Topic: Political Philosophy

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.

‘Libertarian Paranoia’ Strikes Deep?

In case you missed it, in his Bloomberg column last week, law professor and former Obama administration OIRA head Cass Sunstein offered tips on “How to Spot a Paranoid Libertarian.” They’re people who “have a wildly exaggerated sense of risks to liberty, who adopt a presumption of bad faith on the part of government, who have a sense of victimization, who ignore the problem of tradeoffs, and who love slippery-slope arguments.” I probably know some folks who resemble that remark.

In the column and a follow-up blogpost, Sunstein distinguishes between “Paranoid Libertarians” and libertarians in general, who are “speaking on behalf of an important strand in America’s political culture.” And he’s right that virtually all ideologies, libertarianism included, attract some swivel-eyed, conspiratorial adherents who use too much ALLCAPS in their emails. 

What Sunstein doesn’t have is anything resembling a case that “libertarian paranoia” is worth worrying about. In fact, beyond a few anodyne statements like “paranoia isn’t a good foundation for public policy,” he barely tries to make one.  

But, Sunstein suggests, something of what he’s getting at can be found in a 2005 paper on “Libertarian Panics” by his colleague Adrian Vermuele.

I remember that paper very well, having blogged a fairly lengthy critique of it when it came out. It hasn’t improved with age.

The basic argument is plausible enough: Vermuele holds that the same biases and cognitive flaws that can make Americans hysterical about the risk of terror can also make us hysterical about the risks of government abuse. Thus, the salience of past examples of government overreaction to security threats—like WWII Japanese Internment—could lead us to overreact to liberty threats from government in the same way we might overreact to terrorist threats to security.

But when Vermuele gets to specific examples of destructive “libertarian panics,” there’s very little there there. The paper offers two: the American Revolution and the PATRIOT Act. 

See You Next Weekend at the Students for Liberty Conference

Next weekend, February 14-16, the seventh annual International Students for Liberty Conference will be held at the Grand Hyatt hotel in Washington, D.C. Though it is now the largest annual gathering of young libertarians in country, I can remember speaking to a “large” crowd of 100 students at the first ISFLC in snowy New York City. This year more than 1,400 passionate young libertarians are expected to attend, and will bring with them smart ideas grounded in individual liberty and limited government, two concepts in short supply in our nation’s capital. 

Cato will be well represented at the conference. On the main stage, Cato CEO John Allison will offer attendees “A Philosophic Defense of a Free Society,” and I’ll present “10 Ways to Talk about Freedom.” Cato scholars will also lead breakout sessions about their areas of expertise, including a live recording of a Libertarianism.org Free Thoughts podcast. See the schedule below for more details.  Additional Cato scholars will be speaking on panels hosted by other organizations; look for them in the conference program 

If you are in the area, I hope you will plan to come out to support the next generation of liberty advocates.  You’ll likely learn something new in the process.  I encourage you to register, and be sure to stop by the Cato booth to pick up our newest research and chat with Cato representatives. 

 

Saturday, February 15    
Time Speakers Title Location
10:00 -10:30 AM John Allison A Philosophic Defense of a Free Society Main Stage
       
12:30 - 1:00 PM David Boaz Ten Ways to Talk about Freedom Main Stage
       
2:00 - 2:45 PM Julian Sanchez
Amie Stepanovich (Senior Counsel at Access)
Rise of the Surveillance State (and How to Fight It) Franklin
       
3:00 - 3:45 PM Chris Edwards
Ben Friedman
How Can Government Spending Be Cut? Franklin
       
4:00 - 4:45 PM Alex Nowrasteh
Aaron Powell
LIVE Libertarianism.org Podcast: The Philosophy of Free Immigration Franklin
       
5:00 - 5:45 PM Mike Tanner
Michael Cannon
How Government Robs the Young to Pay the Old Franklin

Kindly Inquisitors

This week Jonathan Rauch celebrates the new, expanded edition of his book Kindly Inquisitors: The New Attacks on Free ThoughtHe’s also guest-blogging at the Volokh Conspiracy, itself newly hosted at the Washington Post. In his first post, Rauch sums up a key point of his book and also why its reissue is so timely:

Over the past 20 years, the idea that minorities need protection from hateful or discriminatory speech has gained ground, both in American universities’ speech codes and in national laws abroad. In fact, I argue, minorities are much better off in a system that protects hateful or discriminatory speech than in a system that protects them from it.

Kindly Inquistors offers a moral defense of free inquiry, with a focus on how minorities fare under different approaches to controversial speech. Rauch concludes that when individuals disagree, the only proper approach is the “checking of each by each through public criticism.” 

He terms this approach liberal science, and he recommends it not just in science, but in public policy. One of the most interesting facets of Kindly Inquisitors is the way that Rauch links the free inquiry of science to the free inquiry found in liberal democratic societies; both, he argues, are also akin to the free inquiry found in capitalism.

In all these areas, free inquiry can nevertheless cause genuine harm. Why not restrict, just a bit, if it will prevent some suffering? In the book, Rauch answers:

The truth is that liberal science demands discipline as well as license… It does not give a damn about your feelings and happily tramples them in the name of finding truth. It allows and – here we should be honest – sometimes encourages offense. Self-esteem, sensitivity, respect for others’ beliefs, renunciation of prejudice are all good as far as they go. But as primary social goals they are incompatible with the peaceful and productive advancement of human knowledge. To advance knowledge, we must all sometimes suffer. Worse than that, we must inflict suffering on others.

For many, these words will not be welcome. And for a few truly loathsome people, they will be all too welcome. Undeniably, words a lot like these have been used as a pretext to hurt, which they should not be.

Yet we classical liberals have always welcomed the progress that comes from free minds, from the free exchange of ideas, and from the freedoms of travel and commerce, even if at times they bring disruption, embarrassment, or loss. In science, in public opinion, and in the marketplace, there will always be failures. And yet for a society to succeed, such failures cannot be avoided.

Our faith in mankind’s ability to find and act upon the truth is key: We trust that the process of inquiry, with its defeats as well as its victories, will bring a better and better life for us all. 

About That Coke Ad

I was among the many who misted up at the gentle, lyrical “America Is Beautiful” Coca-Cola commercial last night, but it turns out to be controversial in some circles. Former U.S. Representative Allen West called it “truly disturbing” and thinks it indicates the nation is on the “road to perdition” because it shows various participants singing portions of the song in languages other than English. He goes on to quote Theodore Roosevelt – a President closely associated with the Progressive movement, and no hero to me – that “we have room for but one language here” in America.

One irony here is that the cause of English-language assimilation is doing way, way better today than in the days when bossyboots Progressives like Teddy Roosevelt were banging on about it. It used to be that it would take three or more generations to melt away the language isolation of Finns or Norwegians in the upper midwest, Czechs in Nebraska, Quebecois in upper New England, or Deutschlanders in the parts of Pennsylvania and Maryland where German remained the predominant language long into the nineteenth century. Today, modern popular culture being the force it is, the American-born kids of native Bengali or Ukrainian speakers are likely to enjoy perfect fluency in English. 

Meanwhile, a writer at Breitbart is also upset at the ad, which not only uses “several foreign languages” but “also prominently features a gay couple.” Please no one tell him about the 25-year “Boston marriage” of Katharine Lee Bates, author of “America the Beautiful.”