redistribution

More about Luck and Baseball

In “Luck and Baseball, One More Time,” I make the point that

it takes a lot more than luck to succeed at almost anything, from winning high office to making millions of dollars to painting a masterpiece to building a house to cutting hair properly. To denigrate the rich and famous by calling them lucky is to denigrate every person who strives, with some success, to overmaster whatever bad luck happens to come his way.

The backdrop for that claim is some statistical evidence from the history of major-league baseball:

In the 111-year history of the American League, 60 different players have led the league in batting. Those 60 players have recorded a total of 367 top-10 finishes in American League batting races over the years — an average of 6 top-10 finishes for each of the players. It is not surprising, therefore, that most of the 60 players also compiled excellent career batting averages. Specifically, through 2010, 57 of the 60 had made at least 5,000 plate appearance in the American League, and 43 of the 57 are among the top 120 hitters (for average) — out of the thousands of players with at least 5,000 plate appearances in the American League. Were those 43 players merely “lucky”? It takes a lot more than luck to hit so well, so consistently, and for so many years.

Here is more evidence to the same effect. Two days ago, a young pitcher for the Chicago White Sox named Philip Humber threw a perfect game against the Seattle Mariners. Humber’s was the 19th perfect game since 1893, when the distance from the pitcher’s plate (rubber) to the back point of home plate (where the foul lines intersect) was increased to 60 feet, 6 inches. The 19 perfect games were pitched by 19 different men. And the total number of major league games played from 1893 through today numbers well above 300,000, which means that the potential number of perfect games (if thrown by both teams’ pitchers) is well above 600,000.

Aha, you might say, a perfect game is a matter of luck. Well, it may be partly a matter of luck, but baseball (despite some elements of randomness) is a game of skill, applied intentionally. A perfect game, like many other aspects of baseball, is the residue of the applied skills of pitchers and fielders, just as (the prevalent) imperfect game is the residue of the applied skills of batters and base runners.

The element of skill involved in pitching a perfect game is evidenced by the fact that most of the players who have pitched perfect games are the holders of above-average to exceptional pitching records:

Career Record*
Year of perfect game Pitcher Seasons played Wins Losses W-L % ERA+** Hall of Fame?***
1904 Cy Young 1890-1911 511 316 .618 138 Yes
1908 Addie Joss 1902-1910 160 97 .623 142 Yes
1922 Charlie Robertson 1919-1928 49 80 .380 90 No
1956 Don Larsen 1953-1967 81 91 .471 99 No
1964 Jim Bunning 1955-1971 224 184 .549 114 Yes
1965 Sandy Koufax 1955-1966 165 87 .655 131 Yes
1968 Catfish Hunter 1965-1979 224 166 .574 105 Yes
1981 Len Barker 1976-1987 74 76 .493 94 No
1984 Mike Witt 1981-1993 117 116 .502 105 No
1988 Tom Browning 1984-1995 123 90 .577 98 No
1991 Dennis Martinez 1976-1998 245 193 .559 106 No
1994 Kenny Rogers 1989-2008 219 156 .584 108 Not yet eligible
1998 David Wells 1987-2007 239 157 .604 108 Not yet eligible
1999 David Cone 1986-2003 194 126 .606 121 No
2004 Randy Johnson 1988-2009 303 166 .646 136 Not yet eligible
2009 Mark Buehrle 2000- 162 121 .572 120 Active player
2010 Dallas Braden 2007- 26 36 .419 102 Active player
2010 Roy Halladay 1998- 191 93 .673 139 Active player
2012 Philip Humber 2006- 12 10 .545 110 Active player
Combined W-L 3319 2361 .584
* Through April 22, 2012.
** Earned run average adjusted for ballpark and the league’s mean ERA in each season. An ERA+ of 100 is therefore an average performance over a career; ERA+ >100 is above average; ERA+ <100 is below average. (Details here: http://en.wikipedia.org/wiki/ERA%2B.)
*** Membership in the Hall of Fame is noted for the sake of completeness, though it is not conclusive proof of greatness. (See: http://libertycorner.blogspot.com/2006/10/anti-hall-of-fame-and-baseball.html; http://libertycorner.blogspot.com/2007/12/hall-of-famers.html.)

The point of this excursion into baseball is stated in an old post of mine:

A bit of unpredictability (or “luck”) here and there does not make for a random universe, random lives, or random markets. If a bit of unpredictability here and there dominated our actions, we wouldn’t be here to talk about randomness….

Human beings are not “designed” for randomness. Human endeavors can yield unpredictable results, but those results do not arise from random processes, they derive from skill or the lack therof, knowledge or the lack thereof … , and conflicting objectives…

In baseball, as in life, “luck” is mainly an excuse and rarely an explanation….

Related posts:
Fooled by Non-Randomness
Randomness Is Over-Rated
Luck-Egalitarianism and Moral Luck
Luck and Baseball, One More Time

Liberty, Negative Rights, and Bleeding Hearts

Liberty rights are represented in the Founders’ trinity of “unalienable Rights“: “Life, Liberty, and the pursuit of Happiness.” These really constitute a unitary right, which I simply call liberty. The liberty right is unitary because liberty (as a separate right) is meaningless without life, and liberty implies the latitude to pursue happiness.

Libertarians, for the most part, think of liberty as the enjoyment of the negative right to be left alone in one’s peaceful pursuits, that is, the right not to be robbed, attacked, murdered, and so on. But in a society or polity that values and enables liberty, the right to be left alone is only half the story.

The right to be left alone is the negative sub-rule of the Golden Rule, a good formulation of which is “One should treat others as one would like others to treat oneself.” That formulation implies a positive sub-rule, which could be stated as “Be kind and charitable to others, and they (or most of them) will be kind and charitable to you.”

The positive sub-rule is prudential, not mandatory. But that does not lessen its importance, for liberty cannot prevail absent widespread observance of the positive sub-rule. Such observance creates the conditions of mutual trust and respect that foster mutual forbearance, that is, leaving others alone in their peaceful pursuits. (For more in this vein, see Richard Epstein’s refutation of the view that libertarianism is all about “me” in “No ‘Sachs Appeal’,” Defining Ideas (a Hoover Institution journal), January 24, 2012.)

Let me be clear about the applicability of the Golden Rule in an ideal libertarian society or polity: Both sub-rules — negative and positive — are to be observed voluntarily. But one of them — the negative sub-rule — may be defended by force. Observance of the positive sub-rule may not be coerced, however, because that would violate the negative sub-rule.

The negative sub-rule must be defended because negative rights will not always be respected, human nature being what it is. On the issue of how to defend negative rights, libertarians split into two camps: anarchists and minarchists. These two camps differ about the necessity of the state, which is an independent entity and not an agent of particular members (or groups of members) of a society or polity.

Anarchistic libertarians maintain that negative rights can and should be defended without the intervention of a state. In the anarchistic view, individuals and groups of individuals can contract with each other about rules of interpersonal behavior, and can empower agents to enforce the rules.

Minarchistic libertarians (or this one, at least) maintain that the existence of agents who are empowered by various members of a society or polity is nothing more than warlordism, wherein might makes right. To say that no one would use force to do more than defend one’s negative rights is to make a patently false claim about human nature. (Anarchists, after all, acknowledge the necessity of self-defense.) Minarchists therefore believe that a state should be created and empowered specifically, and exclusively, for the purpose of defending negative rights. Such a state must be generally accountable to the populace, and it must have no power other than to protect the populace from harm. (For more about anarchists, minarchists, and the inevitability of the state, go here.)

Minarchists, nevertheless, tend toward a superficial view of the state’s minimal role, namely, that the job of the state is to see that everyone is left alone, as long as his pursuits are peaceful. That is, the job of the state is to enforce the negative sub-rule of the Golden Rule. So far, so good. Even an anarchist might go along with the idea of such a state.

But here is the rub. What are peaceful pursuits, that is, pursuits which do not harm others?  Who defines them? It cannot be everyone for himself; A’s peaceful pursuit may be a nuisance (or worse) to B.

In sum, harm cannot be defined willy-nilly by individuals, nor is it the abstraction that most libertarians make it out to be with their simplistic invocation of the “harm principle.” Rather, the definition of harm must reflect broad agreement about the rules of interpersonal behavior: social norms. Those norms are not mere abstractions; they are specific rules about permissible and impermissible acts. (Caution to readers: Do not mistake state-imposed rules for social norms, though some state-imposed rules may reflect social norms.)

Like it or not, evolved social norms constitute the foundation of a libertarian society based on mutual trust and respect. And if those evolved social norms specifically proscribe such “libertarian” causes as abortion and homosexual “marriage,” where does that leave the typical “libertarian”? It leaves him wanting to repudiate or overturn social norms, without regard for the effects of doing so on social comity. (See this and this, for example.)

But the ranks of “libertarians” also number a strange breed, often self-described as left-libertarian.  These “libertarians” actively root for the violation of negative rights in the cause of “social justice.” What is “social justice”? The short answer is that it is whatever anyone wants it to be, but it is never restricted to the enforcement of negative rights. The term “social justice” may be taken confidently as code for the enforcement of positive rights by a coercive state.

Left-libertarians will jump through hoops, turn somersaults, and stand on their heads to deny that they favor the enforcement of positive rights by a coercive state. But they do. A post by Kevin Vallier (one of the Bleeding Heart Libertarians) exemplifies their acrobatics:

Libertarians Great and Small (LGS): At some point in the future a group of committed libertarians establish a libertarian free zone called Libertarian Paradise. In LP, all property is acquired and transferred in line with traditional self-ownership political theory. Deviations from these norms are quickly corrected by private and non-profit legal organizations (call them the Cops).

…Due to LP’s unbridled capitalism, its economy booms, making its inhabitants spectacularly wealthy, so much so that charity easily provides for its poorest citizens.

However, through no one person or group’s deliberate action, prosperity ebbs. Perhaps because of resource depletion, climate change or natural disaster, a class of individuals becomes systematically deprived of basic resources (call them the Small). But while they are regularly hungry, they do not starve. And while they cannot secure many basic health resources, they do not die from easily preventable diseases. However, their poverty substantially sets back their well-being.

But the trouble in LP strikes the best-off as well (call them the Great). They too grow poorer, though they remain very well-off, more than wealthy enough to maintain a high standard of living. Yet they no longer feel secure enough to donate to charity. While the Great continue to donate to charity, LP’s charitable institutions no longer have sufficient resources to adequately provide for the Small….

At first the Small petition the Cops to require the Great to pay higher service fees and to use the proceeds to provide a social safety net. But the Cops reject the Small’s petitions for fear of offending their Great clientele.

Eventually the Small grow tired of petitions and begin to occupy local banks, demanding that a small portion of the fortunes of the Great be used to provide the Small with enough food and medical care to be able to get on with their lives. The Small do so non-aggressively, organizing a poor people’s campaign to nonviolently resist LP’s property regime.

But the Great are frustrated. After all, they still give to charity and they too have grown poorer. So the Great demand that the Cops coercively remove the Small from their local banks on the grounds that the Small are violating the self-ownership principle. The Cops comply.

The Small resent the coercion and complain that it is unjustified because they are merely trying to secure basic resources for them and their children. The Cops, acting on behalf of the Great, violently prevent the Small from securing a minimally decent future for themselves and their offspring.

Vallier maintains that

Traditional libertarianism solidly endorses the coercive actions of the Cops. The Cops and their Great clients may be insufficiently benevolent but they act justly.

But social justice libertarians (Strong BHLs) have a different reaction. On their view, the Small are not criminals. In fact, their demands are justified. First, the Small have only occupied local banks after petitioning the Cops to charge higher fees. Second, by occupying local banks, the Small are merely asking the Great to provide them with a very mild safety net that, if institutionalized, would in no way prevent the Great from leading excellent lives.

The social justice libertarian can go further and argue that the property claims of the Great are illegitimate. Their claims are illegitimate because the coercion required to maintain them cannot be justified to the Small given that their well-being is substantially set back by a lack of basic food and healthcare. On the social justice view, the Small’s complaints provide legitimate grounds to revise the property rights recognized in LP to permit (and perhaps require) the Cops to provide a safety net out of the proceeds of legal fees paid by the Great.

…In this case, I’m with the Small. How about you?

And, in an effort to seal his case, Vallier adds

Pre-emptive Remarks:

(1) Please don’t respond with “That will never happen.” The purpose of LGS is to draw out your intuitions about what makes coercion and property regimes morally legitimate. That is why it is a thought experiment.

(2) Please don’t respond with “You’re a statist.” Nothing in LGS assumes that a state controls LP or that the Small want a state. These disputes are possible in a market anarchist social order and can be remedied in the name of justice through polycentric legal organizations.

(3) Please don’t respond that the Small aren’t really being coerced. Many libertarians want to determine what counts as coercion entirely by whether property claims are made in line with the self-ownership principle. But that’s implausible. Even private police forces have to use coercion to protect legitimately held property. Just because a piece of property is rightfully yours doesn’t mean your security forces don’t use coercion to protect it.

(4) Please don’t respond with a slippery slope argument. I was extremely circumspect about the sort of justification the Small employ. They reject as unjustified the coercion used against them because it requires that they remain impoverished through no fault of their own when the Great can easily aid them without any significant risk to their life prospects. To side with the Small, you don’t have to adopt any strongly prioritarian or egalitarian distributive principle.

Remark (1) is unexceptionable; I take LGS as a thought experiment, though a failed one.

As for (2), Vallier should read what he has written. When the Small petition the Cops to force the Great to come across with more money for the Small, it is evident that the Small consider the Cops to have state-like power. That is, the Small want the Cops to act like agents of the state by taking up against their own “clients,” the Great. Further, it is clear that Vallier wants the Cops to assume state-like power when he says that “the Small’s complaints provide legitimate grounds to revise the property rights recognized in LP to permit (and perhaps require) the Cops to provide a safety net out of the proceeds of legal fees paid by the Great.”

Vallier resorts to doublespeak in (3) when he says that “the Cops coercively remove the Small from their local banks.” The Cops (as agents for the Great) are employing force in defense of property rights — rights that the Small had acknowledged by virtue of their membership in the Libertarian Paradise. If there is any coercion in the scenario painted by Vallier, it is committed by the Small, when they occupy the banks in an effort to compel the Great to cough up more money.  Vallier’s use of “coercively” is gratuitous and does not belong in the phrase quoted above.

Remark (4) is slipperiness itself. Having misapplied “coercively” to the Cops defensive actions (as agents for the Great), Vallier recycles it in the statement that the Small “reject as unjustified the coercion used against them.” (As Lenin said, “A lie told often enough becomes truth.”) The Small may “reject as unjustified” their removal from private property, but that does not make their removal unjustified. (See my comments about (3).) Moreover, it is clear that Vallier adopts some kind of “distributive principle,” other than the libertarian principle upon which LP was founded, when he writes that the Small will “remain impoverished through no fault of their own.” The implied principle is that those who are better off owe something to those who are worse off. How much they owe, and under what circumstances is, of course, determined arbitrarily by “social justice” libertarians like Vallier and out-and-out statist redistributionists like Barack Obama. Their principles are the same, they just articulate them differently.

It is understandable the Vallier roots for the “little guy,” most people do; but the “little guy” is not necessarily the “good guy.” In any event, a libertarian society is impossible if the fundamental tenets of libertarianism can be overthrown simply because the “little guy” wants more than the “big guy” is willing to give. It is not as if the Greats have insisted on a narrow, “leave me alone,” kind of libertarianism; their embrace of the positive sub-rule of the Golden Rule is evident (and realistic). Vallier — like any statist — simply wants to enforce his preconceived notion of how the positive sub-rule should be applied. But the enforcement of any such notion, however well intended, is incompatible with liberty. Moreover, as I have shown, the end result of confiscation through taxation and regulation is general impoverishment; the “have nots” suffer, along with the “haves.”

Left-libertarianism is not libertarianism. And its unintended consequences are dire because slippery slopes are real. State power erodes the societal bonds upon which liberty depends, because — as subjects of the state — individual develop the habit of looking to the state for guidance about proper behavior, instead of consulting their consciences and their fellow men. One misuse of state power leads to another, eventually destroying the fragile bonds of mutual respect and forbearance that undergird liberty. (Regarding the reality of slippery slopes, consider how much the contemporary interpretation of the Constitution diverges from its real, original meaning because of accretion of wrongful interpretations; see especially “Our Perfect, Perfect Constitution,” by Michael Stokes Paulsen, University of St. Thomas School of Law.)

For proof of this, one need look no farther than America. America’s slide into statism began in earnest with with Teddy Roosevelt’s “Square Deal,” accelerated with Franklin Roosevelt’s “New Deal,” and has been compounded since through the steady accretion of power by the central government.

All in the name of “social justice.”

Related posts:
On Liberty
Greed, Cosmic Justice, and Social Welfare
Positive Rights and Cosmic Justice
The Interest-Group Paradox
Parsing Political Philosophy
Is Statism Inevitable?
Inventing “Liberalism”
Civil Society and Homosexual “Marriage”
The Price of Government
What Is Conservatism?
Utilitarianism, “Liberalism,” and Omniscience
The Real Burden of Government
Utilitarianism vs. Liberty
The Principles of Actionable Harm
Fascism and the Future of America
The Indivisibility of Economic and Social Liberty
Beware of Libertarian Paternalists
Law and Liberty
Negative Rights
Negative Rights, Social Norms, and the Constitution
Rights, Liberty, the Golden Rule, and the Legitimate State
The Price of Government Redux
The Near-Victory of Communism
The Mega-Depression
Abortion and Crime
Tocqueville’s Prescience
Discounting and Libertarian Paternalism
The Mind of a Paternalist
The State of the Union: 2010
The Shape of Things to Come
Accountants of the Soul
Invoking Hitler
The Unreality of Objectivism
Toward a Risk-Free Economy
Rawls Meets Bentham
The Rahn Curve at Work
Is Liberty Possible?
The Left
Perry v. Schwarzenegger, Due Process, and Equal Protection
Rationalism, Social Norms, and Same-Sex “Marriage”
Line-Drawing and Liberty
The Divine Right of the Majority
The Illusion of Prosperity and Stability
Society and the State
I Want My Country Back
Estimating the Rahn Curve: Or, How Government Inhibits Economic Growth
The Deficit Commission’s Deficit of Understanding
Undermining the Free Society
Our Enemy, the State
Pseudo-Libertarian Sophistry vs. True Libertarianism
The Bowles-Simpson Report
Positivism, “Natural Rights,” and Libertarianism
The Bowles-Simpson Band-Aid
What Are “Natural Rights”?
The Golden Rule and the State
Government vs. Community
Libertarian Conservative or Conservative Libertarian?
Liberty, Equality, Fraternity: Part I
The Stagnation Thesis
Bounded Liberty: A Thought Experiment
Evolution, Human Nature, and “Natural Rights”
Government Failure: An Example
The Evil That Is Done with Good Intentions
More Pseudo-Libertarianism
More about Conservative Governance
The Meaning of Liberty
Positive Liberty vs. Liberty
On Self-Ownership and Desert
In Defense of Marriage
Understanding Hayek
The Destruction of Society in the Name of “Society”
The Golden Rule as Beneficial Learning
Facets of Liberty
Burkean Libertarianism
Rights: Source, Applicability, How Held
About Democracy
What Is Libertarianism?
Nature Is Unfair
True Libertarianism, One More Time
Human Nature, Liberty, and Rationalism
Utilitarianism and Psychopathy
Externalities and Statism
“Occupy Wall Street” and Religion
A Declaration and Defense of My Prejudices about Governance
The Libertarian-Conservative Fusion Is Alive and Well
Libertarianism and Morality
Libertarianism and Morality: A Footnote
Merit Goods, Positive Rights, and Cosmic Justice
More about Merit Goods
What Is Bleeding-Heart Libertarianism?
Don’t Just Stand There, “Do Something”
The Morality of Occupying Private Property
Society and the State
Estimating the Rahn Curve: A Sequel
In Defense of the 1%
Prohibition, Abortion, and “Progressivism”

Luck and Baseball, One More Time

There is such a thing as “luck.” Bad and good luck happen to everyone, at one time or another. But everything that happens to everyone is not due to luck. I am convinced by what I have seen of life — up close and at a distance — that most of what happens to people happens to them because of their intentions, skills, and resources.

Yes, the skills that one possesses may be due in part to genetic luck, and the resources that one can marshal may be due in part to genetic and geographic luck. But if skills and resources were entirely beyond a person’s control, no one would ever climb from the proverbial gutter to attain fame and fortune. That is where intentions come in.

So, I am unimpressed (to say the least) by do-gooders and levelers, who want to take from the productive and give to the unproductive because the productive have had “all the luck,” or some such thing. Balderdash! First, it takes more than luck to be productive and to enjoy even a modest income. Second, taking from the productive to give to the unproductive is like blaming the blameless. It may come as a surprise to do-gooders and levelers (most of whom ought to know better), but a person who earns a high income earns it because that is what others are willing to pay for his efforts — not because he picks the pockets of the poor.

Speaking of high-income earners, I am always puzzled by the fact that income-envy is directed toward CEOs, investment bankers, and suchlike. Why is it not directed at super-star athletes, like Albert Pujols, who will earn $254 million over the next 10 years, just for playing baseball? Perhaps it is because almost everyone recognizes that Pujols is selling a skill that (a) is his (not stolen from someone else) and (b) would not be on display were it not for his assiduous development and application of the particular genetic advantages that enable him to hit a pitched baseball with above-average frequency and power.

Well, Nassim Nicholas Taleb to the contrary notwithstanding, the earning of large sums of money in any profession takes the same assiduous application of particular genetic advantages, or assiduous compensation for the lack thereof. I will not repeat my detailed criticisms of Taleb, which can be found “here” and “here.” Instead, I will return to the subject of baseball, some aspects of which I treated in those posts.

In the 111-year history of the American League, 60 different players have led the league in batting. Those 60 players have recorded a total of 367 top-10 finishes in American League batting races over the years — an average of 6 top-10 finishes for each of the players. It is not surprising, therefore, that most of the 60 players also compiled excellent career batting averages. Specifically, through 2010, 57 of the 60 had made at least 5,000 plate appearance in the American League, and 43 of the 57 are among the top 120 hitters (for average) — out of the thousands of players with at least 5,000 plate appearances in the American League. Were those 43 players merely “lucky”? It takes a lot more than luck to hit so well, so consistently, and for so many years.

And it takes a lot more than luck to succeed at almost anything, from winning high office to making millions of dollars to painting a masterpiece to building a house to cutting hair properly. To denigrate the rich and famous by calling them lucky is to denigrate every person who strives, with some success, to overmaster whatever bad luck happens to come his way.

Related posts:
The Residue of Choice
The American League’s Greatest Hitters
The American League’s Greatest Hitters:  Part II
Fooled by Non-Randomness
Randomness Is Over-Rated
Luck-Egalitarianism and Moral Luck

Taxes: Theft or Duty?

As goofy as Ron Paul is about defense and foreign policy, he is mostly right about domestic policy, namely that there should be little of it — especially at the national level. This is from his exchange with David Gregory on Meet the Press (October 23, 2011):

MR. GREGORY:  Let me, let me ask you about the role of government.  You’ve said about taxation, in a way that doesn’t minces words, the following: “Taxation is immoral,” you told the Libertarian Party News.  Would you scrap the tax code altogether?

REP. PAUL:  That would be a pretty good idea, a pretty good start.  I, I can qualify it if I’m allowed.  Taxation is theft when you take money from one group to give it to, to another, when you, when you transfer the wealth.  Now, taxation could be accomplished with user fees and, you know, highway fees and gasoline taxes and import taxes.  But the income tax is based on the assumption that the government owns you, owns all of your income and provides the conditions on which they allow you to keep a certain percentage.  That, to me, is immoral, and the founders didn’t like it.  That’s why the Constitution had to be amended in 1913.

Not eloquent, but fairly near the mark.

Government has essentially one legitimate function, which is to protect citizens from predators, foreign and domestic. That covers national defense and domestic justice (including the enforcement of contracts and prosecution of fraud). Those functions could be provided by private agencies, but — because of the danger of warlordism — they are best provided by government and funded from a true flat tax.

A proper division of labor would place defense in the hands of the national government and justice in the hands of State and local governments. This would eliminate the ability of the national government to criminalize conduct for the sake of imposing its will on everyone. For the same reason, the provision of justice should be devolved to the lowest possible level within each State.

I see no need for State and local governments to do more than provide justice, though the government of a very small community — say, not more than 150 persons — might legitimately do more if authorized by the community, following rules explicitly and regularly adopted by consensus. Expanding the scale of government action beyond the jurisdiction of a small community courts runaway statism and precludes the provision of services (utilities, highways, etc.) by private actors, which are subject to discipline by market forces.

With that background, I turn to the October 20, 2011, issue of The New Republic and “Don’t Mess with Taxes: A moral defense.” Excerpts of the editorial (in italics) are accompanied by my comments (in brackets and boldface):

Elizabeth Warren, the Harvard law professor now running for U.S. Senate, is getting a lot of attention for the video of a speech she made recently. It wasn’t just because she was taking on Republican talking points more forcefully than most Democrats do these days. It was also because she was defending an idea almost nobody in American politics dares to champion anymore, at least explicitly: She was defending the idea of taxes. [Elizabeth Warren is all wet.]

In recent decades, Republican politicians and key allies, most notably anti-tax crusader Grover Norquist, have succeeded in demonizing taxes, as if the very concept of a tax itself were immoral. [Not quite. See above.]

But there is nothing wrong with asking [asking?] people to pay taxes. On the contrary, there is something very right about it. Nobody [nobody?] questions whether society [the state] can require people to serve on a jury or, in times of war, to enlist in the military. [So soon is Vietnam forgotten, along with its main legal legacy: all-volunteer armed forces.] So why do we question whether society [the state] can require people to pay for the government whose services, and protection, they enjoy? [Most of us do not "enjoy" government services, other than defense and justice, and even those that we do "enjoy" would be provided more efficiently by private firms.]

The moral case for taxation rests on two separate, but related, principles. The first is distributional. History teaches us that capitalism is an excellent economic system for generating wealth. But history also teaches us that capitalism will create losers as well as winners, often because of forces beyond any individual’s control. Whether it’s accident or illness, mismatched skills or misallocated resources, large numbers of people will inevitably find themselves in financial difficulty—without a job, without savings, and without enough money to pay for the basic necessities of life. It can be crippling for them and crippling for their children, so that poverty, like affluence, becomes its own sort of inheritance. [And that's another thing better left to the private sector: charity. Charity-by-government is an inefficient way of taking from the few to give to the many -- but it yields votes, as in "tax and tax, and spend and spend, and elect and elect."]

A civilized society recognizes this problem and vows to mitigate it. [A state, driven by power-lust, is not a society, and cannot claim to be civilized.] If capitalism does not offer everybody at least some realistic hope of upward mobility, it cannot survive.  [But it does offer that hope, and it will survive unless the minions of the state have their way.] Here in the United States, a part of our solution has been to enact government programs that offer the needy minimal allotments of sustenance (food stamps) and shelter (housing choice vouchers), that provide the less affluent with cash (Temporary Assistance for Needy Families) and college tuition (Pell Grants), and that guarantee all citizens pensions (Social Security) and health insurance (Medicare, Medicaid, and the Affordable Care Act). These programs cost money. And the money has to come from somewhere. [These programs are self-defeating because they (1) create dependency, (2) reduce the incentive to better oneself, (3) reduce the incentive to save for one's future needs, and (4) drain resources from growth-producing investments that create jobs and higher incomes, and allow people to save for future needs.]

The second reason we need taxes isn’t about the least fortunate; it’s about public goods. You’ll frequently hear conservatives argue that taking money from people, particularly successful people, is unfair because they, not the government, earned that money. But that’s not quite right, for reasons Warren explained very well in her monologue. Behind every successful individual is a set of public investments that past generations made. Could Bill Gates have made his fortune without government-financed education and technology? Could Sam Walton’s stores have spread across the country without government-sponsored roads on which goods and customers travel? “You built a factory and it turned into something terrific, or a great idea?” Warren said. “God bless. Keep a big hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.” ["Public goods" are a crock. Elizabeth Warren is all wet.]

[O]n the morality of asking [asking?] people to pay taxes, there should be no debate at all. Taxes are an act of citizenship [coercion]. We should all be proud to pay them. [Speak for yourself, kemosabe.]

Other than that, I found the punctuation and spelling to be impeccable.

As for the question posed in the title of this post: theft, all theft, because even essential protective services are not funded equitably.

Related posts:
The Social Welfare Function
Risk and Regulation
A Short Course in Economics
The Interest-Group Paradox
Addendum to a Short Course in Economics
Monopoly: Private Is Better than Public
Utilitarianism vs. Liberty
Utilitarianism, “Liberalism,” and Omniscience
Accountants of the Soul
The Real Burden of Government
Zones of Liberty
Toward a Risk-Free Economy
Rawls Meets Bentham
The Rahn Curve at Work
A True Flat Tax
The Case of the Purblind Economist
The Illusion of Prosperity and Stability
Estimating the Rahn Curve: Or, How Government Inhibits Economic Growth
Asymmetrical (Ideological) Warfare
Giving Back, Again
Taxing the Rich
More about Taxing the Rich
Luck-Egalitarianism and Moral Luck
The Destruction of Society in the Name of “Society”
What Free-Rider Problem?
Utilitarianism and Psychopathy
Elizabeth Warren Is All Wet

Social Justice

Despite a recent outburst, the proximate cause of this post is a column of Nicholas Kristof’s (“Equality, a True Soul Food“, The New York Times, January 1, 2011), in which Kristof pleads for less income inequality in the United States. His plea is based, in part, on the premise that persons of low status suffer because they envy persons of higher status (an assertion that’s based on research about monkeys). Don Boudreaux, Tom Maguire, and Max Borders have weighed in with insightful reactions. Will Wilkinson addressed the status-envy issue in 2006 (here and here), and has addressed it more recently (e.g., see this and follow the links therein). The Heritage Foundation offers a useful (if somewhat out-of-date) statistical analysis of income distribution (misleading word) in the U.S. I have written on the subject so many times that I can only refer you to lists of posts (here, here, here, here, and here) that include many relevant ones.

There is no theoretical or factual argument for income redistribution that cannot be met by a superior theoretical or factual argument against it. In the end, the case for (somehow) reducing income inequality turns on an emotional appeal for “social justice,” that is, for reshaping the world in a way that pleases the pleader. As if the pleader — in his or her pure, misguided arrogance — has superior wisdom about how the world should be shaped.

In fact, “social justice” usually (but not always) is code for redistributing income, either directly (through the taxing and spending power of government) or indirectly (through the power of government to require favoritism toward certain groups of persons). Make no mistake, there is no justice in “social justice,” which is nothing more than a euphemism for coercion by the state.

Social justice is possible only where there is a true society, not the bogus “society”  or “community” to which bleeding hearts and statists refer when they mean the United States or most of its political subdivisions — which have become nothing more than geopolitical prisons.

A true society or community is one in which persons are bound by more than merely residing in the same nation, state, city, or other geographic entity. A true society is one whose members voluntarily commit acts of kindness and charity toward one another, as part of the social “bargain” that is known as the Golden Rule.

That “bargain” amounts to a delicate balance of self-interested and voluntarily beneficial behavior. The self-interested aspect of behavior is mutual forbearance — leaving others alone so that they will leave you alone. The voluntarily beneficial aspect is the commission of acts of kindness and charity. It is the latter that enables the former, because acts of kindness and charity help to build a true feeling of community by creating an atmosphere of mutual respect and trust.

Purveyors of “social justice” say that the voluntary arrangements of true communities are inadequate for the purpose of meeting this or that desideratum. Whence the desiderata? From the preconceptions of the purveyors of “social justice,” of course. They would substitute their “wisdom” for the wisdom that it embedded in voluntary social and economic arrangements. And they usually succeed because their arrogance incorporates a good measure of power-lust.

In sum, true social justice  is possible only in a voluntary community that is founded on mutual forbearance, respect, and trust. It cannot be found in the kind of forcible leveling that is favored by advocates of “social justice.” There is nothing just about coercion.

Related posts:
Greed, Cosmic Justice, and Social Welfare
Positive Rights and Cosmic Justice
The Interest-Group Paradox
Parsing Political Philosophy
Is Statism Inevitable?
Inventing “Liberalism”
Law and Liberty
Rights, Liberty, the Golden Rule, and the Legitimate State
An Encounter with a Marxist
Our Enemy, the State
The Golden Rule and the State
A Not-So-Fine Whine

The Illusion of Prosperity and Stability

For reasons I outlined in “The Price of Government,” the post-Civil War boom of 1866-1907 finally gave way to the onslaught of Progressivism. Real GDP grew at the rate of 4.3 percent annually during the post-Civil War boom; it has since grown at an annual rate of 3.3 percent. The difference between the two rates of growth, compounded over a century, is the difference between $13 trillion (2009’s GDP in 2005 dollars) and $41 trillion (2009’s potential GDP in 2005 dollars).

As I said in “The Price of Government,” this disparity

may seem incredible, but scan the lists here and you will find even greater cross-national disparities in per capita GDP. Go here and you will find that real, per capita GDP in 1790 was only 4.6 percent of the value it had attained 218 years later. Our present level of output seems incredible to citizens of impoverished nations, and it would seem no less incredible to an American of 1790. In sum, vast disparities can and do exist, across nations and time.

The main reason for the disparity is the intervention of the federal government in the economic affairs of Americans and their businesses. I put it this way in “The Price of Government”:

What we are seeing [in the present recession and government's response to it] is the continuation of a death-spiral that began in the early 1900s. Do-gooders, worry-warts, control freaks, and economic ignoramuses see something “bad” and — in their misguided efforts to control natural economic forces (which include business cycles) — make things worse. The most striking event in the death-spiral is the much-cited Great Depression, which was caused by government action, specifically the loose-tight policies of the Federal Reserve, Herbert Hoover’s efforts to engineer the economy, and — of course — FDR’s benighted New Deal. (For details, see this, and this.)

But, of course, the worse things get, the greater the urge to rely on government. Now, we have “stimulus,” which is nothing more than an excuse to greatly expand government’s intervention in the economy. Where will it lead us? To a larger, more intrusive government that absorbs an ever larger share of resources that could be put to productive use, and counteracts the causes of economic growth.

One of the ostensible reasons for governmental intervention is to foster economic stability. That was an important rationale for the creation of the Federal Reserve System; it was an implicit rationale for Social Security, which moves income to those who are more likely to spend it; and it remains a key rationale for so-called counter-cyclical spending (i.e., “fiscal policy”) and the onerous regulation of financial institutions.

Has the quest for stability succeeded? If you disregard the Great Depression, and several deep recessions (including the present one), it has. But the price has been high. The green line in the following graph traces real GDP as it would have been had economic growth after 1907 followed the same path as it did in 1866-1907, with all of the ups and down in that era of relatively unregulated “instability.” The red line, which diverges from the green one after 1907, traces real GDP as it has been since government took over the task of ensuring stable prosperity.

Only by overlooking the elephant in the room — the Great Depression — can one assert that government has made the economy more stable. Only because we cannot see the exorbitant price of government can we believe that it has had something to do with our “prosperity.”

What about those fairly sharp downturns along the green line? If it really is important for government to shield us from economic shocks, there are much better ways of getting the job done that they ways now employed. There was no federal income tax during the post-Civil War boom (one of the reasons for the boom). Suppose that in the early 1900s the federal government had been allowed to impose a small, constitutionally limited income tax of, say, 0.5 percent on gross personal incomes over a certain level, measured in constant dollars (with an explicit ban on exemptions, deductions, and other adjustments, to keep it simple and keep interest groups from enriching themselves at the expense of others). Suppose, further, that the proceeds from the tax had a constitutionally limited use: the payment of unemployment benefits for a constitutionally limited time whenever real GDP declined from quarter to quarter.

Perhaps that’s too much clutter for devotees of constitutional simplicity. But wouldn’t the results have been worth the clutter? The primary result would have been growth at a rate close to that of 1866-1907, but with some of the wrinkles ironed out. The secondary result — and an equally important one — would have been the diminution (if not the elimination) of the “need” for governmental intervention in our affairs.

Related posts:
Basic Economics
The Economic and Social Consequences of Government

Utilitarianism, “Liberalism,” and Omniscience

Utilitarianism is sort of under debate in the blogosphere (see here). But all the hifalutin’ philosophising misses the main point about utilitarianism: Those who practice it are arrogant pretenders to omniscience.

The appeal of utilitarianism rests on two mistaken beliefs:

  • There is such a thing as social welfare.
  • Transferring income and wealth from the richer to the poorer enhances social welfare because redistribution helps the poorer more than it hurts the richer.

Having disposed elsewhere of the second belief, I here address the first one.

The notion of a social welfare function arises from John Stuart Mill’s utilitarianism, which is best captured in the phrase “the greatest good for the greatest number” or, more precisely “the greatest amount of happiness altogether.” From this facile philosophy grew the patently ludicrous idea that it might be possible to quantify each person’s happiness, sum those values, and arrive at an aggregate measure of total happiness for everyone.

Utilitarianism, as a philosophy, has gone the way of Communism: It is discredited, but many people still cling to it under other names — “social welfare” and “social justice” being perennial favorites among the “liberal” intelligentsia.

How can supposedly rational “liberals” imagine that the benefits accruing to some persons (unionized employees of GM and Chrysler, urban developers, etc.) cancel the losses of other persons (taxpayers, property owners, etc.)? There is no realistic worldview in which A’s greater happiness cancels B’s greater unhappiness; never the twain shall meet.  The only way to “know” that A’s happiness cancels B’s unhappiness is to put oneself in the place of an omniscient deity — to become, in other words, an accountant of the soul.

It seems to me that “liberals” (most of them, anyway) reject God because to acknowledge Him would be to admit their own puniness and venality.

The Price of Government

UPDATED on 04/17/10, to include GDP estimates for 2009 and slight revisions to GDP estimates for earlier years. The bottom line remains the same: The price of government is exorbitant.

he federal government is mounting an economic intervention on a scale unseen since World War II. The excuse for this intervention is that without it the present recession will turn into a full-blown depression. Yet, with the Democrats’ and RINOs’ “stimulus” barely underway, the economy already shows signs of rebounding from an economic dip that bears no comparison with the calamitous gulch that was the Great Depression.

Despite the horror stories about a financial meltdown, what we have experienced since late 2007 is not much more than the downside of a typical, post-World War II business cycle. (For more on that score, see this post — especially the third graph and related discussion.) Would it have been worse were all failing financial institutions allowed to fail? I doubt it. Hard, fast failure leaves in its wake opportunities for the organization of new ventures by investors who still have money (and there are plenty of them). But those same investors are being shouldered out and scared off by Obama’s schemes for nationalization, taxation, regulation, and redistribution.

What we are seeing is the continuation of a death-spiral that began in the early 1900s. Do-gooders, worry-warts, control freaks, and economic ignoramuses see something “bad” and — in their misguided efforts to control natural economic forces (which include business cycles) — make things worse. The most striking event in the death-spiral is the much-cited Great Depression, which was caused by government action, specifically the loose-tight policies of the Federal Reserve, Herbert Hoover’s efforts to engineer the economy, and — of course — FDR’s benighted New Deal. (For details, see this, and this.)

But, of course, the worse things get, the greater the urge to rely on government. Now, we have “stimulus,” which is nothing more than an excuse to greatly expand government’s intervention in the economy. Where will it lead us? To a larger, more intrusive government that absorbs an ever larger share of resources that could be put to productive use, and counteracts the causes of economic growth.

Can we measure the price of government intervention? I believe that we can do so, and quite easily. The tale can be told in three graphs, all derived from constant-dollar GDP estimates available here. The numbers plotted in each graph exclude GDP estimates for the years in which the U.S. was involved in or demobilizing from major wars, namely, 1861-65, 1918-19, and 1941-46. GDP values for those years — especially for the peak years of World War II — present a distorted picture of economic output. Without further ado, here are the three graphs:

The trend line in the first graph indicates annual growth of about 3.7 percent over the long run, with obviously large deviations around the trend. The second graph contrasts economic growth through 1907 with economic growth since: 4.2 percent vs. 3.6 percent. But lest you believe that the economy of the U.S. somehow began to “age” in the early 1900s, consider the story implicit in the third graph:

  • 1790-1861 — annual growth of 4.1 percent — a booming young economy, probably at its freest
  • 1866-1907 — annual growth of 4.3 percent — a robust economy, fueled by (mostly) laissez-faire policies and the concomitant rise of technological innovation and entrepreneurship
  • 1908-1929 — annual growth of 2.2 percent — a dispirited economy, shackled by the fruits of “progressivism” (e.g., trust-busting, regulation, the income tax, the Fed) and the government interventions that provoked and prolonged the Great Depression (see links in third paragraph)
  • 1970-2008 — annual growth of 3.1 percent —  an economy sagging under the cumulative weight of “progressivism,” New Deal legislation, LBJ’s “Great Society” (with its legacy of the ever-expanding and oppressive welfare/transfer-payment schemes: Medicare, Medicaid, a more generous package of Social Security benefits), and an ever-growing mountain of regulatory restrictions.

Had the economy of the U.S. not been deflected from its post-Civil War course, GDP would now be about three times its present level. (Compare the trend lines for 1866-1907 and 1970-2008.) If that seems unbelievable to you, it shouldn’t: $100 compounded for 100 years at 4.3 percent amounts to $6,700; $100 compounded for 100 years at 3.1 percent amounts to $2,100. Nothing other than government intervention (or a catastrophe greater than any we have known) could have kept the economy from growing at more than 4 percent.

What’s next? Unless Obama’s megalomaniacal plans are aborted by a reversal of the Republican Party’s fortunes, the U.S. will enter a new phase of economic growth — something close to stagnation. We will look back on the period from 1970 to 2008 with longing, as we plod along at a growth rate similar to that of 1908-1940, that is, about 2.2 percent. Thus:

  • If GDP grows at 2.2 percent through 2109, it will be 58 percent lower than if we plod on at 3.1 percent.
  • If GDP grows at 2.2 percent for through 2109, it will be only 4 percent of what it would have been had it continued to grow at 4.3 percent after 1907.

The latter disparity may seem incredible, but scan the lists here and you will find even greater cross-national disparities in per capita GDP. Go here and you will find that real, per capita GDP in 1790 was only 4.6 percent of the value it had attained 218 years later. Our present level of output seems incredible to citizens of impoverished nations, and it would seem no less incredible to an American of 1790. In sum, vast disparities can and do exist, across nations and time. We have every reason to believe in the possibility of a sustained growth rate of 4.4 percent, as against one of 2.2 percent, because we have experienced both.

We should look on the periods 1908-1940 and 1970-2009 as aberrations, and take this lesson from those periods: Big government inflicts great harm on almost everyone (politicians and bureaucrats being the main exceptions), including its intended beneficiaries. Such is the price of government when it does more than “establish Justice, insure domestic Tranquility, [and] provide for the common defence” in order to “promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity.”

Inventing “Liberalism”

Modern “liberalism” is statism — left-statism, in particular. According to Mike Rappaport of The Right Coast,

[Although] John Stuart Mill was one of the thinkers who moved liberalism toward its modern meaning, it was in the works of Hobhouse and T.H. Green that the change was most affected.

As for Mill (1806-1873), here are some excerpts of my analysis of his influential On Liberty:

… Mill’s prescription for the realization for liberty … 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….

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.”…

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 [Theodore] 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 no 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.

If Mill was in the van of modern liberalism, Thomas Hill Green (1836-1882) and Leonard Trelawney Hobhouse (1864-1929) were leaders of its intellectual tank corps.

An article about Green at The Stanford Encyclopedia of History includes this (under “The Principles of State Action”):

Green holds that the state should foster and protect the social, political and economic environments in which individuals will have the best chance of acting according to their consciences. Notice that in principle Green is not concerned to allow all actions, no matter what their origin…. Yet, the state must be careful when deciding which liberties to curtail and in which ways to curtail them. Over-enthusiastic or clumsy state intervention could easily close down opportunities for conscientious action thereby stifling the moral development of the individual. The state should intervene only where there was a clear, proven and strong tendency of a liberty to enslave the individual. Even when such a hazard had been identified, Green tended to favour action by the affected community itself rather than national state action itself — local councils and municipal authorities tended to produce measures that were more imaginative and better suited to the daily reality of a social problem. Hence he favoured the ‘local option’ where local people decided on the issuing of liquor licences in their area, through their town councils….

Green held that the ultimate power to decide on the allocation of such tasks should rest with the national state (in Britain, embodied in Parliament). The national state itself is legitimate for Green to the extent that it upholds a system of rights and obligations that is most likely to foster individual self-realisation. Yet, the most appropriate structure of this system is determined neither by purely political calculation nor by philosophical speculation. As we shall see, it is more accurate to say that it arose from the underlying conceptual and normative structure of one’s particular society.

Here are some key passages from a biography of Hobhouse on the site of the UK’s Liberal Democrat History Group:

… Hobhouse’s mature political and economic thought [culminated] in his extraordinary little book Liberalism (1911). He sought to explain the social programme and taxation policies of the Liberal government as an extension, not a reversal, of the economic principles of earlier Liberals such as Mill. His underlying theory, difficult to apply in practice but clear enough in theory, was that wealth was created by a combination of individual effort and social organisation, and that the state was entitled to redistribute for the common good that part which arose from social organisation. He also distinguished between property held for use and property held for power, recognising the need for the former but not the latter to be protected by a system of rights. Out of the combination of these ideas, Hobhouse developed Liberal justifications for a guaranteed minimum income funded by income tax.

Hobhouse also developed a distinctive view of liberty and the proper purposes of state power. He maintained, against what we now call libertarianism, that liberty depended on restraint – that every liberty depends on a corresponding act of control. He followed Mill in pointing out the many forms of coercion in social life, including features of existing social and economic conditions. His conclusion was that the proper role of the state was to maximise the availability of liberty by reorganising the existing constraints. But Hobhouse differed from Mill in explaining why paternalism should be opposed. Whereas Mill starts with the harm principle, that no-one should be coerced except to prevent harm to others, Hobhouse says that we should refrain from coercing people for their own good not because [their] good is indifferent to us but because it cannot be furthered by coercion. He believed that the value of liberty lies precisely in its role in human self-development.

Green and Hobhouse, in other words, were accountants of the soul. Green’s apparent delicacy in warning of too much intervention is overcome, in the end, by his recognition of the British state (embodied in Parliament) as the proper arbiter of human conduct. Hobhouse, more boldly, presumed that he and others of his ilk (but not those who disagree with him) could determine how much of one’s property arose from “social organisation,” how much of one’s property was “held for power,” and how to expand liberty by adopting different forms of coercion than those imposed by social norms.

Once again, we are met with (presumably) intelligent persons who believe that their intelligence enables them to peer into the souls of others, and to raise them up through the blunt instrument that is the state.

And that is precisely the mistake that lies at heart of what we now call “liberalism” or “progressivism.”  It is the three-fold habit of setting oneself up as an omniscient arbiter of economic and social outcomes, then castigating the motives and accomplishments of the financially successful and socially “well placed,” and finally penalizing financial and social success through taxation and other regulatory mechanisms (e.g., affirmative action, admission quotas, speech codes, “hate crime” legislation”). It is a habit that has harmed the intended beneficiaries of government intervention, not just economically but in other ways, as well:

  • Americans have learned dependence, instead of self-reliance.
  • Civil society has all but vanished, and with it our ability to solve problems and resolve conflicts cooperatively. Instead, we are forced by government to accept one-size-fits-all solutions.

Not to mention that our liberty — true liberty, not Mill’s hypothetical kind — has all but vanished.

Thus are the wages of “liberalism.”

Other related posts:
The Interest-Group Paradox
Democracy and Liberty
Greed, Cosmic Justice, and Social Welfare
The Worriers
More about the Worrying Classes
Modern Utilitarianism
Refuting Rousseau and His Progeny (and its predecessors, here, here, here, and here)
Positive Rights and Cosmic Justice (Cosmic Justice)
Positive Rights and Cosmic Justice: Part I
Positive Rights and Cosmic Justice: Part II
Positive Rights and Cosmic Justice: Part III

Another Perspective on “Social Justice”

Here is a sample of Barry A. Liebling’s “Irreconcilable Differences,” from today’s edition of TCS Daily:

[T]he assumption of the interventionist is that society and the state take precedence over the individual. It is the group that counts and has rights. Thus, interventionists focus their attention on “social justice” which is different from genuine justice. They have antipathy for “unfettered” individual freedom because they realize that when people act according to their own judgement [sic] and preferences the outcome may not be to the interventionist’s liking. Interventionists see wealth redistribution as a key function of government. Money should be taken from those they despise and given to those they favor.

Liebling’s seekers of social justice (interventionists) are what Thomas Sowell calls seekers of cosmic justice — the same thing by different names. For more about cosmic justice and surrounding fallacies, see my post, “Greed, Cosmic Justice, and Social Welfare.”

The Perils of Europeanism

Charles Murray speaks eloquently in opposition to our Europe-ward drift; for example:

….If we want to know where America as a whole is headed–its destination–we should look to Europe.

Drive through rural Sweden, as I did a few years ago. In every town was a beautiful Lutheran church, freshly painted, on meticulously tended grounds, all subsidized by the Swedish government. And the churches are empty. Including on Sundays. Scandinavia and Western Europe pride themselves on their “child-friendly” policies, providing generous child allowances, free day-care centers, and long maternity leaves. Those same countries have fertility rates far below replacement and plunging marriage rates. Those same countries are ones in which jobs are most carefully protected by government regulation and mandated benefits are most lavish….

I stand in awe of Europe’s past. Which makes Europe’s present all the more dispiriting. And should make its present something that concentrates our minds wonderfully, for every element of the Europe Syndrome is infiltrating American life as well.

We are seeing that infiltration appear most obviously among those who are most openly attached to the European model–namely, America’s social democrats, heavily represented in university faculties and the most fashionable neighborhoods of our great cities. There are a whole lot of them within a couple of metro stops from this hotel. We know from databases such as the General Social Survey that among those who self-identify as liberal or extremely liberal, secularism is close to European levels. Birth rates are close to European levels. Charitable giving is close to European levels. (That’s material that Arthur Brooks has put together.) There is every reason to believe that when Americans embrace the European model, they begin to behave like Europeans.

Europeanism rests on the fallacy of the “free lunch.” The state, which produces nothing, somehow underwrites the benefits listed by Murray — as well as “benefits” like socialized medicine and month-long vacations. All of these supposed benefits must be paid for, of course; the only question is how they will be paid for.

The illusion of free benefits is a disincentive to work: Why work harder when the state will ‘give” you child care, health care, etc.? The cost of those “free” benefits is a disincentive to hiring, business formation, and capital investment, thus penalizing those Europeans who are willing to work and take the business risks that lead to job creation.

Because of these disincentives, most European nations have long experienced low growth and high unemployment. There is even more of that in Europe’s future (and in ours).

Why? Because the “free” benefits enjoyed by Europeans are not free; they come at a high price. And that price will become even less affordable because of the low birth rate among Europeans. The low birth rate means that future European generations (like our own future generations) will find it harder to bear the burden of supporting their elders (whose numbers will rise disproportionately) while paying for their own “free” benefits.

Europeans are able to enjoy “free” benefits, in part, because they are taxed lightly (relative to Americans) for defense; Europe is a free rider on America’s military strength. As our military budget is tapped to pay for our own adventures in Europeanism, the free ride will end for Europeans. They will then have to pay the price of defending themselves from, say, an aggressive Russia or they will have to succumb to Russia’s territorial and economic demands.

Europeanism, in sum, is a prescription for economic stagnation, unrest, demagogic despotism (as the likely response to unrest), and surrender.

In the Long Run We Are All Poorer

The title of this post is a play on John Maynard Keynes’s famous line, “in the long run we are all dead,” which was not a defense of government spending during the Great Depression. The line comes from  Keynes’s Tract on Monetary Reform, which he published in 1923, years before the Depression. Keynes was in fact writing about the need for government action against inflation.

This post, as its title may suggest, complements an earlier post, “Are We Mortgaging Our Children’s Future?” As I say there, Obama’s economic plan (if it can be called that)

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 [Obama plan] 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….

…Obama['s] initiatives…will stimulate a massive growth in the size and intrusiveness of government.

Here, I begin with links to three papers about the multiplier effect of government spending:

Is Government Spending Too Easy an Answer?” (N. Gregory Mankiw)

Government Spending Is No Free Lunch” (Robert J. Barro)

New Keynsian versus Old Keynsian Government Spending Multipliers” (John F. Cogan, et al.)

The bottom line: Increases in government spending probably have a much smaller multiplier (stimulative) effect than claimed by the administration; the effect may well be negative. That is, increases in government spending probably will crowd out private consumption and investment, both in the near term (when spending increases are supposed to spur private consumption and investment) and in the long run (as the increases become permanent).

Next, I offer a baker’s dozen links to commentary about Obama’s economic policies and their implications:

Stocks Hate Obeynomics” (Forbes.com)

The Left’s Grip on the American Economy” (Forbes.com)

Obama’s $646 Billion Cap-and-Trade Green Tax” (James Pethokoukis)

The Obama Revolution: Paid for by the people” (Opinion Journal)

The 2% Illusion: Take everything they earn and it still won’t be enough” (Opinion Journal)

Obama Proposes a European U.S.” (Charles Krauthammer)

Federal Outlays as a Percentage of GDP” (N. Gregory Mankiw)

Obama Lied; the Economy Died” (Tony Blankley)

The Great Non Sequitur: The sleight of Hand behind Obama’s Agenda” (Charles Krauthammer)

Neither Moderate Nor Centrist” (Peter Robinson)

Obama’s Radicalism Is Killing the Dow” (Michael J. Boskin)

Even Worse than the Great Depression” (Donald Luskin)

Obama’s Left Turn” (Stuart Taylor)

Taylor sums it up, thusly:

…I now worry that [Obama] may be deepening what looks more and more like a depression and may engineer so much spending, debt, and government control of the economy as to leave most Americans permanently less prosperous and less free.

Precisely.

There is a bit of hope, in the unlikely form of public opinion. Obama’s approval index (percentage of respondents strongly approving minus percentage strongly disapproving) has gone from a high of +30 on January 22 to a low of +6 (as of March 9). If economic logic doesn’t sway Obama, perhaps he can be swayed by public opinion — though I very much doubt it, given his long-standing adherence to economic and political extremism. (For example, his voting record as a senator placed him among the most “liberal,” i.e., statist, members of the U.S. Senate.)

Where are we headed then? The stock market — for all of its exaggerated swings — does a pretty good job of reflecting expectations about the country’s future economic performance. Witness the performance of the S&P 500:

Real S&P 500, updatedReal S&P price index derived from annual closing prices of the S&P 500 Composite Index, as reconstructed by Global Financial Data, Inc. (no longer publicly available), and GDP deflator (Louis D. Johnston and Samuel H. Williamson, “What Was the U.S. GDP Then?” MeasuringWorth, 2008. URL: http://www.measuringworth.org/usgdp/).

The now-enviably stable post-Civil War trend was broken in the early 1900s, when the “progressive” agenda began to take hold — most notably with the passage of the Food and Drug Act and the vindictive application of the Sherman Antitrust Act by Theodore Roosevelt. It has been all downhill since, with the ratification of the Sixteenth Amendment (enabling the federal government to tax incomes); the passage of the Clayton Antitrust Act (a more draconian version of the Sherman Act, which also set the stage for unionism); World War I (a high-taxing, big-spending, command-economy operation that whet the appetite of future New Dealers); a respite (the boom of the 1920s, which was owed to the Harding-Coolidge laissez-faire policy toward the economy); and the Great Depression and World War II (truly tragic events that imbued in the nation a false belief in the efficacy of the big-spending, high-taxing, regulating, welfare state that we now “enjoy”).

Yes, stock prices have continued to rise, on the whole, but they have fluctuated wildly around a trend that is about 50 percent below the trend that prevailed from 1870 to the early 1900s. Such is the destructive power of the regulatory-welfare state.

The reaction of the stock market to Obama’s ascendancy since May 2008 — when he locked up the Democrat nomination — suggests that we have entered an era of even-lower stock prices. I have indicated the onset of this new era by plotting the values for 2008 and 2009 (to date) in red. Lower stock prices would be bad enough, in and of themselves, but what they betoken is the looming economic catastrophe that surely will result if Obama and his ilk persist in their oppressive program of spending, taxing, and regulating.

Eugene Fama and Kenneth French (distinguished financial economists at the University of Chicago) get it almost right:

Government intervention affects the market in two ways. First, it affects the level of expected future profitability, which has direct effects on stock prices. Second, government intervention and uncertainty about the government’s future actions change the risk of expected future profits, which affects stock prices by raising or lowering the discount rates for expected future profits, and thus raising or lowering expected stock returns. Our view is that the rhetoric and sweeping initiatives of the new administration have lowered market expectations of future profitability, and the uncertainty about government policies has increased the risk of expected future profits. Both effects have contributed to the lower stock prices we have seen as the policies of the new administration have unfolded. If the market has it right (that is, if the market is efficient) all this is built into current stock prices, and expected returns are higher going forward.

Future returns may be positive, over the long run, but those returns — and economic output — will be lower than they would have been, absent Obamanomics.

Greed, Cosmic Justice, and Social Welfare

GREED

We have heard much about “greed” in connection with the current financial crisis and recession. It seems that “greedy” lenders and financial intermediaries granted sub-prime mortgages to persons of low credit-worthiness and then infected the financial system by securitizing those risky mortgages and peddling them around to investors.

Why don’t we hear about the “greed” of the borrowers who entered into those sub-prime mortgages, and who enjoyed (and still enjoy, in most cases) better housing than they would otherwise have occupied. Why don’t we hear about the “greed” of the politicians who (seeking to curry favor and votes from certain groups) pressured Fannie Mae and Freddie Mac (and through them, mortgage lenders) to make mortgages more readily available to low-income borrowers (i.e., to make riskier loans)?

When does the desire to have more (e.g., a bigger house, a higher income) stop being the “American Dream” and become “greed”? Why is it good for a low-income person to inhabit a house that he can’t really afford but bad for a high-income person to inhabit a house that he can afford, and whose investments and entrepreneurship have helped the low-income person strive toward the “American Dream”?

The answer, of course, is that “greed” is whatever a politician, pundit, or other purveyor of economic envy says it is. “Greed” is invoked not to explain financial success but to denigrate those who have attained it (only to lose it, in some cases), as if they had attained it at the expense of those who have failed to attain it (thus far, at least). Except in the (relatively rare) cases of outright theft and fraud, financial success is not attained at anyone else’s expense; economics is not a zero-sum game.

COSMIC JUSTICE

The habit of castigating the motives of the financially successful and then penalizing their success by taxing them disproportionately appeals not only to envy and economic ignorance but also to what Thomas Sowell calls cosmic justice. The seekers of cosmic justice are not content to allow individuals to accomplish what they can, given their genes, their acquired traits, their parents’ wealth (or lack of it), where they were born, when they live, and so on. Rather, those who seek cosmic justice cling to the Rawlsian notion that no one “deserves” better “luck” than anyone else. But “deserves” and “luck” (like “greed”) are emotive, value-laden terms. Those terms suggest (as they are meant to) that there is some kind of great lottery in the sky, in which each of us participates, and that some of us hold winning tickets — which equally “deserving” others might just have well held, were it not for “luck.”

This is not what happens, of course. Humankind simply is varied in its genetic composition, personality traits, accumulated wealth, geographic distribution, etc. Consider a person who is born in the United States of brilliant, wealthy parents — and who inherits their brilliance, cultivates his inheritance (genetic and financial), and goes on to live a life of accomplishment and wealth, while doing no harm and great good to others. Such a person is neither “lucky” nor less “deserving” than anyone else. He merely is who he is, and he does what he does. There is no question of desert or luck.

Such reasoning does not dissuade those who seek cosmic justice. Many of the seekers are found among the “80 percent,” and it is their chosen lot to envy the other “20 percent,” that is, those persons whose brains, talent, money, and/or drive yield them a disproportionate — but not undeserved — degree of fortune, fame, and power. The influential seekers of cosmic justice are to be found among the  “20 percent.” It is they who use their wealth, fame, and position to enforce cosmic justice in the service (variously) of misplaced guilt, economic ignorance, and power-lust. (Altruism — another emotive, value-laden term — does not come into play, for reasons discussed here and here.)

Some combination of misplaced guilt, economic ignorance, and power-lust motivates our law-makers. (Their self-proclaimed “compassion” is bought on the cheap, with taxpayers’ money.) They accrue power by pandering to their fellow seekers of cosmic justice. Thus they have saddled us with progressive taxation, affirmative action, and a plethora of other disincentivizing, relationship-shattering, market-distorting policies. It is supremely ironic that those policies have made all of us (except perhaps politicians, bureaucrats, and thieves) far worse off than we would be if government were to get out of the cosmic-justice business. (See this, for example.)

SOCIAL WELFARE

Some proponents of cosmic justice appeal to the notion of social welfare (even some economists, who should know better) . Their appeal rests on two mistaken beliefs:

  • There is such a thing as social welfare.
  • Transferring income and wealth from the richer to the poorer enhances social welfare because redistribution helps the poorer more than it hurts the richer.

Having disposed elsewhere of the second belief, I now address the first one. I begin with a question posed by Arnold Kling:

Does the usefulness of the concept of a social welfare function stand or fall on its mathematical properties?

My answer: One can write equations until kingdom come, but no equation can make one person’s happiness cancel another person’s unhappiness.

The notion of a social welfare function arises from John Stuart Mill’s utilitarianism, which is best captured in the phrase “the greatest good for the greatest number” or, more precisely “the greatest amount of happiness altogether.” (See “Adler on Mill’s Utilitarianism” at the Adler Archive of The Radical Academy.)

From this facile philosophy (not Mill’s only one) grew the ludicrous idea that it might be possible to quantify each person’s happiness and, then, to arrive at an aggregate measure of total happiness for everyone (or at least everyone in England). Utilitarianism, as a philosophy, has gone the way of Communism: It is discredited but many people still cling to it, under other names.

Today’s usual name for utilitarianism is cost-benefit analysis. Governments often subject proposed projects and regulations (e.g., new highway construction, automobile safety requirements) to cost-benefit analysis. The theory of cost-benefit analysis is simple: If the expected benefits from a government project or regulation are greater than its expected costs, the project or regulation is economically justified.

Here is the problem with cost-benefit analysis — which is the problem with utilitarianism: One person’s benefit cannot be compared with another person’s cost. Suppose, for example, the City of Los Angeles were to conduct a cost-benefit analysis that “proved” the wisdom of constructing yet another freeway through the city in order to reduce the commuting time of workers who drive into the city from the suburbs. In order to construct the freeway, the city must exercise its power of eminent domain and take residential and commercial property, paying “just compensation,” of course. But “just compensation” for a forced taking cannot be “just” — not when property is being wrenched from often-unwilling “sellers” at prices they would not accept voluntarily. Not when those “sellers” (or their lessees) must face the additional financial and psychic costs of relocating their homes and businesses, of losing (in some cases) decades-old connections with friends, neighbors, customers, and suppliers.

How can a supposedly rational economist, politician, pundit, or “liberal” imagine that the benefits accruing to some persons (commuters, welfare recipients, etc.) somehow cancel the losses of other persons (taxpayers, property owners, etc.)? There is no valid mathematics in which A’s greater happiness cancels B’s greater unhappiness.

Yet, that is how cost-benefit analysis (utilitarianism) works, if not explcitly then implicitly. It is the spirit of utilitarianism (not to mention power-lust, arrogance, and ignorance) which enables Barack Obama and his ilk throughout the land to impose their will upon us — to our lasting detriment.