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Hayek on Social Justice & Minimum Income

Kevin Vallier tries to sort it out:

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

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

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Democracy Works, So Government Sucks

Jason Brennan hands you the check:

The quality of the candidates who make it on the ballot depends upon the quality of the electorate. The politicians who make it on the ballot are low quality because they appeal to the median voter. If the median voter has silly views, then smart, well-informed, intellectually honest, forthright politicians don’t stand a chance.

Many people complain that we’re always stuck choosing the lesser of two evils. The Comedy Central show South Park compared the 2004 presidential election to a school mascot election between a Turd Sandwich and a Douche. Why are we often stuck choosing between a Republican Turd Sandwich and Democratic Douche? It’s not because the system is broken or corrupt. It’s because the system works. …

If we want to fix our democracy, then we need to fix ourselves. We need to become smarter, less biased, and more intellectually honest when it comes to politics. We need the median voter to be a virtuous voter.

via Princeton University Press Blog » Blog Archive » Bad Government is Our Fault.

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Thomas Friedman's New Math of Democracy

Thomas Friedman’s New York Times column today would be astonishing in its incoherence if only Friedman hadn’t long ago sapped us of our ability to be astonished by his incoherence. Like many capital-‘d’ Democrats, Friedman has soured on democracy for failing to deliver on his policy wish list.

Watching both the health care and climate/energy debates in Congress, it is hard not to draw the following conclusion: There is only one thing worse than one-party autocracy, and that is one-party democracy, which is what we have in America today.

Why does Friedman say the United States has one-party democracy? Because the Republican Party is effectively opposing the Democratic Party’s agenda! Not even kidding. Get this:

The fact is, on both the energy/climate legislation and health care legislation, only the Democrats are really playing. With a few notable exceptions, the Republican Party is standing, arms folded and saying “no.” Many of them just want President Obama to fail. Such a waste. Mr. Obama is not a socialist; he’s a centrist. But if he’s forced to depend entirely on his own party to pass legislation, he will be whipsawed by its different factions.

Only the Democrats are really playing! You might think that would mean they can do whatever they darn well please. But no! The Democrats can’t do anything! Because the other party‘s opposition is so effective! So it’s exactly as if there’s just one party: nothing gets done!

My hunch is that the Times’ editors see Friedman aiming the gun at his foot, but watching a man stupid enough to actually pull the trigger is so fun they hate to intervene. That or they’re trying to explode the myth of American meritocracy.

So where were we? Oh, yes: one-party democracy is aggravating because sometimes one party can’t do what it wants because the other party gets in the way. Sooo frustrating!!! Why have democracy at all when all you end up with is a single party stymied by the other one! And so it is that Friedman comes to wax romantic about communist central planning:

One-party autocracy certainly has its drawbacks. But when it is led by a reasonably enlightened group of people, as China is today, it can also have great advantages. That one party can just impose the politically difficult but critically important policies needed to move a society forward in the 21st century. It is not an accident that China is committed to overtaking us in electric cars, solar power, energy efficiency, batteries, nuclear power and wind power.

Nikita Kruschev, the enlightened leader of a now-defunct one-party autocracy, was also committed to overtaking the United States in technology and so much more. “We will bury you” is how he put it. At the time, more than a few left-leaning American opinionmakers suspected he was right. After all, how can inefficiently squabbling democracies possibly keep pace with undivided regimes wholly devoted to scientifically centrally planning their way into the brighter, better future? And that, children, is why we speak Russian today.

[Cross-posted from Cato@Liberty]

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Arnold Kling on Freedom as Exit

Arnold Kling riffs off my post on charter cities, in particular my mention of the possibility that illiberal regimes might have free-ish markets while granting their subjects little “real freedom.” Arnold asks:

[W]hat is this “real freedom” of which you speak?

Consider the following definition of freedom: the absence of monopoly.

The absence of monopoly means that you can exercise exit, even if you cannot exercise voice. The presence of monopoly means that, at most, you can exercise voice.

Neither my local supermarket nor any of its suppliers has a way for me to exercise voice. They don’t hold elections. They don’t have town-hall meetings where they explain their plans for what will be in the store. By democratic standards, I am powerless in the supermarket.

And yet, I feel much freer in the supermarket than I do with respect to my county, state, or federal government. For each item in the supermarket, I can choose whether to put it into my cart and pay for it or leave it on the shelf. I can walk out of the supermarket at any time and go to a competing grocery.

The exercise of voice, including the right to vote, is not the ultimate expression of freedom. Rather, it is the last refuge of those who suffer under a monopoly. If we take it as given that the political jurisdiction where I reside is a monopoly, then perhaps I will have more influence over that monopoly if I have a right to vote and a right to organize opposition than if I do not. However, as my forthcoming Unchecked and Unbalanced argues, the reality is that the amount of influence I have is shrinking while the scope of the monopolist is growing.

I think there’s a lot that’s on the right track here, but also a good deal of confusion.

“Absence of monopoly” is an attractive definition of freedom only to an anarchist who insists on begging the big questions. A world in which I am bullied and coerced by lots of different people may be a world without monopoly, but that’s not a world of freedom. And Arnold is wrong that “the absence of monopoly means that you can exercise exit.” Suppose you’re in an anarchocapitalist world (a world in which we do not “take it as given that the political jurisdiction where I reside is a monopoly.”) You live in a house on a piece of property boxed in on all sides by other pieces of property. Each owner of an adjacent property has credibly committed to shooting you if you trespass on her land. There is no collusion between property-owners. They’re just independently jealous of their property rights. Here you have a situation where there is an absence of monopoly and an inability to exercise exit.

Perhaps you’ll say, “Why can’t you cut a deal with with one of the property owners?” Good question. But negotiation is voice, not exit.

Exercising the right to vote may not be the “ultimate” expression of freedom, but it is an expression of freedom. And the exercise of voice more generally is an ultimate expression of freedom if anything is, isn’t it? One thing you might want to do with your freedom is to say your piece. In fact, saying your piece is almost certainly something you’ll want to do with your freedom. People need each other. The main instrument of human survival and flourishing is social cooperation. Cooperation requires negotiation, the exchange of reasons, voice.

Of course, exit is also an ultimate expression of freedom. One thing you might want to do with your freedom is walk away. And threatening to walk away can be a powerfully effective exercise of voice. But you’re not going to profit much from life in society if all you ever do is walk away. Sometimes you can’t walk away, even if you want to, and even if there is no monopoly. Sometimes you’re boxed in by other people’s property or other people’s unwelcoming attitudes. Sometimes you’ve got to ask permission, win an argument, or cut a deal. That’s voice.

I think it’s hugely important to promote greater awareness and activism on behalf of the human rights to free movement and association, which entail the right to exit political jurisdictions. One way to tell if a country is minimally free is to ask whether its residents are free to emigrate — free to walk away. If an illiberal state allows a charter city, and allows some of its citizens to move there, that’s great. The added option, for those who get it, may represent a real gain in freedom. But I think Arnold and I would agree that even if some people are granted permission to move to a semi-independent charter city within their country’s boundaries, if they don’t have a right to walk away from their country altogether, then they don’t have “real freedom.” And I would also say, though perhaps Arnold would not, that citizens of a state do not have “real freedom” if they are denied the right to voice their opinion about the laws, or are denied the right to have some formal role in shaping the system in which they live their lives.

I’ve noticed that Arnold complains a lot about Montgomery Country, MD, but as far as I know hasn’t moved. What’s more, the U.S. won’t keep him from leaving, and there are many other political jurisdictions that would receive him. We could say that Wal-Mart has a monopoly on the land Wal-Mart sits on. But if Arnold is free to leave Wal-Mart and head to Target (which is the monopolist of its own little plot) neither has a monopoly in the relevant sense. Well, Arnold is free to leave Montgomery County for a different county. He is free to leave the U.S. for a different country. But he doesn’t do it. Isn’t this like complaining about Wal-Mart but refusing to walk away and shop somewhere else? What is he asking for? A Target inside Wal-Mart? The benefit of more choices without the bother of going anywhere to get them? Maybe Arnold is already sure that things are no better in other jurisdictions. But if there are 100 movie companies and none make movies that I like, does it it make sense to complain using the language of monopoly?

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Democracy and the Grounds of Distrust

The fight over health care reform has grown surreal indeed. Here’s Ezra Klein, who says our “democracy is sick”:

What we’re seeing here is not merely distrust in the House health-care reform bill. It’s distrust in the political system. A healthy relationship does not require an explicit detailing of the “institutional checks” that will prevent one partner from beating or killing the other. In a healthy relationship, such madness is simply unthinkable. If it was not unthinkable, then no number of institutional checks could repair that relationship. Similarly, the relationship between the protesters and the government is not healthy. The protesters believe the government capable of madness. There is no evidence for that claim, which means that there is no answer for it, either. That claim is not about what is in this bill, or what government has done in Medicare and Medicaid and the VA. It is about what a certain slice of Americans think their government — and by extension, their fellow citizens — capable of.

It requires an amazing kind of selective amnesia to think that there is “no evidence’ that the U.S. government is “capable of madness.” The government of the United States invaded Iraq and its agents have killed many tens of thousands people on the basis of the fact that some Saudis trained in Afganistan flew planes into the World Trade Center, plus some lies. Torture, extraordinary rendition, indefinite detention, etc. I call that madness. Of course, Ezra means the other parts of government concerned with domestic affairs. But not the parts that break into peoples’ houses and destroy their lives for selling contraband herbs, or that subject us constantly to mendacious propaganda about drugs. Our government — and by extension our fellow citizens — is capable of terrible things and proves it every single day. Is it really possible to love government so much, to invest so much hope in its benevolent efficacy, that we grow blind to its evident capacity for evil? Anyway, there must be some parts of the government that are not capable of madness. Ezra invites us to think about those when considering health care reform. Will you accept?

I suspect Ezra thinks that his side of the debate has done nothing to engender distrust. But that would be wrong. The reason I wrote a whole paper about the “noble lies” underpinning the American Social Security system is precisely that our system did and does violate the spirit of transparency and openness needed for good-faith democratic deliberation. And, as I argued last month in my column for The Week, the demonstrated willingness of Democrats, both politician and wonk, to dissemble about whether or not they’re trying to set in motion a chain reaction toward a single-payer system practically demands distrust.

I get fed up when intensely ideological partisans, left or right, start to officiously scold a skeptical democratic public for failing democracy by veering wildly from the party line. We should not be surprised when a history of prevaricating partisan strategy calls forth a paranoid response. Ezra’s right that this is bad for democracy. But if he wants Americans to put more trust in politics, he might try advocating a politics more deserving of trust.

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The Illiberal Liberalism of Charter Cities

I think it’s an idea worth trying, though I share some of Tyler Cowen’s concerns.

Romer says good rules make countries rich. But countries with bad rules, because they have bad rules, often have no clear path to good rules. Romer says what countries with bad rules need are new rules for generating better rules. His proposed solution is to give up on both the purely endogenous development of better rules and the attempts of the global Lords of Poverty to bribe rulers into imposing better rules. Instead, Romer wants to try to get rulers of countries with bad rules to cede to better rulers effective (but limited) political authority over small, largely unoccupied bits of state territory. It strikes me that there’s still an obvious problem here. Why won’t the bad rules that have impeded endogenous development also impede the adoption of a higher-order rule-reforming rule? I don’t really see the loophole that Romer needs to get started. Anyway, the idea is that the rulers of screwed up countries will be so impressed by these zones of high economic performance that they will seek to replicate them in the territory they haven’t leased to Canada or Belgium or whomever.

Hong Kong and it’s effect on China is Romer’s big example. Alex Tabarrok says that Hong Kong’s reintegration into China really marked China’s integration into Hong Kong. I think this is too hopeful. China remains authoritarian, illiberal, undemocratic and not at all enamored of the distinctively English spirit of laissez faire behind the Hong Kong experiment. I think it’s interesting that these facts are clearly assets to the Charter Cities project. What the example of Hong Kong communicates is that authoritarian, illiberal, undemocratic regimes need not feel threatened by semi-independent city states with working “liberal” market institutions. It says to rulers that their countries can get rich without granting their subjects real freedom.

What should we make of this message? Should we encourage it? Is Romer trying to encourage it? Does Romer believe it? Or does he believe that high growth rates sooner or later lead to broader liberalization. Maybe it’s OK to let this cat out of the bag as long as the pace of liberalization is slow enough that current illiberal rulers are never really threatened by the liberalizing externalities of charter cities. But is there any way to credibly make this assurance?

I’m convinced that it would probably be better for both the liberty and welfare of the Burmese people, for example, if the junta tried to go the Singapore/China market authoritarianism route rather than hold free elections and establish a democratic government. I’m not happy with this conclusion. Unlike many of my libertarian friends, I do not think democracy is incidental to liberty. But suppose it turns out that democracy is incidental to economic growth — that it is correlated with but unnecessary to growth. Suppose further that illiberal rulers will welcome isolated experiments in the institutions of growth as long as they don’t come bundled with democratic institutions. If economic liberalization eventually has liberalizing political spillovers, promoting democracy directly could turn out to be self-defeating. Could it turn out that liberal democrats do the most for liberal democracy by promoting market authoritarianism? Would this make Naomi Klein right or wrong?

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The Path to Corporate Welfare is Paved with Essential Legislation

I had meant to blog about this passage in the New York Times, but I’m a lazy blogger these days and Tyler got to it and ably noted the “Nice place you got here. Would be a shame if something happened to it,” tone of Daschle and Baucus. I want to mention one further thing. When I talk to folks on the left, a lot of them really earnestly claim to deplore corporate welfare. But, when it came down to it, a lot of those same folks wanted to brag about promising to deliver corporate welfare to Wal-Mart. What gives? It makes me wonder how they think corporate welfare happens? Do they think it’s usually not as part of some legislative quid pro quo? Maybe the idea is that Wal-Mart publicly backing a coverage mandate in exchange for nixing a requirement to kick in for employees on Medicaid does not count as corporate welfare because the overall legislative aim is worth it. But, of course, once you count in the full set of deals, the actual legislation probably won’t be worth it for anybody but the parties to the deals. You can see Daschle and Baucus as craftily strong-arming corporations and interest groups into getting with the plan. (I guess that’s how they like to see themselves.) Or you can see corporations and and interest groups strong-arming Congress (or manipulating the vanity of congressional powerbrokers) for advantageous regulation. It is, of course, both. When corporations see that politicians plan to get their pound of flesh, they maneuver to give half a pound in exchange for a deal where their competitors give two.

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Most Unexpected Comparison of the Day

From Arnold Kling:

I worry that today’s equivalent of Robert McNamara is Peter Orszag, who I fear is poised to do for our health care system what McNamara did for Vietnam.

I suspect this is a bit overheated, but the fact that Arnold’s book, Crisis of Abundance: Rethinking How We Pay for Health Care, is so outstanding makes this tough to simply dismiss.

Anyway, my similar but less dramatically stated worry, which I expressed in my latest column for The Week, is that the reforms currently on offer take the form they do because of Democratic dreams of a single-payer system, but such reforms, once they make contact with political reality, will likely produce a U.S. system that is even more of an convoluted, unsustainable mess. I think Princeton’s Paul Starr is spot on about the politics:

Some supporters favor this approach [i.e., a new “insurance exchange” offering a “public plan”] because they see it as a step toward single-payer, which is exactly what the opponents fear. Squeezed by the public plan, providers might raise prices for patients insured by private plans, sending those plans into a death spiral.

But a Congress that is not about to adopt single-payer is unlikely to adopt a Trojan horse for single-payer. Some compromise proposals — such as Sen. Charles Schumer’s — offer a second model, calling for a “level playing field” between private insurers and the public plan, including limits on the latter’s ability to flex its purchasing muscle. But tight controls on its bargaining power might doom it entirely if it faces severe adverse selection.

Here’s the delicate political problem: Depending on the rules, the entire system could tip one way or the other. Unconstrained, the public plan could drive private insurers out of business, setting off a political backlash not just from the industry but from much of the public. Over-constrained, the public plan could go into a death spiral itself as it becomes a dumping ground for high-risk enrollees, its rates rise, and it loses its appeal to the public at large. Creating a fair system of public-private competition — giving the public plan just enough power to offset its likely higher risks — wouldn’t be easy even if it were up to neutral experts, which it isn’t.

FUBAR, as McNamara’s pawns would say.