Archives: 12/2010

Cato Unbound: Property Rights in Social Democracy

This month at Cato Unbound, Daniel Klein touches on a topic I’ve long found fascinating – Where do property rights come from? Although he doesn’t answer directly, he does challenge one popular modern idea, namely that property rights are merely grants of permission by the state, which retains a residual ownership. This idea, which Klein terms “overlordship,” I find disturbingly popular among my left-of-center friends.

While the state is certainly tasked with enforcing the claims commonly called property rights, I have a hard time agreeing that the claims themselves – as opposed to their enforcement – are produced only, or primarily, by the state. Consider three objections.

First, there have been plenty of societies where the state is either nonexistent or else a very different creature from the one we know today. Yet those societies have had moral claims about personal and even real property all the same. (This is where one of this month’s contributors, David Friedman, should have plenty of interesting thoughts to add, thanks to his work on stateless societies.) In societies like these, social norms about property didn’t vanish. They were just enforced through other means.

Second, as I said in the pitch text this month:

[I]f the government stopped existing tomorrow, would you still own your property? A simple answer might be: You’d hope so. Even if you didn’t have any guarantees of it, you could still make the moral claim, couldn’t you? Or does it really all depend on the state, whose disappearance would throw your ownership claim into confusion?

I doubt very much that anyone would renounce their property claims and consider themselves paupers if the state were to disappear. Yes, our money would be worthless, but our money really is a creation of the state, and no one can sensibly deny it. Property in other things, though, would remain, even if our enforcement mechanisms suddenly became a lot cruder, less effective, and costlier, which they might well do if the state were to vanish. (On the other hand, Friedman makes medieval Iceland look pretty attractive, especially compared to its contemporaries.)

Third, people of all political persuasions continually observe instances where they think that the state has behaved wrongly in its treatment of property rights. If the state were the true owner of all property in society, and if our property rights were merely the assignments it temporarily made, we would have very little ground to object to any state actions at all. Did the state just raise taxes? We can’t object. Did the state just lower taxes? Again, we can’t object, and by the very same token: The state is the real owner, after all, and it may gift its property as it thinks best.

No one reasons this way. And it gets worse, particularly when we consider removing the property rights of defenseless minorities. That should be fine, right? Their property was only a temporary assignment, wasn’t it? And the owner – the state – can do as it pleases?

One possible objection here is that a democracy wouldn’t allow such a re-assignment, but people making this objection appear to have more faith in democracy than I do. And what if their faith were disappointed? Even if the majority approved of it, I’d like to have some justification for saying the state had done wrong here. And clearly I do.

It seems to me that our real moral intuitions on the nature of property, as on so many other things, are that (1) the state must be able to account for its actions on principles of abstract justice, (2) we are competent to think about state actions as potentially either good or bad, and (3) we can and should change the course of the state’s behavior to be more in keeping with our ideas of justice.

It’s clearly a further leap from all of this to an individualistic account of property rights, but that’s where Klein is heading. Along the way he takes some possibly surprising shots at social contract theory, too. Libertarians who have been feeling complacent as they read these lines would do well to read Klein’s full essay, which might just shake them up.

Slow Death for High-Speed Rail

Tea party victories in November likely signal the beginning of the end for President Obama’s ambitious and expensive high-speed rail plans. Republican governors-elect of both Ohio and Wisconsin have vowed to return federal high-speed rail funds that had been granted to those states. The governor-elect of Florida is also a rail skeptic, and more and more obstacles are being thrown in front of California’s rail plans.


Obama Replaces Costly High-Speed Rail Plan With High-Speed Bus Plan

The prospects for high-speed rail are so dire that the Onion recently suggested that President Obama would shift his support to high-speed buses instead. Even the Washington Post has sounded caution about spending much more money on this obsolete form of travel.

The California High Speed Rail Authority, which wants to spend a mere $43 billion on the first leg of a proposed 220-mph rail network, has gained a reputation as a paragon of mismanagement and conflicts of interest. The authority’s chair, Anaheim Mayor Curt Pringle, has accused its staff of incompetence. Reports from the state auditor, the University of California Institute for Transportation Studies, and a committee of transportation professionals have all concluded that the authority’s cost projections are too low and its ridership revenue projections too high.

Nevertheless, in a blatant political move, the Obama administration gave the authority a $900 million grant just a week before the election on the condition that most of the money be spent in the district of a Democratic member of Congress who was fighting a close reelection campaign. The representative, Jim Costa, won reelection by a mere 3,000 votes. The rail authority dutifully decided to start building the rail line in the heart of Costa’s district, from the small town of Corcoran – known mainly as the home of Charles Manson and fellow prisoners – to an even smaller spot named Borden – population zero. This plan was quickly dubbed the train to nowhere and generated opposition not just from Republicans but from Costa’s fellow Democrat, Dennis Cardoza, who represents the congressional district just north of Costa’s.

Although California voters approved $9 billion in bonds for the rail project, the approval was conditional on getting matching funds. So far, the state has received only about $2 billion from the federal government, which means it only has about $4 billion to spend on construction – less than 10 percent of the amount needed to build from Los Angeles to San Francisco. Given the improbability of finding the other 90 percent, and the fact that Republicans in Congress hope to take back some of the money that has already been granted for high-speed rail, the California rail project seems all but dead. The authority’s only hope is to spend enough money building a train to nowhere that politicians will feel compelled to fund the rest.

Meanwhile, Florida was elated when the Obama administration funded half the cost of an 168-mph line running the 80 miles from Tampa to Orlando, with the promise of more funding later. But the state’s enthusiasm was greatly diminished when the administration announced that it expected the states to come up with at least 20 percent matching funds–funds Florida does not have. Even Orlando Congressman John Mica (likely the next chair of the House Transportation and Infrastructure Committee) has backed away from supporting the line. So the state’s new governor might be able to kill the project.

The Ohio and Wisconsin projects aren’t even worthy of being called high-speed rail, as Wisconsin’s average speed was projected to be just 59 mph and Ohio’s an even more lethargic 38.5 mph. Yet the Wisconsin project was going to cost nearly $1 billion, nearly all of which the feds agreed to fund, while Ohio’s would be more than half a billion, about $400 million of which was initially funded by the feds. Secretary of Immobility Transportation Ray LaHood vowed that these lines would be built no matter what the incoming governors said, then said that if they cancelled the projects, he would just give the money to other states. While that seems likely, Congress could override such a transfer.

Meanwhile, in a spectacular display of poor timing, Amtrak announced its own Boston-to-Washington high-speed rail plan just a week before the election. Current Amtrak trains reach top speeds of 130-150 mph but average only 80 mph on this route. For a mere $117 billion, Amtrak proposed to build a brand-new line capable of reaching 220-mph top speeds, meaning average speeds of about 130-140 mph. But Amtrak planners must have forgotten to low-ball their cost estimates, for the proposed cost-per-mile of $274 million was nearly three times the projected cost of the California line and more than 10 times the projected cost of Florida high-speed rail. No doubt Amtrak will shelve its plan in anticipation of a more favorable political environment.

New transportation technologies are successful when they are faster, more convenient, and less expensive than the technologies they replace. High-speed rail is slower than flying, less convenient than driving, and at least five times more expensive than either one. It is only feasible with heavy taxpayer subsidies and even then it will only serve a tiny portion of the nation’s population.

A few months before the election, LaHood estimated the administration’s high-speed rail construction plans would eventually cost taxpayers $500 billion, and that’s not counting operating subsidies. BNSF CEO Mark Rose thinks the cost will be closer to $1 trillion. If nothing else, the tea parties may be able to take credit for saving taxpayers at least that amount of money.

Robert Kaplan Is Not Making Sense

Robert D. Kaplan

The main article in Sunday’s Washington Post Outlook section was an essay by Robert Kaplan titled “A World with No One in Charge.”  Kaplan has traveled much more widely than he has read, and this essay demonstrates that fact in spades.  The article is rife with internal contradiction and errant theorizing, to the point of bordering on the psychedelic.

The thesis is basically a rehash of “The Coming Anarchy,” Kaplan’s 1994 article warning that Western strategists needed to start concerning themselves with “what is occurring … throughout West Africa and much of the underdeveloped world: the withering away of central governments, the rise of tribal and regional domains, the unchecked spread of disease, and the growing pervasiveness of war.” Kaplan went on to warn, “The coming upheaval, in which foreign embassies are shut down, states collapse, and contact with the outside world takes place through dangerous, disease-ridden coastal trading posts, will loom large in the century we are entering.”

The center of gravity in Kaplan’s work, from Coming Anarchy through this piece, is that the natural state of the world is swirling chaos, and the only thing preventing the sorts of horrors discussed in the paragraph above is empire, be it Roman, British, or American.  Now Kaplan warns us that America is in slow-mo decline, and consequently our “ability to bring a modicum of order to the world is simply fading in slow motion.”  So probably you’d better strap a helmet on and get ready.

Maybe it’s best to take the odd assertions in the piece one by one.  First, Kaplan notes that the first Gulf War was a consequence of the end of the Cold War.  “[I]t is inconceivable that the United States would have invaded Iraq if the Soviet Union, a staunch patron of Baghdad, still existed in 2003.”  He doesn’t spell out exactly why it is inconceivable, but we probably ought to acknowledge the decade-long war that took place right in the middle of the Cold War that cost almost 60,000 American lives and made a wreckage of our domestic politics.  We managed to get that one started even before the Soviet Union was really headed down the toilet.

Kaplan knows enough international relations jargon to be dangerous, but only just enough.  Take, for example, this paragraph:

Husbanding our power in an effort to slow America’s decline in a post-Iraq and post-Afghanistan world would mean avoiding debilitating land entanglements and focusing instead on being more of an offshore balancer: that is, lurking with our air and sea forces over the horizon, intervening only when outrages are committed that unquestionably threaten our allies and world order in general. While this may be in America’s interest, the very signaling of such an aloof intention may encourage regional bullies, given that rogue regimes are the organizing principles for some pivotal parts of the world.

Offshore balancing means something, and it’s not what Kaplan says it is.  In general, as the term has been used for decades in the IR literature, offshore balancing would entail a “balancer of last resort” strategy [.pdf], whereby the United States would rely on local balances of power unless another state threatened to consolidate control of Eurasia or Northeast Asia (or possibly the Persian Gulf), becoming a regional hegemon in one of those regions like the United States is in the Western Hemisphere.  But Kaplan’s identification of “offshore balancing” as entailing coming to the defense of all the allies we’ve accumulated over the past 65 years would entail not offshore balancing but a strategy of dominating every major industrialized region of the world.  If we tell NATO members, Japan, South Korea, Israel, et al that we identify our own security interests with theirs (and sometimes allow them to dictate our definition of our interests), they have every incentive to shirk, allowing us to become the balancer of first, not last, resort.  That’s not what the term offshore balancing means, and it’s certainly not “offshore.”

Moreover, I thought we’d gotten beyond the whole “America is in decline” shtick, but I guess not.  Kaplan is judicious on this subject at times throughout the essay, allowing that “there will be no sudden breakdown on our part,” and that “the United States still dominates the seas and the air and will do so for years ahead,” but we’re told that “the post-imperial order we inhabit allows for greater disruptions than the Cold War ever permitted.”

This is just nuts.  Every empirical study of the topic of which I am aware (try here) shows that interstate, and in many cases intrastate violence has steadily and consistently declined.  Despite this, as early as 1994, skeptics like John Mueller had begun noticing that the Beltway foreign-policy establishment (of which Kaplan is a member) had concluded that the threat environment had grown worse, not better, since the end of the cold war.  As Mueller remarked at the time [.pdf], in order to arrive at this belief, “the past has been simplified, a Eurocentric bias has been introduced, definitions have changed, standards have been raised, and problems previously considered to be comparatively minor have been elevated in perceived importance.”

I’ve probably taken enough of your time, but one last point bears mentioning: Kaplan warns that although “Americans rightly lack an imperial mentality…lessening our engagement with the world would have devastating consequences for humanity.  The disruptions we witness today are but a taste of what is to come should our country flinch from its international responsibilities.”  To be sure, different sorts of conflicts, different balances of power could well emerge in the absence of Kaplan’s American empire, but two questions present themselves.  First, what about the devastation America has wrought on various parts of the world under the current unipolar system?  The “war on terror” is only one example of the phenomenon, but it bears examining the “debit” side of the empire ledger as well.  Second, what is Kaplan’s theory about how other countries interact?  It’s not stated, but it sounds like he believes the rest of the world–including most importantly America’s current allies–are like infants waiting to be devoured by the bears that will come out of the woods if we scale back our international involvement.  Why should we believe that countries like Japan, South Korea, and America’s European allies wouldn’t (couldn’t?) do more if it became necessary in the absence of an American military commitment?  What will happen?

Actually, one final point.  In their book on lobbying and policy change, Frank R. Baumgartner and his coauthors write that defending the status quo is the easiest position for lobbyists (and presumably other policy advocates), and that “one particularly useful tactic was simply to sow doubt about any proposals for change: it might cost more than proponents say; it might not work as intended; any tinkering with the existing policy might have serious unintended consequences given the complexity of the policies already in place.”  This is so commonly the case with defenders of the foreign-policy status quo that it really stuck with me.  We have to evaluate these same claims about the implications of a prospective policy change as they might apply to the status quo.  Probably there are various cognitive factors at work here, but at the very least we need to dig much more deeply into the theories that underlay our various policy prescriptions to get at anything worth debating.  Which, of course, happens almost never here in Washington.

Is Wikileaks Libertarian?

In response to Wikileaks’ complaints that Amazon.com will no longer host the whisteblower site’s activities, Chris Moody, over at the Daily Caller, writes:

Unfortunately for WikiLeaks’ argument, Amazon is a private company that can legally sever ties with anyone it wants. If anything, the company is exercising its right to free speech and association by choosing not to work with another independent organization.

That’s correct, though I would add that it was Senator Joe Lieberman (I-CT), Chairman of the Homeland Security Committee, who bullied Amazon into cutting Wikileaks from its server. Thus, it was partially government coercion, not private consent, that severed a business relationship.

As an aside, Wikileaks founder Julian Assange said in a recent interview with Forbes that he is influenced by “American libertarianism, market libertarianism.” (Hat tip: Reason’s Matt Welch.) For more on Assange, check out his old website.

Promoting Free Trade—Sort Of

The U.S. and South Korean governments have agreed to changes in the free trade agreement negotiated by the Bush administration. The president rightly lauded the FTA as a good deal for Americans:

“This agreement shows the U.S. is willing to lead and compete in the global economy,” the president told reporters at the White House, calling it a triumph for American workers in fields from farming to aerospace.”

Approving the FTA has taken on added urgency after the European Union negotiated a similar accord with the South. Once that agreement takes effect, Europeans would have better access than Americans to the world’s 13th largest economy. Protectionism is always foolish, but especially so when one’s competitors are promoting open markets.

The accord also offers important geopolitical benefits. With much nervousness in the U.S. and throughout East Asia over an increasingly assertive China, Washington should work to break down barriers to Americans trading with China’s neighbors. Already Koreans do more business with China than the U.S. While the FTA won’t reduce the appeal of products from next door China in South Korea, it will allow American producers to compete more freely in that market.

The president deserves credit for pushing the agreement forward, but he also needlessly held up ratification by two years. Moreover, his “fix” punishes American consumers. As the official government fact sheet explains:

Car Tariff Elimination: The 2007 agreement would have immediately eliminated U.S. tariffs on an estimated 90 percent of Korea’s auto exports, with remaining tariffs phased out by the third year of implementation. The 2010 supplemental agreement keeps the 2.5 percent U.S. tariff in place until the fifth year. At the same time, Korea will immediately cut its tariff on U.S. auto imports in half (from 8 percent to 4 percent), and fully eliminate that tariff in the fifth year.

Truck Tariff Elimination: The 2007 agreement would have required the United States to start reducing its tariff on Korean trucks immediately and phase it out by the agreement’s tenth year. The 2010 supplemental agreement allows the United States to maintain its 25 percent truck tariff until the eighth year and then phase it out by the tenth year – but holds Korea to its original commitment to eliminate its 10 percent tariff on U.S. trucks immediately.

That is, the Obama administration forced a delay in the reduction of U.S. auto tariffs. This obviously hurts Korean exporters, but the highest price will be paid by American consumers. The provision is simply a special interest payoff to the auto industry, which already has benefited from a big federal financial bail-out. So much for bringing “change” to Washington.

Free trade is good for Americans. That means bringing down foreign trade barriers. It also means bringing down U.S. trade barriers.

FDA Expansion and the ‘Arcane’ U.S. Constitution

Last Tuesday, despite warnings of regulatory overreach, the Senate voted 73-25 in favor of S. 510, the Food Safety Modernization Act, which would greatly expand the powers of the federal Food and Drug Administration and impose extensive new testing and paperwork requirements on farmers and food producers. Almost at once, however, the bill was derailed – whether temporarily or otherwise remains to be seen – by what the New York Times called an “arcane parliamentary mistake” and the L.A. Times considered a purely “technical flaw”. Roll Call put it more bluntly: “[Senate] Democrats violated a constitutional provision requiring that tax provisions originate in the House.” While the New York Times weirdly cast Senate Republicans as the villains in the affair, other news sources more accurately reported that it was the (Democratic) House leadership that was standing up for its prerogatives:

“Unfortunately, [the Senate] passed a bill which is not consistent with the Constitution of the United States, so we are going to have to figure out how to do that consistent with the constitutional requirement that revenue bills start in the House,” [House Majority Leader Steny] Hoyer said.

According to Hoyer, this has happened multiple times this Congress, causing severe legislative angina.

“The Senate knows the rule and should follow the rule and they should be cognizant of the rule,” Hoyer scolded. “Nobody ought to be surprised by the rule. It is in the Constitution, and you have all been lectured and we have as well about reading the Constitution.”

To those familiar with the history of the U.S. Constitution, the Origination Clause should hardly count as arcane or technical. It stands as the very first sentence of Article I, Section 7: “All bills for raising revenue shall originate in the House of Representatives; but the Senate may propose or concur with amendments as on other Bills.” Behind that simple statement were centuries of history in which one of the most dearly fought battles for partisans of liberty was to secure for the more popular of the parliamentary branches, in Britain’s case the House of Commons, the “power of the purse,” that is, the power to raise public revenue through taxation. While tinkering with the exact details a bit, the framers of the U.S. Constitution would never for a moment have thought of dropping the general principle, in those days familiar as it was to every schoolchild. Thus it is that the House Ways and Means Committee, with its jurisdiction over revenue measures, descends to this day as a much more important entity on Capitol Hill than its counterpart Senate Finance Committee.

With its two-year terms of office and less populous constituencies, the House of Representatives was of course designed to be the legislative branch closest to the people, most readily thrown out of office when it strays from the public mood. Those considerations aside, the Constitution is rightly celebrated for the way its framers made the House and Senate different from each other precisely in order to ensure jealousies and dissensions between the two, those jealousies and dissensions serving as a safeguard against hasty or ill-considered legislation. In this case it worked exactly as planned, and the self-regard of the House leadership will serve as the reason for another round of scrutiny for a bill that could badly use some. Somewhere up above the spirit of James Madison may have heard the scolding words of Rep. Hoyer, and smiled.

Welcome to the Future

Chris Cardiff notes that Brad Paisley has put the libertarian optimism of Matt Ridley, Deirdre McCloskeyand me – to music in his new song and video “Welcome to the Future”:

When I was a young boy, I dreamed of having my own jukebox. Jukeboxes always had this huge selection of great songs compared to the few 45 singles I owned. And you could select whichever songs you liked just by pushing a button instead of waiting for your favorite songs to play on the radio. Of course, in my imagination I owned a standard floor-sized jukebox, not something the size of a credit card that also records video.

Brad Paisley brought back these memories with the opening lyrics of his hit song, “Welcome to the Future.” He dreamed of his own floor-sized arcade game when he was a boy – now he’s got one on his phone. “Welcome to the Future” starts with a familiar theme: technology-driven product innovation. But Paisley uses the second stanza to segue to the more profound theme of social change.

On the surface, the second stanza continues the theme of technological change as it contrasts writing letters to video conferencing. But it is really making a deeper point when you realize his grandfather wrote the letters from his base in the Philippines, where he was fighting the Japanese during World War II. Paisley illustrates the transformative power of economic freedom, when he sings that he “was on a video chat this morning, with a company in Tokyo.”  From mortal enemies to premiere trading partners in a generation.

Paisley’s final stanza evokes the most powerful image of social change. The mood changes as all the instruments are stripped away so it’s just Paisley and his guitar. I won’t spoil it for you but I will say that when I first heard this part, it gave me chills.