Topic: Political Philosophy

Nick Gillespie and Matt Welch on the New Episode of “Free Thoughts,” the Libertarianism.org Podcast

On Free Thoughts, the newish podcast from Libertarianism.org, Aaron Ross Powell, myself, and our guests explore the deep questions in libertarian thought. Guests include philosophers, economists, other Cato scholars. Rather than focusing on current public policy issues, we try to take a deeper look at how libertarians see the world. 

Nick Gillespie and Matt Welch joined us for this week’s episode, and Jason Kuznicki filled in for Aaron. We discuss whether there is a growing movement of independents that is a cause for optimism among libertarians. Are we in for a better, more libertarian era than ever before? Or should we be skeptical of this kind of optimism, given the growth of the federal government in recent years?

You can also subscribe to the iTunes feed or the RSS.

Obama Administration Turns Antique Collectors And Dealers Into Criminals

The Obama administration is preparing to treat virtually every antique collector, dealer, and auctioneer in America as a criminal.  In the name of saving elephants, the administration is effectively banning the sale of all ivory objects, even if acquired legally decades ago.  Doing so will weaken conservation efforts and enrich those engaged in the illegal ivory trade.

Under the Convention on the International Trade in Endangered Species of Wild Fauna and Flora (CITES) only ivory from before 1989 can be sold.  Unfortunately, ivory prohibition has not stopped the slaughter of elephants. 

The greatest demand for new ivory comes from Asia.  Most ivory in America arrived legally, many years ago. 

Until now the rules were simple and sensible.  Ivory imported legally can be sold.  Moreover, the burden of proof fell on the government to convict you of violating the law.  That’s the way America normally handles both criminal and civil offenses.

However, in mid-February the administration issued what amounted to a ban on ivory sales.  As I point out in my new Forbes online column:

In practice, virtually every collector, dealer, auctioneer, and other person in America is banned from selling ivory items, even if acquired legally, owned for decades, and worth hundreds or thousands of dollars.  Every flea market, junk shop, estate sale, antique store, auction showroom, and antique show is at risk of raids, confiscations, and prosecutions.

First, no imports are allowed, not even of antiques, which before could be brought to America with a CITES certificate. 

Second, all exports are banned, except antiques (defined as over a century old) in what the Fish and Wildlife Service says are “exceptional circumstances.”  At best the administration is raising the administrative and cost burdens of exporting to countries which already limit ivory imports to items with appropriate CITES documentation.  Or the new rule may restrict the sale of items previously allowed, thereby hindering Americans in disposing of their legal collections. 

Venezuela Verifies Hayek on Exchange Controls

Foreign airlines have begun to restrict ticket sales in Venezuela. As the bolivars’ value evaporates, and with exchange controls in force, the airlines fear that the funds they have in Caracas will evaporate, too. By restricting ticket sales, the airlines will limit the amount of new money that is trapped behind the government’s wall of exchange controls.

Of course, President Nicolas Maduro isn’t the first autocrat to impose exchange controls, and he won’t be the last to impose these confiscatory policies. Indeed, the pedigree of exchange controls can be traced back to Plato, the father of statism. Inspired by Lycurgus of Sparta, Plato embraced the idea of an inconvertible currency as a means to preserve the autonomy of the state from outside interference.

So, the temptation to turn to exchange controls in the face of disruptions caused by hot money flows is hardly new.  Tsar Nicholas II first pioneered limitations on convertibility in modern times, ordering the State Bank of Russia to introduce, in 1905–06, a limited form of exchange control to discourage speculative purchases of foreign exchange.  The bank did so by refusing to sell foreign exchange, except where it could be shown that it was required to buy imported goods.  Otherwise, foreign exchange was limited to 50,000 German marks per person.  The Tsar’s rationale for exchange controls was that of limiting hot money flows, so that foreign reserves and the exchange rate could be maintained.  The more things change, the more they remain the same.

This brings me to Nobel laureate Friedrich Hayek’s 1944 classic, The Road to Serfdom. Many thought Prof. Hayek hurt his case because he was extreme. What nonsense. Just consider the Wall Street Journal’s reportage from Caracas about the real concerns of foreign airlines that have funds locked up in Venezuela. And then reflect on the following insightful analysis from the Road to Serfdom:

The extent of the control over all life that economic control confers is nowhere better illustrated than in the field of foreign exchanges. Nothing would at first seem to affect private life less than a state control of the dealings in foreign exchange, and most people will regard its introduction with complete indifference.  Yet the experience of most Continental countries has taught thoughtful people to regard this step as the decisive advance on the path to totalitarianism and the suppression of individual liberty.  It is, in fact, the complete delivery of the individual to the tyranny of the state, the final suppression of all means of escape—not merely for the rich but for everybody.

Hayek’s message about convertibility has regrettably either been overlooked, or thought to be too extreme. Exchange controls are nothing more than a ring fence within which governments can expropriate their subjects’ property. Open exchange and capital markets, in fact, protect the individual from exactions, because governments must reckon with the possibility of capital flight.

This House Does Not Believe in Hope

Happy Valentine’s Day, Washington: Netflix has a present for you. Tonight, you and your significant other can curl up on the couch with Frank and Claire Underwood, D.C.’s favorite backstabbing power couple. House of Cards, Netflix’s ridiculous (yet hard to resist) telenovela, is back. Apparently, many Hill staffers were irate that Netflix didn’t release the show early, for binge-streaming during yesterday’s snow day.

HoC’s story, focused on a Machiavellian congressman’s rise to power, isn’t heavy on verisimiltude. Like many fictional depictions of Washington, it fails to capture “the nation’s capital as the bureaucratic and constipated place that it in fact is,” as Christopher Hitchens once put it. It takes a lot of suspension of disbelief to buy into the show’s vision of a Capitol of cunning and competent schemers.

Still, some of the characterization rings true. Two decades in, this town probably would transform Princess Bride’s pure-hearted “Buttercup” into a vicious social X-ray running a phony environmental think tank. Likewise, my colleagues at Cato’s Center for Educational Freedom will probably appreciate the casting choice that led to former Sopranos hitman Mikey Palmice’s turn as a teacher’s union leader.

And overall, HoC is a major improvement over the last Beltway drama official Washington fell in love with: The West Wing, Aaron Sorkin’s unctuous Valentine to the Heroic Presidency. Sorkin built that show around the concept of an incorruptible president devoted to good works: the unbearably decent Josiah (Jed) Bartlet, a theologian-cum-Nobel laureate in economics, backed up by a staff of the most selfless, high-minded, public-spirited and charming political operators ever devised. It was altogether the throne-sniffingest portrayal of Washington imaginable.

I’ll take HoC’s Beltway Borgias over Sorkin’s Cartoon Camelot any day. As I wrote in the Washington Examiner this week: “At least ‘House of Cards’ is willing to entertain the idea that political animals aren’t angels and that ‘public service’ often deserves the scare quotes.”

Hayek: The Market and Other Orders

Volume 15 of the Collected Works of F. A. Hayek has just been published by the University of Chicago Press. This volume, edited by series editor and Hayek biographer Bruce Caldwell, is The Market and Other Orders. It contains many of Hayek’s most important papers:

  • The Use of Knowledge in Society
  • The Meaning of Competition
  • The Results of Human Action but Not of Human Design
  • Competition as a Discovery Procedure
  • The Pretence of Knowledge, his Nobel Prize lecture
  • and The Political Ideal of the Rule of Law, lectures delivered in Egypt in 1954-55 that served as early drafts of chapters 11, 12, 13, 14, and 16 of The Constitution of Liberty

That’s only the beginning in this impressive volume, which should be of interest to any Hayek scholar, and indeed any student of economics or complex social orders.

Lawrence Summers, former secretary of the Treasury and president of Harvard, said in an interview for The Commanding Heights, Daniel Yergin and Joseph Stanislaw’s 1998 study of the resurgence of economic liberalism,

What’s the single most important thing to learn from an economics course today? What I tried to leave my students with is the view that the invisible hand is more powerful than the hidden hand. Things will happen in well-organized efforts without direction, controls, plans. That’s the consensus among economists. That’s the Hayek legacy.

This volume is a great introduction to those key ideas.

 

The Tyranny of Good Intentions: How Politicians Waste Money, and Sometimes Kill People, With Kindness

If logic decided policy in Washington, federal spending would be low, the budget would be balanced, the benefits of regulations would exceed the costs, and policymakers would guard against unintended consequences.  Unfortunately, the nation’s capital is largely impervious to logic, and the tragic results are obvious for all to see.

Emotion and intention seem to have become the principal determinants of government policy.  People are poor.  Increase the minimum wage.  Not everyone can afford a home.  Create a dozen housing subsidy programs. 

As I wrote in the Freeman:

Never mind the consequences as long as the officials involved mean well and their ideas sound good.  No need to detain our leaders on white horses, who have other crusades to lead.

This widespread inability to compare consequences to intentions is a basic problem of humanity.  In fact, it’s one of the reasons the Founders desired to limit government power and constrain politicians. 

For instance, the newly created federal government possessed only limited, enumerated powers.  Even if you had weird ideas for transforming the American people, it wouldn’t do you much good to get elected president or to Congress.  The federal government wasn’t authorized by the Constitution to engage in soul-molding.

Moreover, there would be strong resistance to any attempt to expand federal power.  The constitutional system preserved abundant state authority.  Three federal branches offered “checks and balances” to abusive officials or majorities. 

Most important, the majority of Americans shared the Founders’ suspicions.  At the end of the 19th century a Democratic president still was willing to veto unemployment relief because he believed Congress had no authority to approve such a bill.

However, over the following century and more virtually every limitation on Washington was swept away.  Equally important, as faith in religion ebbed faith in politics exploded.  Today those who think with their hearts rather than their minds have largely taken control of the nation’s policy agenda.

No where has this been more destructive than in the area of poverty.  How to deal with the poor who, Christ told us, would always be with us?

As Charles Murray demonstrated so devastatingly three decades ago in his famous book, Losing Ground, ever expanding federal anti-poverty initiatives ended up turning poor people into permanent wards of Washington.  Worse, unconditional welfare benefits turned out to discourage education, punish work, inhibit marriage, preclude family formation, and, ultimately, destroy community.  It took the 1996 reforms to reverse much of the culture of dependency.

Similar is the minimum wage, which may become a top election issue this fall.  Unless businesses are charities, raising the price of labor will force them to adjust their hiring.  How many low-skilled workers will be hired if employers are told to pay more than the labor is worth?  There isn’t much benefit in having a theoretical right to a higher paying job if you are not experienced or trained enough to perform it.

There are similar examples in the regulatory field.  No one wants to take unsafe, ineffective medicines.  So the Food and Drug Administration was tasked with assessing the safety and efficacy of new compounds before they can be released.  The intention is good, but ignores the inescapable trade-off between certainty and speed. 

The rise of AIDS brought the problem into stark relief, as people faced an ugly death while the bureaucratic, rules-bound FDA denied them the one effective medicine, AZT, in order to make sure it didn’t have harmful side-effects.  Years before the agency held up approval of beta-blockers, killing people lest they suffer some lesser harm from taking the drug.

Few people in politics fail to claim to be acting for the public good.  In many cases they really believe it.  But good intentions are never enough.  Consequences are critical.  What you intend often doesn’t matter nearly as much as what you actually accomplish.

Likely Sources of Obama’s Misconceptions about Income Mobility

President Obama has been expressing inordinate alarm about differences between income groups, and about mobility between such groups over time.   “The combined trends of increased inequality and decreasing mobility,” he says, “pose a fundamental threat to the American Dream, our way of life, and what we stand for.”  

A fundamental limitation of annual income distribution figures is that income in any given year may not be at all typical of a family’s normal or lifetime income.  Job loss or illness can push one year’s income well below normal, for example, and asset sales can produce one-time windfalls. People are commonly much poorer when young than they are by middle age, after accumulating experience and savings. For such reasons, the President’s strong opinions about “decreasing mobility” could be important, if true.

We need to separate two concepts of mobility. One is intergenerational mobility – whether “a child born into poverty … may never be able to escape that poverty,” as the President put it. Another involves intertemporal mobility – whether starting with a low wage at your first job supposedly impedes moving up the ladder of opportunity.

The President’s opinion that intergenerational mobility has declined was rigorously debunked by Raj Chetty, Emmanuel Saez and others.  As for inequality and mobility being related, they also found that, “the top 1 percent share is uncorrelated with upward mobility [p. 40].” Moreover, “The fraction of children living in single-parent households is the strongest correlate of upward income mobility among all the variables we explored [p.45].”  Since other countries have fewer single-parent households, this is just one reason for being wary of facile international comparisons.

Intertemporal mobility is not about links between parents and children, but about the ease with which individuals move from a lower to a higher income group, and vice-versa.  Are we stuck with the same paycheck we had just after leaving school, or can we move up with effort, experience, learning and saving?  Did having a big gain in the stock market in 2007 ensure that would happen again in 2008-2009?

The Federal Reserve Board’s Survey of Consumer Finances (SCF) tracks income mobility of the same families over time.  It turns out that mobility is surprisingly hectic even over short periods.