a low of 32.5 percent of GDP the year of Reagan’s inauguration. With the passage of the Economic Recovery Tax Act, revenues fell from 19.2 percent of GDP to 17.5 percent of GDP; when combined with unrestrained spending, the inevitable result was a ratcheting up of the debt. Indeed, by the time the Gipper left office, the debt was 51.5 percent of GDP (effectively erasing 25 years of progress).

Things would get much worse in subsequent years (indeed, gross debt as a percentage of GDP is projected to exceed 100 percent of GDP in 2012) so the mix of policies embraced by the Reagan administration and its successors is only part of a larger story that must include the uncontrolled growth in entitlement spending (a product of program design and demographic trends).
Was there a supply side miracle? Certainly marginal rates were slashed and the administration introduced a cost-benefit analysis-based system of regulatory review (executive order 12291) and continued the process of deregulation initiated by Ford and Carter. But the economic recovery looks more like a closeted return to Keynesian stimulus than a sharp turn to supply side revolution.

So much for Reaganomics.

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Fox News, Sweden and the Left

EDITOR’S NOTE: Due to technical difficulties, I’m posting Mark Pennington’s second post for him below:

I tune in to Fox News occasionally to get some relief from the constant left of centre bias offered by the BBC – the latter is currently offering an incessant stream of reports on how public spending cuts which will return Britain to levels of government spending last seen in 2006, represent the end of civilisation as we know it. It is disturbing though to hear Fox presenters repeatedly describing European countries, such as Sweden – as ‘socialist’,  warning about the fate which awaits the US if it does not mend its Obamaesque ways.

Sweden is emphatically not a socialist country – unlike Britain, it has never practiced a policy of mass nationalisation and has thus never needed a Margaret Thatcher to reverse such a trend. Unlike the United States, it has recently taken radical steps to privatise postal services and to massively enlarge the role of the private sector in secondary education. In essence, Sweden is an open market economy but with an enormous transfer-based welfare state imposed on top. One might say that Sweden is a model of social democracy. Indeed, many on the British and American left point to Sweden as a clear example of how to combine high levels of prosperity and other quality of life indices with high levels of income redistribution. Alas, for the left, even a cursory glance at the history reveals that the success of Sweden in this regard has occurred not because of social democratic policies, but in spite of them.

As the former economic advisor to Prime-minister Olaf Palme, Assar Lindbeck has shown, for most of the period between 1930 and 1965 when the Social Democratic Party held a virtual monopoly of power – it did not in fact pursue ‘social democratic’ – i.e. highly redistributive policies.[1] Significantly, in 1960 Sweden had lower levels of taxation and perhaps more surprisingly, higher levels of income inequality (as measured by gini coefficients) than the United States. This followed a period when Sweden rose from being relatively poor by European standards to one of the four riches countries in the world with respect to per capita income. In the intervening years, however, Swedish taxes have risen to be among the highest in the developed world and the income distribution has become one of the most egalitarian. With respect to per-capita income, however, Sweden has fallen between 10 and 15 places. Recent improvements in Swedish economic performance meanwhile have been accompanied by attempts to reduce the level of taxation and to tolerate a modest rise in income inequality following the virtual bankruptcy of the country in the early 1990s.[2]  In short, as any classical liberal would be keen to point out, there is always an economic cost to redistributive policies and Sweden is no exception to this rule.

It might, of course, be argued that the decline in the relative growth performance of Sweden is a ‘price worth paying’ because redistribution has brought about many other benefits such as greater social trust, lower crime, low infant mortality and the like. This view lies at the heart of the thesis that inequality is the cause of various social ‘diseases’ for which greater equality (read redistribution) is ‘the cure’. Yet again though, the evidence from Sweden does not fit the social democratic case. Sweden already had higher life expectancy, lower infant mortality, lower crime and higher levels of trust than most other developed nations in the early 1960s, i.e. when it had a much less egalitarian income distribution. Indeed, some indicators – such as crime – have actually deteriorated since the income distribution has been flattened. The experience of Sweden and the Nordic countries more widely suggests that it is not the welfare state that has created high levels of trust and social well-being, but that countries with high levels of trust and well-being are more likely to introduce egalitarian policies – policies which slowly but surely start to put a strain on the social fabric.

 So, America and Britain have much to learn from Sweden – but the lessons they need to heed are not those proffered by Fox News or by the British and American Left.

[1] Lindbeck, A. (1997) The Swedish Experiment, Journal of Economic Literature, 35: 1273-1319

[2] Bergh, A. (2006) Is the Swedish Welfare State a Free Lunch, Econ Journal Watch, 3 (2): 210-35.

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EDITOR’S NOTE:  We are joined today by a special guest blogger.  I have been eager to have this historian and dedicated advocate of individual liberty post for us.  Here is his first (and hopefully not his last) entry:         

In the vast corpus of material about Ronald Reagan certain common themes are repeated regarding the fortieth president’s emotional and personal disposition to friends and family.

Almost invariably Reagan is described as having been distant, removed, and even cool to one and all. His detachment has been remarked upon as a key element in understanding both his successes as well as his failures as a president. To some it forms a constant in his general approach to life, allowing him to maintain the steadiness of purpose necessary to face down the Soviet threat while retaining a generally optimistic perspective on the future prospects of America.

To others it marks the core of their frustration with a man who could at one and the same time preside over massive increases in public debt and government growth and yet so eloquently evoke the ideas of limited government, federalism, constitutionalism, and the values of individual liberty. It was that uncanny and unfailing ability to set those ideas in words that captured the essence of America’s self-image and allowed Reagan, as noted by Murray Rothbard, perhaps his most vituperative and unsparing critic, to deflect all aspersions. He told us what we wanted to believe of ourselves, even as we continued down the path of big government spending and subsidy. And the public loved him for it.

With Reagan we got it all. Big government both in domestic life and defense, and the imagery of solid independent, individual republican liberty. He made us feel positively noble about duplicity, and for it, Rothbard charged him with being an amiable dunce, a shallow man with a photographic memory who could deliver his lines on cue.

Rothbard’s words were meant to hurt. They were meant to reveal an emperor without clothes. They were intended to get on with the task of social criticism that he and others had begun in their struggle to limit government but which they felt had been disastrously derailed by the “great communicator.”

Yet, today the fortieth president’s popularity in the public memory still soars. Actually, it appears to have risen even higher than what it was in Rothbard’s time, and it is Rothbard’s criticisms that fall on deaf ears. Yet, the facts which Rothbard brought forth are still true. Government did not shrink. Tax burdens were shifted about, but the total taken from the private economy went up, not down. Power continued to be centralized, and the deficit skyrocketed.

The personality that rests at the heart of this bifurcation has been more charitably interpreted by biographers inclined to like the man, but the explanations still run to the psychological. Invariably they point to Reagan’s troubled childhood and his alcoholic father. For children in such circumstances, learning to contain one’s emotions and even inventing an alternate reality are often keys to survival. But while these interpretations might explain a general predisposition to life, they don’t fully comport with what we know about Reagan. He was not disengaged from the facts of the world.

Once Reagan made up his mind about something, his resolve was indeed set, but the processes by which he reached such decision were not automatic. His critics notwithstanding, Reagan did study. He read. He not only read, but he apparently read with care. A visit to the home he cherished more than any other place of residence supports that well enough. While his tastes were not broad, his reading ran deep and it is clear that he focused on the texts in front of him.

It is an interesting question whether the best learning is to be had from those who read widely or those who read deeply. Reagan seems to have been the latter sort. At school, he was not known to excel, but where his interests took him, their he succeeded brilliantly. Consider his experience with public life in general, not simply in acting, but the give and take of debate.

In forming his opinions Reagan in fact read political and economic texts, often underlining key passages. He also frequently overrode the concerns of speech writers to insist upon his own ideas and his own style. This is not what one would expect of a man who had no need to know the outside world. His general disposition, to my mind, was a product of decision and purpose. It was not the accidental by-product of childhood trauma. What might it then be?

Contemplating the stark contrasts of Reagan’s administration that his critics have rightly made so obvious, brings to my mind certain melancholy passages in Gibbon’s Decline and Fall of the Roman Empire, more particularly the discussion of the virtuous emperors. Here is what Gibbon had to say: “The forms of the civil administration were carefully preserved by Nerva, Trajan, Hadrian, and the Antonines, who delighted in the images of liberty, and were pleased with considering themselves as the accountable ministers of the laws. Such princes deserved the honour of restoring the republic, had the Romans of their days been capable of enjoying a rational freedom.”

These virtuous emperors knew that Rome was no longer a republic, but they wanted the Romans to remember the values that had once made republican government possible. The tragedy was not that they were emperor’s per se, but that the Roman people would no longer suffer themselves to be free.

The philosophy that informed the actions of these princes counseled modesty in objectives, resolve in their pursuit, evenness of temper and avoidance of emotional extremes, and a basic trust in the laws that govern nature, or what was then considered the benevolent designs of an over-arching providence.

In essence, these values describe the stoic’s understanding to know one’s limitations and to guard resolutely the seat of the rational self from the corrosive effects of passion. For Marcus Aurelius, the most deeply learned emperor in this school of thought, Epictetus’s Enchiridion, or teachings, formed the model of his own Meditations.

For years I too was inclined to accept the assertions often repeated that Reagan did not read, or even more damning, that he had no real grounding for his views other than the popular imagery of the parts he played in western films. You might then prepare yourself to imagine the startled sense of revelation I experienced when visiting the Reagan Ranch Center and the Ranch itself when my eyes fell upon a certain text situated among Reagan’s favorite books on horseback riding and the literature of the American west. It was none other than Epictetus.

Reagan was fond of the saying, “The best thing for the inside of a man is the outside of a horse.”  The balm of horsemanship was a deeply important part of Reagan’s psychological and emotional defenses. That he placed Epictetus’ teachings alongside these texts speaks volumes to me.

Among the primary teachings of this former Greek slave turned Roman instructor and philosopher was the counsel to know what you can change and what you cannot. Epictetus enjoined his followers to find a middle path of rational thought and shun those things that cloud reason. He encouraged trust and a mild optimism in the beneficent nature of the universe. Whatever may happen, happens for a purpose and ultimately for the good. More interesting still, he counseled an easy-going, forgiving disposition towards one’s critics and opponents. He warned his readers not to get caught up in the negativity of their enemies but rather, to resolve to maintain steadiness of purpose. 

The historian can view a subject from multiple vantage points. Certainly Reagan’s critics have chosen one way to look at the facts of his administration, but looking at Reagan from the vantage point of stoicism offers a great deal of insight.

Did Reagan really believe his rhetoric, and if so, was he self-deceived, or attempting something else entirely?

The most biting comments accept Reagan’s sincerity, but question his mental capacities. Like Rothbard, they denounce him for being the puppet of the state and lament that he did not challenge Leviathan at its core. Thus David Stockman decries the interests that glommed onto Reagan from the start and prevented the cuts necessary to slay the deficit dragon. If my newly acquired revelation is correct, however, faced with a decision that had to be made, Reagan took what he believed to be the course most consonant with America’s limitations at that time.

As John Samples has so rightly emphasized in his important new work, The Struggle to Limit Government, Reagan came to conclude that defense and the threat of the Soviet Union were the most important obstacles he had to face. He understood certain dimensions of that problem quite well, some of which obviously came from his appreciation of Friedrich Hayek’s focus on the contradictions of socialist economics.

He also understood that certain other things could not yet be tackled because we, the American people, were not ready for it. Thus he supported Stockman’s efforts, but was unwilling to break his administration in an all-out pursuit of those objectives. Thus he is reputed to have said in his illimitable style, “We won’t leave you out there alone, Dave. We’ll all come to the hanging.” It wasn’t that he didn’t believe in the objective that Stockman was pursuing, but he recognized the limits of the practical.

So what do we make of the eloquent and moving words about liberty and the limits of government? Like the virtuous emperors, I believe Reagan was trying to remind us of what we aspire to be, of our highest aspirations. The Soviet threat, whatever one may think about the rightness of the policy he pursued, was in Reagan’s mind, the chief obstacle to reform. If ever we were to restore fiscal and moral virtue, it had to be done in an environment that was safe and conducive to its attainment. So long as the communist threat remained, the goal of limited political and fiscal government was crippled.

A closer look at what Reagan’s administration attempted to do behind the scenes should accomplish two things: Firstly, it should convince us that he did try to place limits on spending and reduce the share of government’s command of private resources, but failed. His first term tax measures and fiscal policies did, for a time, shift the burden onto present consumption as opposed to investment in the future (if Laurence Kotlikoff’s assessment of the Accelerated Cost Recovery System is to be credited), and he did lower dramatically the top rate on incomes. But those same policies did not shrink government’s take. In exchange for certain tax increases in 1982, he obtained a worthless promise from Congress to revisit the subject of actual cuts in spending. It never came.

Secondly, a closer look should convince us of something far more fundamental: the enemy was not Ronald Reagan. In this, his critics need to take a long hard look at themselves. They chastise him for not tackling the deficit even unto his own destruction. They lament that he did not tear down, even at the cost of his presidency, any of the various departments and agencies of command and control that grew up with the various programs of the New Deal and the Great Society. But Congress was not unified under Reagan, and the powers his critics called upon him to exercise were not the powers of a president, but of a king.

Even in his criticism, Rothbard unfortunately reveals more about the depths to which the public has sunk than about the liberties he praises. No president could have done what Rothbard wanted, because WE would not have let him do so. In fact one could interpret Rothbard as decrying the fact that Reagan was not a monarch! Even among the proponents of self-government then, as in the older sense of government of the self, that very virtue has subtly faded from view.

I think Reagan knew this. He understood his limitations and knew that he had to face the one challenge then needful of address which he could successfully tackle. The Soviets are no more.

Through his rhetoric, though, Reagan hoped to remind us of the work yet ahead: the size and expense of big government. It is my hope that somewhere we shall find the courage of the stoic to face down the source of this most dangerous enemy of all: ourselves.

Let it not be said of us: “Reagan deserved the honor of restoring the republic, had the Americans of his day been capable of enjoying a rational freedom.”

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The following is a quote attributed to John Hicks in Sen’s Development as Freedom (p. 28):

The liberal, or non-interference, principles of the classical…economists were not, in the first place, economic principles; they were an application to economics of principles that were thought to apply to a much wider field.  the contention that economic freedom made for economic efficiency was no more than a secondary support.

In recent decades there has been an increasing sense that markets improve economic outcomes.  This view has been adopted by China, by former Soviet states, by a variety of former dictatorships and even by some old-style European leftists.   But many of these adopters have failed to recognize that the highest value of markets is not instrumental: it is that market exchange—in itself— is an essential and basic freedom, indeed a human right.

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This post concludes a series of posts on the topic of “American exceptionalism.” In my last look at the topic several weeks ago, I argued that one conception of American exceptionalism among conservatives – the idea that the United States is uniquely free or has a particularly small government due to its culture – is mostly mistaken. In fact, while the U.S. does have a relatively small government by high-income democratic standards, that relative smallness can be explained more or less entirely by its fiscal-federal institutions, which are also shared by Canada and Switzerland (and Switzerland has a much smaller government than the U.S.). In this post, I take aim at a conception of American exceptionalism more widespread on the left, the idea that the U.S. is uniquely sinful in its degree of inequality. To a significant degree this premise on the left mirrors the premise on the right of uniquely small government: the cost of that small government, it is argued, is more inequality.

The problem with the claim is simple: comparing the U.S. to Europe on inequality is inappropriate because (more…)

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Nice to see my libgressive friend Rob Farley giving kudos to Kentucky Senator Rand Paul.  I can’t imagine it will happen too often, so it is noteworthy:

“I will grant that there’s a certain courage in a Kentucky Senator lauding Cassius Marcellus Clay over Henry Clay.”

For what it is worth, here is what Wikipedia says about Cassius Marcellus Clay (the pol, not the boxer – but also the man Ali’s father was named after if Wikipedia can be believed).

I’m with Paul that now is not the time to seek a compromise on the big issues of the day.  Sometimes, as with Henry Clay, it only leads to bigger problems down the road, not to mention a sacrifice of moral principles in the process.  I also think it will be bad politics for the Republicans, though this doesn’t really matter to me.

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