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Archive for March, 2011

My students and I have lately been reading Rawls, and we have been considering, among other things, the implications of his claim that we do not deserve our “natural assets”  and thus can claim no exclusive title to them on that basis. “The existing distribution of income and wealth,” Rawls writes, “is the cumulative effect of prior distributions of natural assets—that is, natural talents and abilities—as these have been developed or left unrealized, and their use favored or disfavored over time by social circumstances and such chance contingencies as accident and good fortune.” He concludes: “Intuitively, the most obvious injustice of the system of natural liberty [advocated, for example, by Adam Smith] is that it permits distributive shares to be improperly influenced by these factors so arbitrary from a moral point of view” (A Theory of Justice, p. 72).

Given, then, the second of Rawls’s two principles of justice—namely, the “difference principle,” which holds that social and economic inequalities are justified only if they conduce primarily to the benefit of society’s “least advantaged” (TJ, p. 83)—one might conclude that differences in natural assets, as well as the benefits accruing from them, are among the inequalities that are to be so arranged. (Rawls later discusses the necessity and role of a “distribution branch” of government whose “task is to preserve an approximate justice in distributive shares” (TJ, p. 277).)

Across my desk today comes a singular instance that might illustrate the scope of Rawls’s position. Perhaps you have heard of the 12-year-old Indiana boy who is a mathematical genius, so much so that he may be on the verge of discovering some hitherto unknown extensions of Einsteinian General Relativity, possibly even revising it in light of problems he may have discovered. Time magazine has a story about him here.

Apparently people who work on such things think the boy may actually be on to something. So perhaps we might expect some new discoveries and new directions in mathematics and astrophysics from him in time. How exciting.

But reading about his otherwise relatively normal life, which includes things like playing video games and spending time with his “girlfriend” (whatever that means for a 12-year-old), Rawls’s argument beckoned to me. The boy clearly has natural talents, and perhaps even world-changing natural talents. By Rawls’s reasoning, he does not deserve them, and so has no moral claim on them. And it would be unjust to let him alone benefit from what seems like a winning ticket in the “natural lottery” (TJ, p. 75). So, shouldn’t we view them as a natural treasure, a natural precious asset, and, applying Rawls’s “difference principle,” argue that it is to be employed so that it is of principal advantage to the least advantaged in society?

What might this mean? Well, perhaps the boy and his natural assets should be nationalized: they should be viewed as part of the common pool of natural talents from which we are all equally entitled to benefit, subject to the condition that the least advantaged among us must be the primary beneficiaries. That would mean, I should think, that there should be some collective or democratic deliberation about what use(s) of this boy’s natural talents are that satisfy this principle.

Now, by imaginatively putting myself into a Rawlsian “original position” behind a “veil of ignorance,” perhaps I can begin to speculate what those uses might be. Trying to do that now—I’m actually squinting and furrowing my brow quite philosophically at this very moment—it seems easier for me to imagine what kinds of things we would not allow the boy to do than it is to imagine what we would require him to do.

For example, I can tell you that there would be no more video games or spending time with the “girlfriend.” With an intellect like that, every minute not spent working on something important is effectively depriving the rest of us of potential benefits. How could we possibly justify wasting time on things like that? What, then, should we require him to do? I am not so sure, but it may be that working on General Relativity is not one of them. Cancer? Obesity or longevity? Hunger?

His charming mother, who appears, though only behind the camera, in a video associated with the Time story, seems to love her son, even if she does not understand him. A speculation: She would not appreciate our collectively deciding about the best use of her son’s talents, and she would probably try to assert some kind of authority over him. The Rawlsian would presumably hope that she would not press that too hard, lest an unfortunate unpleasantness ensue.

But nationalizing the boy would seem to follow from Rawls’s principles. To what uses do you think we should put his talents?

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Dodd-Frank

Former Fed Chair Alan Greenspan in today’s Financial Times:

The financial system on which Dodd-Frank is being imposed is far more complex than the lawmakers, and even most regulators, apparently contemplate. We will almost certainly end up with a number of regulatory inconsistencies whose consequences cannot be readily anticipated. Early returns on the restructuring do not bode well.

Greenspan goes on to note: “The act may create the largest regulatory-induced market distortion since America’s ill-fated imposition of wage and price controls in 1971.”

For those who have watched the financial reforms, this judgment (and much of the Greenspan’s comments) comes as no surprise.

Far more surprising:

Bill Murray has been cast to play FDR (brilliant choice)

Christine O’Donnell has a book contract (insert punch line here)

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According to Bloomberg:

Premier Wen Jiabao said on March 5 that China will “resolutely” press ahead with controls on the property market to curb speculation, reiterating a promise to keep housing affordable. The government will “severely punish” irregularities in the real-estate market, implement differentiated credit and tax policies, and hold local officials accountable for maintaining stable home prices, he said.

First, given China’s history, I shudder to think what it could mean for the government to “severely punish” someone or something for a market irregularity.

Second, are price controls really the best policy prescription for any market?  Now I understand that politics in China has already heavily distorted the allocation of resources (making housing more attractive in the first place as a store of value), but doesn’t this just continue to distort the market simply in another direction?   And isn’t it possible that the controls will increase evasion and corruption?  Or lead to the opposite of what the government says it wants (how will checking prices actually lead to the higher supply that really works to reduce or check price rises given steady or growing demand?)?  But maybe China’s housing market is so distorted by government policy in the first place that this is necessary (I doubt it).  

I’m guessing that the Chinese government is really more worried about slowly getting a handle on the housing bubble rather than affordable housing.  And the best way to do that isn’t through further government distortion of the market but to open up other realms of safe, legal investment so that housing isn’t seen as a store of wealth (and an inefficient one at that) but a place to live.  

I’m generally skeptical of trying to interfere with prices – especially given how useful they are as an efficient transmitter of local knowledge (HT: Hayek).  So China, increase economic freedom to get out of the problems you’ve created through government action and don’t extend any further the reach of the distortionary tentacles of the state!

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The Real Churchill

I just finished reading Ralph Raico’s total evisceration of Winston Churchill. According to Raico, Churchill was throughout his life dedicated to two ends: his own power and the making of war. Every other principle he “ultimately betrayed.” Among Churchill’s sins are accounted the following: violating the international laws of war in blockading food and medicine from German civilians during World War I, setting merchant shipping policies that led to the sinking of the Lusitania (if not actually arranging for its sinking directly), returning Britain to the gold-exchange standard at prewar parity (thus destroying the British economy and setting the stage for the disastrous series of events that plunged the world into the Great Depression), attempting to crush the Indian independence movement, and more.

Even Churchill’s early opposition to Nazi Germany was tainted, for Churchill also took a hard line against Weimar Germany’s attempts to ease its heavy burden of reparations – policies that ultimately led to the rise of Hitler in the first place. In the end, Churchill’s real value lay in his rhetoric and the way in which he boosted British morale during the dark days of 1940. In the end, one achieves historic greatness more by what one says than by what one does, it seems.

HT: Brian Doherty

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The King’s Speech

The president’s speech last night was interesting. I remain a little uncertain as to what the criteria will be for future interventions. According to the president:

For generations, the United States of America has played a unique role as an anchor of global security and as an advocate for human freedom. Mindful of the risks and costs of military action, we are naturally reluctant to use force to solve the world’s many challenges. But when our interests and values are at stake, we have a responsibility to act.

Apparently, the justification rests on national interests and/or values. The president clearly believes that there are national interests at stake here. When reviewing the potential slaughter in Benghazi, he stated: “It was not in our national interest to let that happen.”

This past weekend, Defense Secretary Gates noted: “No, I don’t think it’s a vital interest for the United States, but we clearly have interests there, and it’s a part of a region which is a vital interest for the United States.” There was no compelling argument last night to contradict this assessment. Ultimately, things seem to hinge on values.

Once again, the president:

To brush aside America’s responsibility as a leader and -– more profoundly -– our responsibilities to our fellow human beings under such circumstances would have been a betrayal of who we are. Some nations may be able to turn a blind eye to atrocities in other countries. The United States of America is different.

And

Born, as we are, out of a revolution by those who longed to be free, we welcome the fact that history is on the move in the Middle East and North Africa, and that young people are leading the way. Because wherever people long to be free, they will find a friend in the United States. Ultimately, it is that faith — those ideals — that are the true measure of American leadership.

Given the number of people who find themselves under dictatorial rule and the threat of annihilation, and thus “long to be free,” it would appear that “our responsibilities to our fellow human beings” is almost boundless.

I am not a foreign policy expert (thankfully), but some of the Pileus readers and contributors (good morning Grover) most certainly are. Quick question: does last night’s speech make you wonder (once again) whether we are in the midst of George W. Bush’s third term? How would one distinguish last night’s comments from what one might encounter in the more refined neocon circles?

Update:
In case you wondered, William Kristol (Weekly Standard) found the speech “reassuring.” In his words:

The president was unapologetic, freedom-agenda-embracing, and didn’t shrink from defending the use of force or from appealing to American values and interests. Furthermore, the president seems to understand we have to win in Libya. I think we will.

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If the answer is no, here’s a link where you can help create an incentive for a local cinema to show the film.  In true Randian (and Smithian) fashion, it is not out of altruism that the typical theatre is going to show Atlas Shrugged but out of the self-interested desire to earn a profit (of course, in doing so, the theatre is also going to satisfy your preferences and everyone involved with the transaction will be better off).  So, please — out of self-interest or even out of altruistic feelings for the rest of us (I think the Objectivists will give you a pass this one time!) – give the theatre owner a reason to show Shrugged on April 15th by clicking on that link and asking for the movie to be shown in your area!*

* No, we haven’t forgotten about the collective action problem.  Nor do I promise the film will be great – I haven’t seen it and hold out hope that it will be wonderful.

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I’m always surprised how often this old post gets viewed by our readers compared to other “age-challenged” posts.  I guess more people are interested in the Department of Agriculture than I thought when I first wrote the post.

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