Topic: General

New at Cato Unbound: Robin Hanson on Creativity and Smart Machines

In his reply to Rise of the Creative Class author Richard Florida’s lead essay, George Mason economist Robin Hanson argues that creativity matters less for economic growth and the future of work than Florida thinks. According to Hanson, Florida’s emphasis on creativity distracts us from the prospect of a truly revolutionary change just over the horizon: rapidly exponential growth driven by smart machines. “An economy with intelligent machines could grow very rapidly indeed,” Hanson argues, “and induce rapidly falling human wages.” Will we be prepared if we’re busy making the Creative Class comfortable?

Show Me the Libertarianism

As Gene noted earlier, Markos “KosMoulitsas has put up an interesting big-think post over at DailyKos advancing the ideals of the “Libertarian Democrat,” about which, apparently, he is writing a book. Kos rightly points out that libertarians have very little in common with the GOP in its present incarnation. So what is to prevent libertarians from siding with the Democrats in elections? Before I delve into Kos’s answer, let me say what I think is the major barrier to a left/libertarian lovefest.

There is some evidence that personality traits predict party affiliation. For example, “openness to experience,” one of the “big five” personality traits, strongly correlates with ideological preference. According to psychologist Robert R. McCrae:

Open individuals have an affinity for liberal, progressive, left-wing political views, whereas closed individuals prefer conservative, traditional, right wing views. Indeed, a case can be made for saying that variations in experiential openness are the major psychological determinant of political polarities. [Paper abstract.]

Now, the following is far from rigorously scientific, but I think it’s pretty indicative. I have a talk on the psychology of persuasion that I’ve given to a number of libertarian groups. I’ve been giving out a short “openness to experience” quiz at the beginning (inspired by this fascinating presentation [ppt] by UVA psychologist Jonathan Haidt. ) The results? People who self-select to attend a libertarian talk about persuasion score extremely high on “openness to experience,” which predicts an audience with socially liberal preferences and largely Democratic party affiliation. But almost none of these people vote for Democrats. Why not?

Insofar as political commitment isn’t simply a matter of personality, or of reflexive adherence to what the people around you happen to believe, I think the barrier between liberals and libertarians has almost entirely to do with different answers to empirical questions about the way markets and governments function. The different syndromes of approving and disapproving sentiments about market and state characteristic of libertarians and welfare state liberals more or less follow upon these prior judgments of fact. Libertarians and liberals—classical liberals and welfare state liberals—are generally the same kind of people at the level of certain core aspects of personality that tend to influence political affiliation. The difference, then, is likely a function of the way different sets of beliefs mediate the expression of personality.

The thing that keeps me from throwing my lot in with Democrats has everything to do with their consistent underestimation of the efficacy and justice of institutions that make the most of the information carried by market prices, and their consistent overestimation of the efficacy and justice of bureaucratic political management. Love markets more, and love the state less, and libertarians may come a knockin’. A recent Pew survey reported that only 50 percent of the people they identify as libertarians either identify as or lean toward Republicans, while a healthy 43 percent identify as or already lean toward Democrats. Libertarians may be ripe for the pickin’.

Now, here’s Kos:

The problem with this form [the usual form] of libertarianism is that it assumes that only two forces can infringe on liberty – the government and other individuals.

The Libertarian Democrat understands that there is a third danger to personal liberty – the corporation. The Libertarian Dem understands that corporations, left unchecked, can be huge dangers to our personal liberties.

I think Kos underestimates just how wary of corporations libertarians generally are. Classical liberal political economy tells us that the greater the scope and power of state coercion, the stronger the incentive for economically powerful private interests, such as corporations, to use it to their own advantage, squashing competition, consolidating advantage, and channeling taxpayer dollars into corporate coffers. Libertarians have never believed in leaving corporations unchecked. The way you check corporations is by taking political power off the table.

Here is Kos’ key paragraph, which contains the real division between classical and statist liberals:

A Libertarian Dem believes that true liberty requires freedom of movement—we need roads and public transportation to give people freedom to travel wherever they might want. A Libertarian Dem believes that we should have the freedom to enjoy the outdoor without getting poisoned; that corporate polluters infringe on our rights and should be checked. A Libertarian Dem believes that people should have the freedom to make a living without being unduly exploited by employers. A Libertarian Dem understands that no one enjoys true liberty if they constantly fear for their lives, so strong crime and poverty prevention programs can create a safe environment for the pursuit of happiness. A Libertarian Dem gets that no one is truly free if they fear for their health, so social net programs are important to allow individuals to continue to live happily into their old age. Same with health care. And so on.

It’s pretty clear that Kos is pushing a program of positive liberty rather in opposition to the classical libertarian notion of liberty as non-interference. I fear that once you cash out precisely what Kos has in mind by ensuring that people aren’t “unduly exploited by employers,” whatever that means, or by “poverty prevention” and “social net programs,” we’ll discover something disappointingly like the Democratic party status quo. In which case, Kos will be simply declaring a pretty standard set of Democratic policies as “libertarian,” in defiance of the normal understanding of the term. Is this a Machiavellian attempt at the dark Lakovian arts of re-framing? Or, more hopefully, a reflection of a sincere wish to court libertarians away from a lately abusive alliance with Republicans?

If it is the latter, then simply recognizing that the 2nd Amendment is in fact part of the US Constitution and using the word ‘libertarian,’ is not going to much help Kos’ cause. As Gene did, it really is worth pointing out common ground between libertarians and the left. Nobel-winning libertarian heroes such as Friedrich Hayek and Milton Friedman have supported a tax-funded safety net, and so would I, if it was sanely designed. Now, if Democrats like Kos really meant it, and started thinking about market and government institutions in anything remotely like the way Friedman and Hayek were thinking when they proposed their minimum income policies, or started thinking about environmental policy like PERC, or threw away their silly vestigial Marxist model of agonistic employee-employer relationships — which is just to say, if Democrats actually become more recognizably libertarian— then I think the psychological evidence supports the hypothesis that personality-compatible libertarians would flock to the Democrats in droves.

But talk is cheap. So show me the libertarianism.

 

Response to Holt

My back and forth with Matthew Holt on HSAs continues…

In my previous post, I wrote that Holt’s critique of my paper made it appear that he hadn’t read the paper very closely. As I understand his response, he is “not very interested” in doing so. He is already convinced that we need “compulsory social insurance” with “incentives for providers that induce them to provide cost-efficient care.” Fair enough.

Or maybe not. Holt continues to misrepresent my views and what that paper says. He variously accuses me of believing that his owning an HSA invalidates his criticisms of HSAs; believing that health insurance is unnecessary; and having no interest in (or proposals for) reducing the burden of expensive flat-of-the-curve medicine. These and other errors could have been avoided by carefully reading my paper.

Since this exchange seems to be bearing little fruit, I will not take it much beyond the following brief summary of my actual views on these issues.

There are some medical expenditures that should not be covered by insurance. Beyond a certain point, problems of moral hazard, fraud, low-quality care, medical errors, and loss of control over one’s medical decisions tend to overwhelm the benefits of additional coverage. (This occurs whether the excess coverage comes through the private sector or the public sector, and even if the state limits supply.) Consumers do a better job than government of establishing coverage up to that point and then stopping. That argues for letting consumers control all the dollars involved, which is at the heart of my large HSAs proposal.

In other words, if you want to subsidize uninsurable medical expenses, you don’t want to do it through insurance. You would do less damage by giving them cash.

What Would You Do?

You know you haven’t done anything wrong, so you have always assumed that you have nothing to worry about from police officers and prosecutors. Maybe a remote chance of a misunderstanding, but nothing that couldn’t be quickly cleared up. After all, why would the police bother you when you do not break any laws?

Now consider the nightmare case of James Calvin Tillman.

The police arrest Tillman for rape. He asserts his innocence, but the victim says she is sure that he is the culprit. Prosecutors offer Tillman a plea bargain. If Tillman will agree to waive his right to a trial and plead guilty, the state will agree to a 8 year prison sentence. However, if Tillman declines the deal and exercises his right to a trial, the state promises to seek the maximum penalty: 45 years imprisonment.

Questions:

What do you think a guilty man would do in such circumstances?

What would you have done in those circumstances?

What do you think Tillman did?

Tillman went to trial and was found guilty. After serving 18 years in prison for doing nothing wrong, he was just released on the basis of a recent DNA test.

It is always curious how the Governor, the Mayor, the Warden, the District Attorney, and the Police Chief never seem to be on the scene when the wrongly convicted person is released from jail. Maybe they just happened to be out of town on more important business!

Anyway, some people hold the view that it is not realistic to expect perfection. They say, “What’s important here is that a tragic mistake was discovered and corrected. The system worked.” Well, yes, but does it not make sense to see how that mistake was discovered and to consider ways in which such mistakes can be avoided in the future?

If we assume that the police and prosecutors are correct 95 percent of the time, then there are 100,000 innocent people in prison. On top of that, thousands and thousands more may not be locked up, but they have acquired criminal records because they got swept up in a police investigation and no one in the government believed their story.

At the risk of sounding unsophisticated, one way to minimize the mistakes is to actually have more trials, so that an impartial jury can weigh evidence. We really don’t have trials anymore. The cases that you hear about on the news—Scott Peterson, Michael Jackson, Martha Stewart, Enron CEOs—are part of the paltry 4 percent of cases that go to trial. Our courthouses are mostly gigantic plea bargaining centers. And plea bargaining rests upon the legal fiction that the government does not retaliate against a person for exercising his constitutional right to a trial.

When a judge accepts a plea deal, he’ll ask whether the accused is pleading guilty “voluntarily.” This is a staged ceremony. No one is supposed to mention the prosecutorial threats (we’ll throw the book at you!) that will be carried out if the accused insists upon a trial.

One might say, “Tillman got a trial and look what happened to him.” True enough, but I suspect many, many more errors are buried in the plea bargaining statistics.

Let’s reduce the dishonesty and wrongful prosecutions in our system by abolishing plea bargaining.

“Libertarian Democrats”?

Blue-Team Blogfather Daily Kos has posted an ode to the “Libertarian Democrat,” a creature he sees as the possible salvation of the party:

A Libertarian Dem rejects government efforts to intrude in our bedrooms and churches. A Libertarian Dem rejects government “Big Brother” efforts, such as the NSA spying of tens of millions of Americans. A Libertarian Dem rejects efforts to strip away rights enumerated in the Bill of Rights – from the First Amendment to the 10th. And yes, that includes the 2nd Amendment and the right to bear arms.

That’s the part traditional libertarians will like best. The rest, not so much. The “libertarianism” Kos describes checks its antistatism at the door, emphasizes economic security and fears corporate power as much as state power. Though judging by Kos’s legal blogger “Pericles,” who I should thank for his or her very kind write-up of “Power Surge,” libertarians and Libertarian Democrats have some common ground on constitutional issues. See “Cato vs. Caesar.”

Does the Libertarian Democrat exist? It’s doubtful, though Kos has a few examples, including the impressive James Webb, Vietnam war hero, former Secretary of the Navy, and current Democratic challenger to Virginia Senator George Allen. But then the Libertarian Republican has been an elusive creature of late as well, judging by the GOP’s constitutional amendment fetish. The last time the flag-burning amendment came up for a vote in the House, only an even dozen Republicans voted against it, and only a couple of those could reasonably be described as “libertarian.” Neither party is a reliable friend of liberty, but any effort to move either party in the right direction ought to be applauded.

The Democratic party is quite unlikely to evolve in the direction Kos’s post suggests. But if it did, for all its flaws, it would still beat “Big Government Conservatism” any day of the week.

Death and Taxes: The Revenue Is Uncertain

The Senate votes on estate tax repeal tomorrow. Nothing gets the political emotions flowing more than “tax cuts for the rich.” The Washington Post’s Harold Meyerson recently called repeal “estate tax lunacy,” for example. But let’s look at a few points made by the Washington Post in an editorial yesterday, which opposed repeal.

1) The Post says that the revenue loss from repeal would be too large—$776 billion over 10 years starting in 2012. But that’s less than two percent of expected revenues during those years. Besides the Congressional Budget Office says that under current law the estate tax will raise $45 billion in 2012 rising to $67 billion in 2016. Thus, the Post’s figure looks exaggerated. The source appears to be the left-wing Center on Budget and Policy Priorities. Harvard’s Greg Mankiw looks at the revenue impact of estate tax repeal in his blog.

2) Under estate tax repeal, the current tax exclusion of unrealized capital gains at death would be partly ended. Thus, the government’s revenue loss under repeal would be partly offset by rising capital gains tax revenue, as I discuss in my new bulletin.

The Post says that “Congress’s Joint Committee on Taxation has analyzed this claim [about the capital gains offset] and found it empty.” Actually, it’s a huge mystery what the JCT includes in its estate tax estimates, or any of its estimates. JCT’s official estimates have a huge impact on the debate over tax policy, yet its methods and assumptions are highly secret. The public cannot find out how the JCT is dealing with capital gains in its estimates. Even members of Congress usually can’t find out how the JCT comes to its sometimes suspicious-looking numbers.

As Mankiw and other experts have noted, estate tax repeal might not lose the government any money at all, but the JCT says repeal would lose the government $290 billion over 10 years (2006-2015). It’s absurd that Congress is making a crucial decision on tax policy tomorrow, yet we cannot have an open discussion regarding the budget impact with the taxpayer-funded experts employed by Congress.

Note that the Heritage Foundation recently published an excellent book on the issue of JCT secrecy

Bloviating about “Boutique” Fuels

The House Energy & Commerce Committee held a hearing today on the subject of “boutique” fuels. Republicans are positively obsessed with this matter, convinced beyond sanity or reason that gasoline prices are high in large part because EPA is tolerating a large number of different gasoline blends around the country.

Ed Murphy, group director for downstream and industry operations at the American Petroleum Institute, gamely tried to introduce a bit of economic rationality into this debate. While there are certainly reasons to decry the proliferation of gasoline blends around the country, the recent run-up of gasoline prices has nothing to do with them. His testimony, however, apparently failed to impress Republicans according to the trade pub Greenwire.

Now, if EPA were making gasoline more expensive, I’m sure API would be the first bunch to say so. The fact that they are not speaks volumes. That is, it speaks volumes only to those interested in listening. Beating up on Greens is more important to the GOP than beating up on high prices. Having even a scintilla of evidence to back up their charges is apparently irrelevent.