Month: February 2009

The Causes of Economic Growth

President Obama proposes (unsurprisingly) to “soak the rich,” which is a flawed prescription for making the government’s ends meet, and yet another insult to the body economic.

The well-being of all Americans is best assured by a vibrant and growing economy, a necessary condition of which is the prospect of ever-greater rewards at the top end of the income scale. Leftists, in their zeal to redistribute income, aim to penalize “the rich” for being richer than the rest of us; the result is to penalize all of us by thwarting economic growth, which has these several causes:

1. Hard work

The tradeoff here is with “non-work” activities, and the tradeoff can be costly. But those who choose wisely in sacrificing non-work activities then acquire additional cash income, which can be used to offset the loss of non-work time and/or to improve the tools of one’s trade.

2. Smart work

Working smarter requires education, specialized training, and on-the-job learning. Today’s workers are (on the whole) more productive than their predecessors because the education, training, and on-the-job learning of today’s workers incorporates lessons learned by their predecessors.

3. Saving and investment

Resources that are saved (not used to produce consumption goods) can flow into investment (services and goods such as pharmaceutical research and development, advanced computer and telecommunications technologies). It is investment that enables the production of new, more, and better consumer goods with a given amount of labor. (Government investment is an inferior alternative to private investment.)

4. Invention, innovation, and entrepreneurship

These are the primary activities through which saving becomes investment, usually via the medium of financial institutions. Inventors, innovators, and entrepreneurs (along with shareholders, creditors, and financial intermediaries) accept the risks associated with failure and the rewards of success. It is the prospect of rewards that encourages invention, innovation, and entrepreneurship — and the benefits they bestow on workers and consumers. (Invention, innovation, and entrepreneurship — like work — are “socially responsible” activities because the pursuit of gain is motivated by the satisfaction of wants.)

5. Trading

If A makes bread and B makes butter — and if both prefer buttered bread — both benefit from trade. Where they produce bread and butter matters not; A and B could be neighbors, live in different parts of the United States, or one of them could live in a different country. In any event, both are made better off through voluntary exchange.

6. Population growth

Given the foregoing, a larger population means more people to work “hard” and “smart”; more output that can be saved and invested; more inventors, innovators, and entrepreneurs whose activities can be leveraged into greater per-capita output; and a multiplication of opportunities for beneficial voluntary exchange.

7. The rule of law under a minimal state

Predation — whether by individuals, mobs, or government — discourages everything that fosters economic growth. The more that government tries to direct the economy, the less it will grow and satisfy human wants.

Further reading:
Why Outsourcing Is Good: A Simple Lesson for Liberal Yuppies
Trade Deficit Hysteria
Brains Sans Borders
The Main Causes of Prosperity
Straight Thinking about Business Cycles
Understanding Economic Growth
The Population Mystery
The Economy Works, in Spite of Zany Economists
What Economics Isn’t
Why Government Spending Is Inherently Inflationary
Understanding Outsourcing
A Simple Fallacy
Ten Commandments of Economics
More Commandments of Economics
Three Truths for Central Planners
Bits of Economic Wisdom
Productivity Growth and Tax Cuts
Zero-Sum Thinking
Economist, Heal Thyself
Liberty, General Welfare, and the State
Monopoly and the General Welfare
Trade, Government Spending, and Economic Growth
Toward a Capital Theory of Value
Things to Come
And much more, here.

Are We Mortgaging Our Children’s Future?

Or, what will the “stimulus package” stimulate?

Congressional Democrats used to depict George W. Bush’s tax-rate reductions as fiscally irresponsible. The real problem, for Democrats, wasn’t that tax cuts might cause the national debt to swell. The real problem, for Democrats, was the prospect of having less money to spend on things that Democrats like to spend money on.

Now that Democrats control the White House and both houses of Congress, fiscal irresponsibility is all the rage (among Democrats). It seems that an increase in the national debt isn’t fiscally irresponsible if (a) it results from Democrat policies and (b) it’s caused not by lower taxes but by huge government spending programs.

Predictably, some Republicans have reverted to the old GOP line that deficit spending mortgages our children’s future (or some such thing).  The flaws in this assertion are exposed very nicely here, by professional economists.

However, the suggestion that the national debt represents inter-generational theft does hint at an essential truth. The burgeoning size and influence of government (which is the cause of the burgeoning national debt) amounts to theft — period:

1. Government spending (whether financed by taxes, borrowing, or money creation) commandeers resources that could have been used to produce goods and services in the private sector. Government spending diverts those resources to uses deemed “beneficial” not by producers and consumers but by politicians and interest groups.

2. Some of the commandeered resources are devoted to the payment of government employees for the purpose of making work for them, which includes the  writing and enforcement of regulations that hinder economic growth. Other resources are commandeered for the purpose of transferring purchasing power from productive members of society to less-productive and unproductive ones, thus penalizing and discouraging the traits that drive economic growth: hard work, thrift, innovation, and entrepreneurship.

3. The net effect  — near-term and long-run — is to reduce total economic output below what it could have been.

In other words, the “stimulus package” doesn’t simply “mortgage our children’s future.”  It does a lot more than that. Like all government spending that isn’t undertaken for the protection of Americans from foreign and domestic predators, the “stimulus package” mortgages our present, our future, our children’s future, and their children’s future, ad infinitum. The real problem isn’t the size of the national debt, it’s the size of government.

The best way to stimulate the economy is to reduce the tax and regulatory burdens that stifle hard work, thrift, innovation, and entrepreneurship — words that don’t seem to be in Democrats’ vocabulary. On the contrary, Democrats (Barack Obama, in particular) are bent on increasing the tax and regulatory burdens on Americans, especially those upon whom growth most depends.

As Friedrich Hayek explains, in The Constitution of Liberty,

the illusion that by means of progressive taxation the burden can be shifted substantially onto the shoulders of the wealthy has been the chief reason why taxation has increased as fast as it has done and that, under the influence of this illusion, the masses have come to accept a much heavier load than they would have done otherwise. The only major result of the policy has been the severe limitation of the incomes that could be earned by the most successful and thereby gratification of the envy of the less-well-off.

The answer to the question asked at the beginning of this post: The “stimulus package” (and other Obama initiatives) will stimulate a massive growth in the size and intrusiveness of government. Greg Mankiw agrees (here and here, for example).

Further reading:
Curing Debt Hysteria in One Easy Lesson
The Real Meaning of the National Debt
Debt Hysteria, Revisited
Why Government Spending Is Inherently Inflationary
Joe Stiglitz, Ig-Nobelist
A Simple Fallacy
Ten Commandments of Economics
Professor Buchanan Makes a Slight Mistake
More Commandments of Economics
Productivity Growth and Tax Cuts
Risk and Regulation
Liberty, General Welfare, and the State
Do Future Generations Pay for Deficits?
The Laffer Curve, “Fiscal Responsibility,” and Economic Growth
And much more, here.

Giving Back

In the latter years of my tenure at a tax-funded think-tank, our CEO established a “community service” program so that our professional staff of well-paid, mostly white, economists, mathematicians, and scientists could “give back to the community.” The “community” to which the aforementioned professionals gave “service” did not, of course, comprise well-paid, white professionals.

I am confident that the targets of our CEO’s “social consciousness” paid only a minuscule fraction of the taxes that funded the nicely appointed offices, high salaries, and generous benefits enjoyed by our professionals. “Giving back” to the “community” that actually supported them would have involved mowing lawns, tutoring, and babysitting for mostly white, middle- and upper-income professionals in other parts of the D.C. area than the one selected by our CEO as the “community” to which to “give back.”

If the services provided by our professional staff in exchange for their splendid offices, salaries, and benefits had been worth their weight in taxes, there would have been no need for those professionals to “give back” to any community. Taxpayers would have received their money’s worth, and that would have been that.

Our CEO either felt guilty about his huge office, princely salary, and obscene benefits or he thought that the think-tank wasn’t giving taxpayers fair value for their money. As he would have been the last person in the United States to admit that the think-tank wasn’t delivering fair value, I can only conclude that his yearning to “give back” arose from feelings of guilt, which he projected onto his employees — many of whom undoubtedly had similar feelings. For, even as the CEO pressed his employees to “give back,” he sought to justify the spending of more tax dollars on better quarters and higher compensation for the think-tank and its employees (himself included, of course).

Feelings of guilt aren’t confined to those who feed at the public trough, of course. CEOs and senior executives of large corporations have a good thing going for themselves — which they owe to their chummy relations with boards of directors — and they know it. Thus the impetus for private-sector “giving back.”

In summary, “giving back to the community” is either an unnecessary act — because “the community” already has received fair value for its money — or it is emblematic of guilt. In the first instance, “giving back” is really an act of charity, which comes at the expense of those who pay for a company’s products (i.e., taxpayers or consumers). In the second instance, “giving back” is really a false act of contrition and an inadequate, misdirected form of atonement for executive avarice.

Having said all of that, I must add this: In the era of bailouts that is now upon us, there is much to be said for “giving back” by bankers, U.S. auto makers, members of the UAW, and defaulting mortgagors — to name a few of the recent and prospective additions to the already vast roster of government clients. That these new clients, like their predecesssors, will not “give back” is, of course, a foregone conclusion.

Moreover, if the present regime has its way there will be some kind of “national service” program which (through tax incentives if not downright conscription) will divert resources from useful (i.e., marketable) ends to “socially conscious” (i.e., government-dictated) ones. “National service,” in other words, is assuredly not a means of “giving back.” It is, rather, a means of taking away — of stealing time and opportunities from those who are conscripted into it, of stealing money from those whose incomes are conscripted (taxed) to support it.

The End of Slavery in the United States

This post commemorates the 200th anniversary of Abraham Lincoln’s birth by revisiting two long-debated questions about the Civil War: Was it fought over the issue of slavery? Would slavery have ended in the United States, even if the Confederacy had not been defeated?

WAS THE CIVIL WAR ABOUT SLAVERY?

The war was about slavery, in a roundabout way:

  • The mainly agrarian South wanted low tariffs on manufactured goods because high tariffs meant that Southerners had to pay higher prices for manufactured goods. The North wanted high tariffs to protect its new manufacturing industries.
  • Slave labor was fundamental to Southern agrarianism. Abolition was largely a Northern phenomenon.
  • Anti-Northern feelings among Southern elites had been running high for decades. With the rise of the Republican Party, Southerners faced not only the continued prospect of Northern economic dominance but also the prospect that slavery would be abolished. The declarations of the causes of secession issued by four seceding States — Georgia, Mississippi, South Carolina, and Texas — leave no doubt that anti-abolition, pro-slavery sentiment fueled secession. Mississippi’s declaration, for example, puts this at the top of the list of reasons for secession:

    Our position is thoroughly identified with the institution of slavery– the greatest material interest of the world. Its labor supplies the product which constitutes by far the largest and most important portions of commerce of the earth.

    In sum, the election of Abraham Lincoln posed an imminent threat to the Southern “way of life,” in which slavery was an essential ingredient.

  • War was inevitable, given the South’s aversion to the North’s economic and abolitionist agenda, on the one hand, and Lincoln’s determination to preserve the Union, on the other hand.

The North’s victory in the Civil War meant an end to slavery in the United States, even though ending slavery was, in Lincoln’s view, secondary to preserving the Union. According to one account of a failed peace parley in January 1865 — an account that is somewhat disingenuous about the South’s interest in preserving slavery — Lincoln

stated that it was never his intention to interfere with slavery in the states where it already existed and he would not have done so during the war, except that it became a military necessity. He had always been in favor of prohibiting the extension of slavery into the territories but never thought immediate emancipation in the states where it already existed was practical. He thought there would be “many evils attending” the immediate ending of slavery in those states.

Be that as it may, the government of the United States did take advantage of the Civil War to eradicate slavery, first partially through the Emancipation Proclamation, then fully through the Thirteenth, Fourteenth, and Fifteenth Amendments to the Constitution.

Slavery’s demise, as a byproduct of the Civil War, raises two questions:

  • Might not slavery have ended, regardless of the Civil War or its outcome?
  • Is slavery an indelible stain on American history?

WITH RESPECT TO SLAVERY, WAS THE CIVIL WAR NECESSARY?

There are those who argue that if the North had fought the Civil War over slavery, it had fought an unnecessary war because economic forces would eventually have put an end to slavery. There are others who argue that slavery would not have succumbed to economic forces. Crucial to the debate between the two camps is the validity (or invalidity) of Robert Fogel and Stanley Engerman’s cliometric study, Time on the Cross: The Economics of American Negro Slavery (1974), which makes a case that slavery would not have succumbed to economic forces. Fogel and Engerman’s study, however, is fraught with errors. Thomas J. DiLorenzo explains some of those errors:

. . . Fogel and Engerman’s . . . reliance on . . . the price of slaves . . . as “evidence” that slavery could not have been ended peacefully is poor economics. . . . For one thing, the Fugitive Slave Act socialized the enforcement costs of slavery, thereby artificially inflating slave prices. Abolition of the Act, as would have been the reality had the Southern states been allowed to leave in peace would have caused slave prices to plummet and quickened the institutionÂ’s demise. That, coupled with a serious effort to do what every nation on the face of the earth did to end slavery during the nineteenth century – compensated emancipation – could have ended slavery peacefully. Great Britain did it in just six years time, and Americans could have followed their lead.. . .

[T]he high price of slaves . . . in 1860 created strong incentives for Southern farmers to find substitutes in the form of free labor and mechanized agriculture. It also increased the expected profitability of mechanized agriculture, so that the producers of that equipment were motivated to develop and market it in the South. This is what happens in any industry where there are rapidly-rising prices of factors of production of any kind. As Mark Thornton wrote in “Slavery, Profitability, and the Market Process” (Review of Austrian Economics, vol. 7, No. 2, 1994), by 1860 “slavery was fleeing from both the competition of free labor and urbanization towards the isolated virgin lands of the Southwest.” Gunderson does not cite any literature past 1974 on this point, so he is probably unaware of such facts.

[T]here is a difference between slave labor being “efficient” for the slave owner and its effect on society as a whole. Of course slavery was profitable to slave owners. This government-supported system helped them confiscate the fruits of the slaves’ labor. But since slave labor is inherently less efficient than free labor, and since so many resources had to be devoted to enforcing the system — most of which were the result of government interventions such as the Fugitive Slave Act, mandatory slave patrol laws, and laws that prohibited manumission — the system imposed huge burdens (”dead weight loss,” in the language of economics) on the rest of society. Free laborers and non-slave owners in the South (at least 80 percent of the adult population) were the primary victims of these government-imposed costs, and would have been a natural political constituency for their eventual abolition. As Hummel concluded, “In real terms, the entire southern economy, including both whites and blacks, was less prosperous” overall because of slavery.

There was net internal migration from South to North, confirming the fact that free laborers in the South were also indirectly exploited by the slave system which forced them into lower-paying jobs. . . .

DiLorenzo — an anarcho-libertarian who despises Abraham Lincoln and is rabidly pro-secession (column archive) — may strike you as a biased source, even though he seems to have facts and logic on his side, in this instance. But we need not rely on DiLorenzo. Fogel and Engerman’s thesis has been attacked, on its merits, from many quarters. Here, for example, are excerpts of a review essay by Thomas L. Haskell, “The True and Tragical History of ‘Time on the Cross’ ” (fee required), from The New York Review of Books (October 2, 1975):

The flaws of Time on the Cross are not confined to its parts but extend to its conceptual heart: the efficiency calculation. No finding raised more eyebrows than the dramatic claim that slaves, through their personal diligence and enthusiastic commitment to the work ethic, made southern agriculture 35 percent more efficient than the family farms of the North. My own nonspecialist’s doubts about this contention . . . have been amply confirmed (and superseded in expertise and weight of evidence) by the work of a half-dozen economic historians.

Fogel and Engerman should have known from the beginning that any comparison of regional efficiency in the antebellum period was fraught with breathtaking difficulties. The basis for their comparison, a rather controversial economist’s tool known as the “geometric index of total factor productivity,” gives results whose interpretation is debatable in even the most conventional applications. . . .

Since the index is based on market value it reflects not only the performance of producers (which is what we have in mind when we talk about productive efficiency) but also the behavior of consumers, whose eagerness for the product helps to determine its market value. Consumer behavior is clearly irrelevant to productive efficiency and the index is misleading to the extent that it is influenced by this factor.

In short, the index is sensitive to demand: if two producers organize their work in equally rational ways, work equally hard, and even produce equal amounts of physical output, the so-called “efficiency” index may nonetheless rank one producer more “efficient” than the other because his product is in greater demand. As David and Temin observe, this is not the accepted meaning of “efficiency.”

Given the sensitivity of the index to demand and the heavy demand for the South’s principal crop, cotton, the index by itself is utterly incapable of justifying the chief inference that Fogel and Engerman drew from it—that slaves must have been hard-working Horatio Alger types and their masters skilled scientific managers. Gavin Wright confirms that the efficiency gap has more to do with voracious consumer demand for cotton than with any Herculean feats of productivity by southern producers. . . .

The bias introduced by cotton demand is only the most obvious of the flaws in the efficiency calculation. Even apart from the inherent frailties of the index in this especially difficult application, Fogel and Engerman’s use of it rests on some extremely dubious assumptions. The choice of 1860 as a typical year for measurement has been sharply questioned. So has the authors’ proposition that an acre of northern farmland was on average 2.5 times better in quality than southern farmland. This extraordinary assumption alone is enough to guarantee a finding of southern superiority in productivity. . . .

Lance Davis of the California Institute of Technology, a prominent cliometrician, singled out the efficiency calculation as the least plausible argument of a generally unpersuasive book. He estimated that Fogel and Engerman’s chances of successfully defending the efficiency finding were about one in ten. This is a telling judgment from the man who introduced the term “New Economic History,” who once called Fogel’s railroad study a “great book,” and who even crowned Fogel himself as “the best” of the cliometricians nine years ago. The efficiency calculation has been closely scrutinized not only by Davis, Wright, Temin, and Paul David, but also by Stanley Lebergott of Wesleyan, Harold Woodman of Purdue, Jay Mandle of Temple, and Frank B. Tipton, Jr. and Clarence E. Walker, both of Wesleyan. No one has a kind word to say for it.

Haskell certainly wasn’t offering an apology for slavery or for any other form of oppression. Nor am I. Slavery was evil, but it existed. The question facing our forbears was how best to eradicate it and then improve the lot of those who had been enslaved. With the advantage of hindsight a case can be made that America’s blacks would be better off today if their ancestors had been freed and integrated into society voluntarily — through economic forces if not social ones. But that is merely hindsight. Regardless of Lincoln’s motivation for prosecuting the Civil War, that war brought an end to slavery. And that — thankfully — is that.

Moreover, Lincoln-hater DiLorenzo gives us good reason to believe that slavery would have died hard in the South. DiLorenzo wants the best of both worlds. He wants to prove that the Civil War was not fought (by the North) because of slavery, and also to prove that the Civil War was fought (by the North) unnecessarily because economic forces would have put an (eventual) end to slavery. The second proposition is inconsistent with the first. DiLorenzo’s inconsistency arises because he is a pro-secessionist who also has the good grace to oppose slavery. He must therefore resort to alternative history in order to justify his secessionist views. His alternative history (sampled above) is that economic forces would have brought an end to slavery in the South, absent the Civil War. But would they have done so? Perhaps eventually, but not for an unconscionably long time.

Economic forces arise from human nature. One facet of human nature is a “taste” that manifests itself in the oppression of “inferior” races (e.g., blacks, Jews, Tutsis, Hutus). Such a “taste” can override “rational” (i.e., wealth-maximizing) forces. The post-Civil War history of race in the South suggests very strongly that slavery would have died hard in the South. Thomas Sowell examines a slice of that history:

The death of Rosa Parks has reminded us of her place in history, as the black woman whose refusal to give up her seat on a bus to a white man, in accordance with the Jim Crow laws of Alabama, became the spark that ignited the civil rights movement of the 1950s and 1960s.

Most people do not know the rest of the story, however. Why was there racially segregated seating on public transportation in the first place? “Racism” some will say — and there was certainly plenty of racism in the South, going back for centuries. But racially segregated seating on streetcars and buses in the South did not go back for centuries.

Far from existing from time immemorial, as many have assumed, racially segregated seating in public transportation began in the South in the late 19th and early 20th centuries.

Those who see government as the solution to social problems may be surprised to learn that it was government which created this problem. Many, if not most, municipal transit systems were privately owned in the 19th century and the private owners of these systems had no incentive to segregate the races.

These owners may have been racists themselves but they were in business to make a profit — and you don’t make a profit by alienating a lot of your customers. There was not enough market demand for Jim Crow seating on municipal transit to bring it about.

It was politics that segregated the races because the incentives of the political process are different from the incentives of the economic process. Both blacks and whites spent money to ride the buses but, after the disenfranchisement of black voters in the late 19th and early 20th century, only whites counted in the political process.

It was not necessary for an overwhelming majority of the white voters to demand racial segregation. If some did and the others didn’t care, that was sufficient politically, because what blacks wanted did not count politically after they lost the vote.

The incentives of the economic system and the incentives of the political system were not only different, they clashed. . . .

The “incentives of the political system” — a “taste” for racial oppression, in other words — dominated Southern politics until the 1960s. And that was in a defeated South. The determination of Southern political leaders to defend slavery in the first place, and then to salvage the remnants of slavery through Jim Crow, is strong evidence that economic forces might not have been allowed to operate freely in the South, at least not for a long time. The evil (take note, Mr. DiLorenzo) was to be found in Southern political leaders, not in the White House.

Opponents of slavery, unarmed as they were with “sophisticated” (and flawed) cliometric techniques, saw the evil in slavery and eradicated it when they had the opportunity to do so. Uncertain gradualism in the defense of liberty is no virtue. Opportunistic abolitionism in the defense of liberty is far from a vice.

THE STAIN OF SLAVERY

The fact that slavery existed in the United States for so long is taken by some — especially those of the Left, here and abroad — as evidence that white-male-capitalist-dominated-America is evil incarnate. But slavery in the United States was ended when white, male capitalists still dominated America, whereas slavery still exists in non-white areas of the world.

Strident critics of the United States nevertheless persist in saying that the existence in the United States of slavery (or any other “evil,” real or imagined) means that the U.S. was and is no better than, say, the fascistic Third Reich. (Leftists don’t like to remind us about the longer-lived and equally fascistic USSR.) Such assertions studiously ignore the fact that most Americans always have been freer than the subjects of Hitler and Stalin. The economic forces that could eventually have brought an end to slavery in the United States would not have been allowed to operate in Nazi Germany or the Soviet Union — or in Communist China, Cuba, Saddam’s Iraq, North Korea, and other dictatorial regimes of the kind that Leftists often have defended and even idealized as “progressive” and even “freedom-loving.” Nor should it go without notice that Nazi Germany and the USSR met their demise at the hands of the “militaristic” United States.

It is supremely ironic that Leftists — who like to attack the United States as “fascistic” and “militaristic” — are proponents of government interventions in private affairs that are confiscatory and stifling in their effects on economic output. All working persons in the United States — and all who depend on them — are in thrall to the “plantation owners” who run our affairs from the Capitol in Washington, the various State capitols, and sundry municipal buildings. The Left applauds that thralldom and agitates for its intensification.

Yes, the fact that slavery existed in the United States for so long is a stain on the history of the United States, but it is not an indelible stain. To err is human, which must come as news to the Left, with its penchant for judging its enemies (mainly conservative, white, American males) by superhuman standards of conduct, while seeking to impose its utopian social and economic order through the power of the state. The Left’s cynicism stands in stark contrast to the vision of the Framers, who sought “a more perfect Union” by enabling the free exchange of ideas and goods.

On Liberty

This inaugural post is in two parts: “What Liberty Is Not” and “What Liberty Is.” This post is a springboard for future posts, which will explore politics, economics, and their interplay from a libertarian-conservative perspective.

WHAT LIBERTY IS NOT

Who can doubt that many people have forgotten, for very obvious reasons, Mill’s qualifications of personal sovereignty, namely that it applies to conduct that “merely concerns himself”?

Theodore Dalrymple, In Praise of Prejudice:
The Necessity of Preconceived Ideas

Liberty is not license, as the saying goes, for what should be an obvious reason: Unrestrained behavior is bound, at some point, to intrude on those who do not wish to partake of it, or its consequences. The intrusion may be direct, as in the case of a wild party that devolves into a brawl and thence to the destruction of property. Or the intrusion may be indirect, as in the gradual weakening of social norms that had contained (if not stifled) licentious behavior and, therefore, its consequences.

Nor is liberty found in anarchy, which is an open invitation to thuggery. This is true even in free-market anarchism, a Utopian scheme in which the state is replaced by private institutions offering police protection, justice, and other defense services. There is nothing in free-market anarchism to prevent contractual bargains of the vilest sort: murder by the low bidder, for example. Who could stand in the way of such a contract and its execution if the parties to it can summon more force than any objector?

John Stuart Mill, in On Liberty (1869), preaches neither license nor anarchy, or so it seems. He offers a deceptively benign description of liberty:

It comprises, first, the inward domain of consciousness; demanding liberty of conscience, in the most comprehensive sense; liberty of thought and feeling; absolute freedom of opinion and sentiment on all subjects, practical or speculative, scientific, moral, or theological. The liberty of expressing and publishing opinions may seem to fall under a different principle, since it belongs to that part of the conduct of an individual which concerns other people; but, being almost of as much importance as the liberty of thought itself, and resting in great part on the same reasons, is practically inseparable from it. Secondly, the principle requires liberty of tastes and pursuits; of framing the plan of our life to suit our own character; of doing as we like, subject to such consequences as may follow: without impediment from our fellow-creatures, so long as what we do does not harm them, even though they should think our conduct foolish, perverse, or wrong. Thirdly, from this liberty of each individual, follows the liberty, within the same limits, of combination among individuals; freedom to unite, for any purpose not involving harm to others: the persons combining being supposed to be of full age, and not forced or deceived.[1]

That description, strangely, follows Mill’s prescription for the realization for liberty, which is his “harm principle” beloved of both libertarians and modern liberals. It is as if Mill began with the harm principle in mind, then concocted a description of liberty to justify it. The “devil,” in this case, lies not in the details but in the harm principle:

That principle is, that the sole end for which mankind are warranted, individually or collectively in interfering with the liberty of action of any of their number, is self-protection. That the only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others.[2]

Given the individualistic thrust of this passage and the surrounding text, the only plausible interpretation of the harm principle is as follows: An individual may do as he pleases, as long as he does not believe that he is causing harm to others.[3] That is Mill’s prescription for liberty. It is, in fact, an invitation to license and anarchy.

Libertarians and liberals, even those who claim to reject license and anarchy, embrace the harm principle, for all of its simple-mindedness. Theodore Dalrymple writes:

It has long been an objection to Mill that, except for the anchorite in the Syrian desert who subsists on honey and locusts, no man is an island (and even an anchorite may have a mother who is disappointed by her son’s choice of career); and therefore that the smallest of his acts may have some impact or consequences for others. If one amends the [harm] principle to take that part of a man’s conduct that concerns principally himself, rather than only himself, one will be left with endless and insoluble disputes as to which part of his conduct that is….

But, as the great historian Lord Acton said, “Ideas have a radiation and development, an ancestry and posterity of their own, in which men play the part of godfathers and godmothers more than that of legitimate parents.” Who can doubt that many people have forgotten, for very obvious reasons, Mill’s qualifications of personal sovereignty, namely that it applies to conduct that “merely concerns himself”?[4]

The main appeal of On Liberty to libertarians and modern liberals is Mill’s defense of conduct that (in his view) only offends social norms:

Society can and does execute its own mandates: and if it issues wrong mandates instead of right, or any mandates at all in things with which it ought not to meddle, it practises a social tyranny more formidable than many kinds of political oppression, since, though not usually upheld by such extreme penalties, it leaves fewer means of escape, penetrating much more deeply into the details of life, and enslaving the soul itself. Protection, therefore, against the tyranny of the magistrate is not enough: there needs protection also against the tyranny of the prevailing opinion and feeling; against the tendency of society to impose, by other means than civil penalties, its own ideas and practices as rules of conduct on those who dissent from them; to fetter the development, and, if possible, prevent the formation, of any individuality not in harmony with its ways, and compel all characters to fashion themselves upon the model of its own. There is a limit to the legitimate interference of collective opinion with individual independence: and to find that limit, and maintain it against encroachment, is as indispensable to a good condition of human affairs, as protection against political despotism.[5]

Thus Mill rejects the enforcement of social norms, “except [in] a few of the most obvious cases,”[6] by either the state or “society.” Lest anyone mistake Mill’s position, he expands on it a few paragraphs later:

These are good reasons for remonstrating with [a person who acts contrary to social custom], or reasoning with him, or persuading him, or entreating him, but not for compelling him, or visiting him with any evil [including social censure] in case he do otherwise. To justify that, the conduct from which it is desired to deter him, must be calculated to produce evil to some one else. The only part of the conduct of any one, for which he is amenable to society, is that which concerns others. In the part which merely concerns himself, his independence is, of right, absolute. Over himself, over his own body and mind, the individual is sovereign.[7]

In Mill’s usage, “calculated” means “intended.”[8] By that logic, which is implicit throughout On Liberty, an individual is except in “a few of the most obvious cases” a law unto himself, and may do as he pleases as long as he believes (or claims to believe) that his conduct is not harmful to others.

Mill’s bias against the enforcement of social norms, in all but a few “obvious cases” (murder? theft? rape?), ignores the civilizing influence of those norms. That influence is of no account to Mill, as Dalrymple explains:

For Mill, custom is an evil that is the principle obstruction to progress and moral improvement, and its group on society is so strong that originality, unconventionality, and rebellion against it are goods in themselves, irrespective of their actual content. The man who flouts a convention ipso facto raises society from its torpor and lets everyone know that there are different, and better, ways of doing things. The more such people there are, the greater the likelihood of progress….

Of radical evil, in which the [twentieth] century was to abound, [Mill] has nothing to say, and therefore he had no idea that a mania for progress could result in its very antithesis, or that some defense against such radical evil, of which the commission was not possible without the co-operation and participation of many men, was necessary. The abandonment of customary restraint and inverted moral prejudice was not necessarily followed by improvement.[9]

There is a high price to be paid for the blind rejection of long-standing social norms, whether by individuals, organized groups, legislatures, or courts wishing to “do their own thing,” exact “social justice,” make life “fair,” or just “shake things up” for the sake of doing so. The price is liberty.

WHAT LIBERTY IS

A man at liberty is a person neither in chains, under confinement, nor intimidated like a slave by the fear of punishment…. [T]o consider inability of soaring to the clouds like the eagle, of living under the water like the whale, of making ourselves king or pope, as a want of liberty, would be ridiculous.

Claude Adrien Helvétius, Essays on the Mind and Its Several Faculties

License and anarchy, even in John Stuart Mill’s deceptive packaging of them, are antithetical to liberty. For it is the general observance of social norms that enables a people to enjoy liberty, which is:

peaceful, willing coexistence and its concomitant: beneficially cooperative behavior

That, simply stated, is liberty or something as close to it as can be found on Earth. It encompasses the Founders’ three desiderata “Life, Liberty, and the pursuit of Happiness” thusly:

Liberty is impossible without life, or where one lives in constant fear of one’s life.

Liberty therefore requires peaceful coexistence with one’s fellows, even if it must be ensured by force of arms.

Liberty is meaningless unless all are able to pursue happiness, that is, to cooperate (as they will) in mutually beneficial undertakings.

True liberty must be “ordered liberty,” in that it cannot arise from license or anarchy, as prescribed by Mill or his more radical progeny (e.g. Murray Rothbard). Nor can liberty arise from modern liberalism, which has been diagnosed, quite rightly, as a superficially benign kind of fascism.[10]

Mill’s prescription for the attainment of liberty the harm principle focuses on what the individual may do. Anarchists and Objectivists seize on Mill’s prescription because they are preoccupied with individualism, as opposed to liberty, a concept they invoke ritually without understanding it. Liberals pay lip service to Mill’s prescription because it seems to justify unfettered pursuit of their personal preferences (whatever those might be). Liberals then demonstrate their lack of principle by contradictorily and unabashedly using the state to impose their preferences on others, especially for the adolescent thrill of subverting social norms. (I include big-government and national-greatness “conservatives” in that indictment; they are nothing but liberals with a different agenda.)

A valid prescription for the attainment of liberty focuses on what liberty is, and the proper role of the state in securing it. Liberty, as I describe it, requires four things:

  • the general observance of social norms and, accordingly, their enforcement through social censure;
  • an accountable, minimal state, dedicated to the protection of its citizens;
  • voice, the opportunity for dissent from social norms and laws (though not the right to have one’s dissent honored); and
  • exit, the right to leave one’s neighborhood, city, State, or country without prejudice.

I will have more to say about those four points in future posts. Here, I will say a bit more about the role of the state, which is important to the effectiveness of my prescription for liberty The state’s proper role is negative, in the main. The state may not:

  • tax citizens more than is necessary to protect them from enemies, foreign and domestic;[11]
  • enable predatory or parasitic behavior among the populace;[12]

  • compel anyone to observe social norms, except those that the state enforces for the protection of all citizens;
  • interfere in the voluntary evolution or operation of social norms, except as those might impinge on voice or exit;
  • bar exit or impose a cost on it, except as necessary to execute justice and defend the nation; or
  • consistently overstep its rightful authority.

Consistent violation of rightful authority exposes the state to overthrow by political action or rebellion, as necessary.

If that prescription seems familiar, it is because of its provenance in the Declaration of Independence and United States Constitution.

It is true that the power of the state is prone to abuse. And the state must sometimes act against the preferences of some citizens (even a majority of them), for not everyone can agree at all times about the proper and necessary scope of state action in matters of justice and defense. But the state is a necessary bulwark against anarchy. The relevant issue is not whether to empower a state but how much power to give it and how to contain that power.

Reflexive opposition to the idea of the state is not libertarian; it is Utopian. The issue is not whether to have a state, but how to harness it in the service of liberty.


[1] On Liberty (1869), Chapter I, paragraph 12. (All citations of On Liberty refer to the version at Bartleby.com: http://www.bartelby.com/130/index.html.)

[2] On Liberty (1869), Chapter I, paragraph 9.

[3] As I show below, I am not misreading the quoted passage.

[4] In Praise of Prejudice: The Necessity of Preconceived Ideas (2007), pp. 44-5.

[5] On Liberty, Chapter I, paragraph 5. See also Chapter IV: On the Limits to the Authority of Society over the Individual, paragraph 3.

[6] On Liberty. Chapter I, paragraph 6.

[7] On Liberty, Chapter I, paragraph 9.

[8] See, for example, Mill’s use of “calculated” in Chapter IV, paragraph 19.

[9] In Praise of Prejudice, pp. 57-8.

[10] See, for example, Jonah Goldberg’s Liberal Fascism (2007).

[11] This allows a few (and only a few) positive acts on the part of the state: the maintenance and use of national-defense forces, the administration of justice through police and courts.

[12] There are predators other than murderers, thieves, etc. There are, for example, those who would use the coercive power of the state (e.g., legal bans on smoking in private establishments, licensing laws) to deny liberty to others, sometimes on behalf of parasites. Parasites benefit from coercive power state power, and depend on it instead of depending on their own efforts. Parasites, who can be classes of individuals or corporations, benefit from such things as affirmative action, income redistribution and regulatory protection from competitors.

[13] Voice does not include such acts as subornation, incitation, or treason, which undermine defense and justice. And no one, not even members of the press, should be shielded from prosecution for such acts.