social justice

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”

Society and the State

Michael Oakeshott writes:

A modern state, as it emerged from a medieval realm, a patrimonial estate, a military protectorate, or a collection of colonial settlements, had three distinct features that it has never lost: an office of authority, an apparatus of power, and a mode of association….

…[S]ince a modern state has never ceased to be recognized as an association in the making, attention has always been directed to the sort of association it might be made to become no less than to what it may be perceived to be. But the exploration of this theme has been sadly hindered by confusion.

First, it is usually conducted in terms of the vocabularies of authority or of power, but in this connection these words are meaningless. To say, for example, that the conditions of association are or should be “democratic” is absurd…. [T]here are no “democratic ” rules of relationships…. Secondly, this inquiry has been almost obliterated by drivel about something called “society,” a fanciful total of unspecified relationships which only a simpleton would think of identifying with a state. (“Talking Politics,” Rationalism in Politics and Other Essays, pp. 441, 450)

There can be such a thing as “society,” but only in rare circumstances. And Oakeshott is correct when he says that only a simpleton would identify society with a state. But, as I will discuss, it is not only simpletons who identify society with a state but also cynical politicians and leftist opportunists.

With respect to society, I begin with Margaret Thatcher, who often is quoted as saying that “there is no such thing as society.” When Mrs. Thatcher said that, she was arguing against the entitlement mindset, as in ” ‘society’ owes me a roof over my head and three meals a day.” As she put it, “people must look to themselves first. It’s our duty to look after ourselves and then, also to look after our neighbor.”

There is, in fact, such a thing as society. But what is it? “Society” has many meanings. This one rings truest:

an enduring and cooperating social group whose members have developed organized patterns of relationships through interaction with one another

In other words, the state is not society. The state — in the guise of a nation, a city, a village, etc. — may compel certain behaviors, including the transfer of one’s income to strangers. Compulsion by the state is the antithesis of societal cooperation.

There is, nevertheless, a tendency — especially on the part of leftists — to claim that the state represents and serves society. The claim is wrong:

  • For the reasons given above, the identification of the state with society is nothing more than a rhetorical sleight-of-hand by which utilitarians, paternalists, do-gooders, politicians, and pundits justify the imposition of their preferences on the masses.
  • The specific acts of the state often are malign rather than benign. See, for example, any of the 140 issues of Regulation that have been published to date. Moreover, acts of the state generally involve regulatory and tax burdens that, at once, stifle prosperity and liberty.

The fact of the matter is that the state destroys society in two ways. First, it usurps the functions served by society, most notably the functions of charity and marriage. Second, it compels certain kinds of behavior instead of allowing behavior to evolve cooperatively.

Two of the stated aims of compulsion are the advancement of “social justice” and “diversity.” The former is redistributionism, pure and simple. The latter forces social and economic interactions between persons of dissimilar cultures, religions, and races — to no good end.

Social justice” is usually

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 justicein “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.

“Diversity” — which encompasses and extends the state’s effort to force “equality” — is a case study in the state’s socially destructive power. In “The downside of diversity,” at The Boston Globe, Michael Jonas reports on a study by Harvard political scientist Robert Putnam, “E Pluribus Unum: Diversity and Community in the Twenty-first Century.” Putnam, according to Jonas,

has found that the greater the diversity in a community, the fewer people vote and the less they volunteer, the less they give to charity and work on community projects. In the most diverse communities, neighbors trust one another about half as much as they do in the most homogeneous settings. The study, the largest ever on civic engagement in America, found that virtually all measures of civic health are lower in more diverse settings.

John Leo, writing at City Journal (“Bowling with Our Own“), first discusses Putnam’s findings; e.g.:

Putnam’s study reveals that immigration and diversity not only reduce social capital between ethnic groups, but also within the groups themselves. Trust, even for members of one’s own race, is lower, altruism and community cooperation rarer, friendships fewer. The problem isn’t ethnic conflict or troubled racial relations, but withdrawal and isolation. Putnam writes: “In colloquial language, people living in ethnically diverse settings appear to ‘hunker down’—that is, to pull in like a turtle.”…

Neither age nor disparities of wealth explain this result. “Americans raised in the 1970s,” he writes, “seem fully as unnerved by diversity as those raised in the 1920s.” And the “hunkering down” occurred no matter whether the communities were relatively egalitarian or showed great differences in personal income. Even when communities are equally poor or rich, equally safe or crime-ridden, diversity correlates with less trust of neighbors, lower confidence in local politicians and news media, less charitable giving and volunteering, fewer close friends, and less happiness….

Leo then discusses the fact that Putnam had delayed announcing his findings:

Putnam has long been aware that his findings could have a big effect on the immigration debate. Last October, he told the Financial Times that “he had delayed publishing his research until he could develop proposals to compensate for the negative effects of diversity.” He said it “would have been irresponsible to publish without that,” a quote that should raise eyebrows. Academics aren’t supposed to withhold negative data until they can suggest antidotes to their findings…

Though Putnam is wary of what right-wing politicians might do with his findings, the data might give pause to those on the left, and in the center as well. If he’s right, heavy immigration will inflict social deterioration for decades to come, harming immigrants as well as the native-born. Putnam is hopeful that eventually America will forge a new solidarity based on a “new, broader sense of we.” The problem is how to do that in an era of multiculturalism and disdain for assimilation.

Myron Magnet, also writing at City Journal (“In the Heart of Freedom, in Chains“), addresses “elite hypocrisy, gangsta culture, and failure in black America.” Magnet asks

how can there still exist a large black urban underclass imprisoned in poverty, welfare dependency, school failure, nonwork, and crime? How even today can more black young men be entangled in the criminal-justice system than graduate from college? How can close to 70 percent of black children be born into single-mother families, which (almost all experts agree) prepare kids for success less well than two-parent families?

And answers:

The legacy of slavery and racism isn’t the reason….

Beginning around 1964, the rates of black high school graduation, workforce participation, crime, illegitimacy, and drug use all turned sharply in the wrong direction. While many blacks continued to move forward, a sizable minority solidified into an underclass, defined by self-destructive behavior that all but guaranteed failure.What was going on in the mid-sixties that could explain such a startling development? Political scientist Charles Murray gave the first answer to that question: welfare benefits sharply rose just at that moment. Offering more purchasing power than a minimum-wage job, the dole, he argued, provided an economic incentive for women to have out-of-wedlock babies and for their boyfriends to live off their welfare payments, too.

A decade after Murray, I suggested that, though welfare was part of the answer, the real explanation was larger. It was cultural, not economic. Begun by the elites, vast changes reshaped mainstream attitudes in the 1960s. Sex became fine outside marriage, and illegitimacy lost its stigma. Drugs were cool; social authority and tradition weren’t. America was deemed a racist, unjust society that victimized and impoverished blacks, who could rarely better their condition and who therefore deserved generous welfare benefits as reparations for past and present oppression. If blacks committed crime, the system that drove them to it, out of poverty or as an act of protest, was at fault: we shouldn’t blame the victim, as the saying went—meaning the poor criminal, not his prey. Since people shape their actions according to the ideas and beliefs they hold, when these new attitudes reached the inner cities, what could result but an epidemic of social dysfunction?

“Diversity” — which was born of misplaced white guilt about slavery and racism — exemplifies the state’s long habit of adopting and magnifying the destructive, anti-social consequences of elite opinion.

“Social justice” and “diversity” — and the other leftist slogans that are meant to stifle resistance to statist oppression — have nothing to do with “society” and everything to do with the use of the state to coerce the many for the satisfaction of the few. And it does not stop there.

Read on:
Intellectuals and Capitalism
Greed, Cosmic Justice, and Social Welfare
Positive Rights and Cosmic Justice
Democracy and Liberty
The Indivisibility of Economic and Social Liberty
Tocqueville’s Prescience
Accountants of the Soul
Down with “We”
The Divine Right of the Majority
I Want My Country Back
An Encounter with a Marxist
Our Enemy, the State
“Intellectuals and Society”: A Review
Social Justice
The Left’s Agenda
The Meaning of Liberty
Positive Liberty vs. Liberty
More Social Justice
On Self-Ownership and Desert
Luck-Egalitarianism and Moral Luck
The Left and Its Delusions
Externalities and Statism
Merit Goods, Positive Rights, and Cosmic Justice
The Spoiled Children of Capitalism
Politics, Sophistry, and the Academy
Subsidizing the Enemies of Liberty
More about Merit Goods

More about Merit Goods

This is a follow-up to “Merit Goods, Positive Rights, and Cosmic Justice.” That post was inspired by a post at Austin Frakt’s blog, The Incidental Economist, about which John Goodman had this to say:

Austin, on first reading, I thought you were saying that I (as a taxpayer) should help pay for your daughter’s asthma medication — even though you agree that you can afford to pay for it yourself. Disbelief overcame me, so I read your post a second time. Then I read it a third. Each time, the message was as incomprehensible as on the previous reading.

Is there a persuasive reason why I owe the Frakt household something? If so, it’s not in this post.

Frakt’s response to Goodman:

You owe me nothing. Follow the link to value-based insurance design or find the V-BID center at U Mich. I think you’re looking for trouble where none should exist.

Well, I followed the link, and came away unconvinced that Frakt wants nothing from Goodman or anyone else. Accordingly, I posted this comment (paragraph breaks and emphasis added):

Your post about value-based insurance — to which you refer John Goodman — suggests that by reducing the co-pay on asthma drugs, trips to the ER would be averted, thus reducing the insurance company’s total costs and (possibly) the premiums it must charge its policy holders. If I have that right, it explains your reply to Goodman that “You owe me nothing.” I suspect that what he reacted to — and I would have reacted to similarly — is your assertion that “breathing [is] a merit good, something we all have a right to enjoy.” That assertion is unnecessary to the discussion of value-based insurance. And your use of the term “merit good” strongly suggests that your statement “Asthma medication is exactly the type of health product that should be free, or nearly so, especially for low-income families” is not just a statement about the presumed efficacy of value-based insurance, but advocacy for income redistribution.

In that case, a modified version of Goodman’s reaction is entirely in order, and I subscribe to it: “Is there a persuasive reason why I owe other households something, and what qualifies you (or anyone else) to make that judgment?” The excuse that I might otherwise end up paying for ER services through my taxes or insurance premiums relies on the assumption that ER services are a merit good that ought to be covered by tax subsidies and/or mandated insurance coverage. There is no end to the number of things that can be called merit goods, but calling them merit goods does not disguise the fact that doing so is an excuse for imposing one person’s or group’s preferences and burdens on others.

Those impositions have led to the present state of affairs, in which myriad interest groups pick each others’ pockets — and the pockets of the unfortunate who are not well-represented by an interest group. One truly unfortunate result of that state of affairs — aside from the gross diminution of liberty — is the diversion of resources from uses that would foster greater economic growth and alleviate much of the poverty that provides an excuse, in the first place, for special pleading about merit goods.

Merit Goods, Positive Rights, and Cosmic Justice

A merit good is said to be something that

an individual or society should have on the basis of some concept of need, rather than ability and willingness to pay…. [T]he concept … lies behind many economic actions by governments…. Examples include the provision of food stamps to support nutrition, the delivery of health services to improve quality of life and reduce morbidity, subsidized housing and arguably education….

Sometimes, merit … goods are simply seen as an extension of the idea of externalities. A merit good may be described as a good that has positive externalities associated with it. Thus, an inoculation against a contagious disease may be seen as a merit good. This is because others who may not now catch the disease from the inoculated person also benefit.

[M]erit … goods can be defined in a different way…. The essence of merit … goods is [has] do with … information failure…. This arises because consumer[s] do not perceive quite how good or bad the good is for them: either they do not have the right information or lack relevant information…. [A]merit good is [a] good that is better for a person than the person … realizes.

Other possible rationales for treating some commodities as merit … goods include public-goods aspects of a commodity…

A merit good, in short, is something that someone believes that the state should cause to be given to certain individuals, as a “positive right,” for various reasons: perceived need, externalities, and market failure among them.

But the “right” to something that is not earned or freely given is not a right, as the term is properly understood. It is an extortion by force or the threat of force, either directly (as in the case of outright theft) or though the coercive power of the state. Only a fool or a dishonest person can say that something obtained through extortion is obtained by right, unless that person believes that the victims of extortion are less deserving — less human — than the intended beneficiaries of extortion.

If a right is anything, it is something that all members of a polity can enjoy equally. If some members of a polity are placed above others through force or the threat of force, then the polity has no system of rights; it has a system of arbitrary privileges, dispensed by the state according to the whims of the faction then in power.

Given that a right must be something that all can enjoy equally, a right can only be negative:

  • the right not to have one’s life taken if one is peaceful toward others
  • the right not to be deprived of liberty if one is peaceful toward others
  • the right to the peaceful enjoyment and use of one’s property in the pursuit of one’s life and livelihood.

These negative rights come down to this: the right to be left alone as one leaves others alone.

If “obligations” accompany the right to be left alone, they do so only in the context of voluntary social (and economic) relationships, wherein acts of kindness and charity flow readily among persons who trust and care for each other and do so, in good part, because they observe the right of others to be left alone. These “obligations” are incurred and honored voluntarily, not because a person or group invested with the power of the state decrees them.

Merit goods (“positive rights”), by contrast, are the products of presumption — judgments about who is “needy” and “deserving” — and they are bestowed on some by coercing others. These coercions extend not only to the seizure of income and wealth but also to denials of employment (e.g., affirmative action), free speech (e.g., campaign-finance “reform”), freedom of contract (e.g., mandatory recognition of unions), freedom of association (e.g., forced admission of certain groups to private organizations), freedom of conscience (e.g., forced participation in abortions), and on and on.

The list of “merit goods” that forms the basis for the many and various forms of state-sponsored coercion may not be infinite, but it is exceedingly long. And its length is limited only by the perverse ingenuity of the seekers of “cosmic justice.” What is cosmic justice? I like this example from Thomas Sowell’s speech, “The Quest for Cosmic Justice“:

A fight in which both boxers observe the Marquis of Queensberry rules would be a fair fight, according to traditional standards of fairness, irrespective of whether the contestants were of equal skill, strength, experience or other factors likely to affect the outcome– and irrespective of whether that outcome was a hard-fought draw or a completely one-sided beating.

This would not, however, be a fair fight within the framework of those seeking “social justice,” if the competing fighters came into the ring with very different prospects of success — especially if these differences were due to factors beyond their control….

In a sense, proponents of “social justice” are unduly modest. What they are seeking to correct are not merely the deficiencies of society, but of the cosmos. What they call social justice encompasses far more than any given society is causally responsible for. Crusaders for social justice seek to correct not merely the sins of man but the oversights of God or the accidents of history. What they are really seeking is a universe tailor-made to their vision of equality. They are seeking cosmic justice.

To be a practitioner of cosmic justice, a person must set himself up as a judge of the merit of other persons, without really possessing more than superficial information about those other persons (e.g., that they are “rich” or “poor” by some standard). As I once said of two founders of modern “liberalism,” T.H. Green and L.T. Hobhouse, they are

accountants of the soul….

…(presumably) intelligent persons who believe that their intelligence enables them to peer into the souls of others, and to raise them up [or put them down] through the blunt instrument that is the state.

This is done on in the service of concepts that do not bear close examination, such as externalities, public goods, market failure, and social justice, social welfare, and positive rights. I will not repeat my asseessments of those concepts, but refer you to some of them instead:

Greed, Cosmic Justice, and Social Welfare
Positive Rights and Cosmic Justice
A Short Course in Economics
Social Justice
The Meaning of Liberty
Positive Liberty vs. Liberty
More Social Justice
On Self-Ownership and Desert
Luck-Egalitarianism and Moral Luck
Externalities and Statism

More Social Justice

Matt Zwolinksi has a post at Bleeding Heart Libertarians in which he asks “What Is Social Justice?” He offers a couple of specific answers and alludes to others. One of his offerings is something he calls prioritarianism.

Prioritarianism, as I understand it from Zwolinski’s explanation, assumes that (a) the welfare of an individual can be quantified, (b) the welfare of individuals can be summed, (c) the welfare-value of a marginal dollar is inversely proportional to the initial welfare state of the recipient, (d) the inverse relationship is stronger at lower initial welfare-values, and (e) most importantly, in accordance with (b), the welfare gained by the person to whom a marginal dollar is given somehow cancels the welfare lost by the person from whom that dollar is taken.

If this is a valid prescription for “social justice,” it must be capable of implementation. Otherwise, it is no more useful than a map of the Kingdom of Oz.

And who should be in charge of measuring welfare, summing it, and weighing the gains and losses in order to arrive at a socially “just” distribution of income, whatever that is? Well, we know the answer to that question: It has to be the state — or more accurately — elected officials and bureaucrats: people not known for their perspicacity, objectivity, and even-handedness.

In the alternative, a just society could be one where individuals engage in voluntary, cooperative exchanges of goods and services for their mutual betterment, and from the fruits of which they voluntarily aid those whom they know to be in need of aid.

The alternative is inevitably attacked as “unjust.” But it should be noted that such attacks come from individuals (philosophers, politicians, do-gooders, etc.) who would impose their own views of “social justice” on everyone. How any such imposition can be considered more “just” than a regime of voluntary, cooperative, mutually beneficial behavior is beyond me.

I submit that what we now have in the United States is a statist, “prioritarian” regime, with all of real-life arbitrariness, scheming, and graft that inexorably accompanies statism. What we need badly is a reversion to the kind of constitutional order that would allow the alternative to flourish.

Related posts:
Economic Growth since WWII
The Price of Government
The Commandeered Economy
The Price of Government Redux
The Mega-Depression
The Real Burden of Government
Toward a Risk-Free Economy
The Rahn Curve at Work
The Illusion of Prosperity and Stability
Estimating the Rahn Curve: Or, How Government Inhibits Economic Growth

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

Accountants of the Soul

In a post about two of the founders of modern “liberalism,” T.H. Green, and L.T. Hobhouse, I say

Green and Hobhouse . . . were accountants of the soul. Green’s apparent delicacy in warning of too much intervention [by the state] 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.

It is hard to distinguish the mindset of the “liberal” from that of the “libertarian” paternalist, who does not cavil at the prospect of using the power of the state to “nudge” lesser mortals toward “choices” that he deems in their best interest. “Liberals” and “libertarian” paternalists are alike in their abstract love of mankind and particular disdain for individuals.

Related posts (broken links have been fixed):
Greed, Cosmic Justice, and Social Welfare
Positive Rights and Cosmic Justice
Fascism and the Future of America
Negative Rights, Social Norms, and the Constitution
Rights, Liberty, the Golden Rule, and the Legitimate State
Tocqueville’s Prescience
State of the Union: 2010
The Shape of Things to Come

The Land of Sunshine: A Parable

This parable is meant to be disrespectful of many things, not the least of them being our rulers and the rules they foist upon us in their disrespect for us and our liberty. It is not meant to be disrespectful of women or persons of color, except for those among them — and their political champions — who believe that past wrongs justify the multiplication of wrongs into the future.

Once upon at time — not so long ago or far away — there was a land ruled by a wise, young king. Well, he was thought wise because he orated in the unctuous, condescending tones, and he was younger than most of the kings who had preceded him. Let’s just call him “the man.”

Now, the man was known for his unbounded compassion. He would do anything for his subjects, as long as it wasn’t at his own expense or the expense of his large, raucous council of advisers. (More about them, anon.) His preferred method of paying for his acts of beneficence was to pretend that they cost nothing — a ruse that he was able to sustain by taking money from his subjects and promising to repay the debt to their descendants. (This scheme had worked well for the man’s predecessors, and so he adopted it as his own — with a vengeance.)

The man’s pseudo-compassionate heart was troubled by the inequality he found in the land. It was upsetting to him was that not all of his subjects were equal in all respects. Some of the man’s subjects were more capable than others, and therefore had higher incomes than others. Although the man was not troubled about the high incomes of lawyers, movie stars, and basketball players, he nevertheless proposed the imposition of higher taxes on high-income persons, just to get even with them.

Other of the man’s subjects were women who could not do everything that men could do, which the man deemed unfair. Although he did not bemoan the fact that men were inferior to women in many respects, he nevertheless proposed forcing employers to hire women for jobs that men could do better.

And there were those of the man’s subjects who went about with pale, sickly white skin, whereas others sported glowing, healthy-looking shades of gold. And so the man proposed to his council of advisers that all pale persons should be made darker (and thus healthier) by allowing them to spend more time in the sun, and by giving them regular doses of a rare, expensive, and effective elixir.

The council of advisers debated the man’s proposals for months on end. The council had no problem with penalizing capable persons and males, for such practices had been accepted for decades, in the name of equality. Nor did the council object to the practice of sending pale persons to work in the sun, as long as it resulted in more indoor work for the golden ones.

The council’s main objection had to do with the elixir, and whether more of it could be produced so that its new consumers could enjoy it without depriving others of its health-giving powers. In the end, the council agreed with the man that it was more important to create the impression of equality than to worry about such trivial matters as the supply of a health-giving elixir. “Trust us, it will all work out,” were the reassuring words of the council’s leaders.

And thus it came to pass that this not-so-distant land was blessed with less freedom, declining prosperity, ill-bred children, more illness, and equality — but one out of five isn’t bad for government work. The only disappointment came when the pale persons acquired red necks instead of turning golden brown.

Monopoly: Private Is Better than Public

In this discursive post, I use the economic concept of perfect competition as a starting point from which to defend monopoly and to expose the folly and futility of governmental intervention in markets.

PERFECT COMPETITION AS A BOGUS STANDARD

I learned, in the standard microeconomics of my college days, that perfect competition is preferred to these three alternatives:

  • imperfect competition, where there is some degree of product differentiation (real or perceived)
  • oligopoly, where a particular product or service is sold by only a few firms (“product or service” is hereafter called “good,” in keeping with economic jargon)
  • monopoly, where there is only one seller of a particular good.

The theoretical superiority of perfect competition rests on the belief that, compared with the alternatives, it yields the greatest output of goods and, therefore, the greatest degree of satisfaction to consumers; that is, perfect competition maximizes “social welfare.”

The standard analysis has many problems, the most fundamental of which is the observation selection effect. The observer, in this case, is the economist who views the world through the lenses of economic efficiency and “social welfare.”

The construct of economic efficiency involves gross generalizations about economic reality, which are based on ideal firms in an ideal world, not on the behavior of real firms in the messy world of reality. The construct, in other words, sets up an ideal world of perfect competition, divergences from which are judged less than optimal — as if unavoidable, real-world divergences are less valid than the perfections of an imaginary construct. (This is an instance of a Nirvana fallacy, “the logical error of comparing actual things with unrealistic, idealized alternatives.”)

Then there is “social welfare,” which perfect competition is purported to maximize. “Social welfare” is in fact a fictitious device whereby the person who invokes it assumes (implicitly if not explicitly) that the happiness of individuals can be summed, and that he knows just how to do it. The predictable result of “social arithmetic” is a call for some kind of governmental action that effectively redistributes income; for example:

  • Affirmative action, on balance, redistributes income from shareholders, consumers, and more-qualified workers to less-qualified workers.
  • Progressive taxation redistributes income from persons who earn a lot of money (the job-creators of the economy) to persons who earn less money. It also drives out high earners, to the detriment of the rest of us.
  • Trust-busting (which is of particular interest here) amounts to a redistribution of income from the owners of a oligopolistic or monopolistic firm to consumers.

“Social welfare,” in other words, is a phony excuse for playing God — a variant of the Nirvana fallacy. (For more, see this, this, and this.)

HOW GOVERNMENT INTERVENTION DOES MORE HARM THAN GOOD

Why is it not a good thing for government to act in ways that redistribute income from the owners of firms to consumers? There are several reasons, beginning with the artificiality of perfect competition (or something like it) as a model of how markets ought to be organized.

Then, there is the arrogance of a mindset that judges consumers to be more deserving that the owners of businesses — owners who staked a lot of money (and created jobs) on business ventures that might have gone sour (and often do). Is it possible that trust-busting discourages business (and job) formation? You can bet on it.

Related to that, it is necessary to remember that business owners are humans, too — 160 years of communist-populist-“progressive“-“liberal” rhetoric to the contrary notwithstanding. Business owners’ desire for profit is no less legitimate than consumers’ desire for low prices. Government is in the business of penalizing oligopolistic and monopolistic business owners not only because economists have set up a false standard (perfect competition or something like it), but also because the act of penalizing appeals to the envy of many voters and interest groups toward persons with legitimately high incomes. Trust-busting is neither logically nor morally admirable.

It is true that not all industries lend themselves to perfect competition or something like it, but it is neither necessary nor desirable to regulate firms in industries that are characterized by oligopoly and monopoly. (pace Paul Krugman). Oligopoly and monopoly are not iron-clad. Consumers have alternatives: If the price of X is “too high” they can (and will) buy more of Y and Z; if the price of X rises a lot, relative to the prices of Y and Z, the producer of X is likely to find himself with a direct competitor. In the alternative, more consumers will abandon X in favor of Y and Z.

TWO EMOTION-LADEN CASES

What about situations in which there seem to be no ready substitutes for a particular good? Lurking behind this question are fears of private monopolies controlling the supplis of water and medical goods. The case of medical goods is more straightforward, so I will deal with it before considering the supply of water.

Medicine

The supply of medical goods already is artificially low because of government, not in spite of it. Who licenses doctors and grants the A.M.A. a near-monopoly on the accreditation of medical schools? Who licenses and regulates hospitals? Who approves drugs and licenses pharmacists? The list of questions could go on and on, but the answer is always the same: government.

The average person will react along these lines: “Government has to be involved in the provision of medical goods, otherwise we would be taking our lives in our hands every time we go to a doctor or a hospital, and every time we use a drug.” I respond as follows:

The main effect of government regulation of certain goods (including medical ones) is to raise the cost of those goods by imposing costs on their providers and effectively barring additional providers from setting up shop. This unseen cost means that Americans consumer fewer medical goods than they would if government weren’t imposing costs on providers and barring prospective providers. (There is an argument that Americans, on balance, consume more medical goods than necessary because of Medicare, Medicaid, and tax-exempt, employer-subsidized health insurance. But given those distortions, it is true that regulation raises costs and restricts entry.) Is it possible that the net effect of regulations is to make Americans worse off rather than better off? A good case can be made for that proposition. (See this, this, and this.) The case of medical goods exemplifies Bastiat’s axiom that

a law produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them.

Water: The Hardest Case

No Inherent Need for Government Intervention

If the debate about government’s role in medicine evokes much emotion and little reason, any discussion of privatizing the water supply is certain to elicit the rawest of emotions: fear. A typical reaction goes like this: “If government doesn’t provide our water, greedy speculators will corner the market and we’ll all be at their mercy.” It is hard to imagine such a reaction in the 1800s, when a large fraction of the population lived in rural areas, where most water came from privately owned wells or was taken, by private means, from rivers and lakes. Government doesn’t have to provide water, and if it couldn’t stop a you from drilling a well in your backyard (which it can, thanks to its “police power”) many urbanites and suburbanites might be able to supply their own water.

In any event, there is no inherent reason for government to supply water. The simple fact is that “municipal water works” has acquired the totemic status of “public schools.” Both institutions have become so embedded that private alternatives (on a large scale) were unthinkable, until (in the case of public schools) failure became so obvious that it could no longer be ignored. (That the dominant solution to the failure of public schools is to throw more money at them is neither a negation of their failure nor of the widespread perception of failure.)

Scenario 1: “Accidental” Private Monopoly

Given that there is no inherent reason for government to provide water, I begin the analysis of water monopolies with the following hypothetical:

We have with a small, settled community of 25 homes, in which every home has a well (and has had one for generations). It is accepted by all members of the community that each homeowner is the owner of his well; that is, wells are not communal property. Further, every well provides an ample amount of water for such purposes as drinking, bathing, cooking, watering lawns and gardens, washing cars, etc.

Suddenly, because of some unforeseeable geological change, every well but one runs dry. And the owners of the  24 homes without functioning wells (the unlucky 24″) have no immediate or easy recourse to another source of water — a spring, stream, or lake — because there are none within a day’s drive of the community. The only convenient source of water is the 25th  home (“lucky 25″), whose well  seems to provide more than enough water for its owner — enough, in fact, to meet the drinking, bathing, and cooking needs of the “unlucky 24.”

Issues Arising from Scenario 1

How should the “unlucky 24″ cope with the near-term problem of obtaining water for drinking, bathing, and cooking? Suppose that they have two practical options:

  • Appeal to “lucky 25″ by offering him a price for water that would just cover the cost of providing it (electricity, pump repairs/replacements, etc.).
  • Buy water in large quantities from an out-of-area vendor — at a much higher price than they would offer “lucky 25.”

“Lucky 25,” the accidental water monopolist, has the following options:

  • Accept the offer made by the “unlucky 24.”
  • Make a counter-offer by setting a price that is somewhere between the offer made by the “unlucky 24″ and the cost, to them, of buying water from an out-of-area vendor.
  • Refuse to sell water to the “unlucky 24,” for one of the following reasons: (1) It is his right to do so. (2) He doesn’t want to be in the water-selling business, with its attendant distractions. (3) He fears that drawing significantly greater amounts of water from his well will cause it to run dry.

(You should understand that this is a law-abiding community whose residents are respectful of  property rights — unlike the typical government — so that the water monopolist doesn’t have to worry about defending his well and himself against a mob.)

I daresay that the average reader would expect “lucky 25″ to accept the offer made by the “unlucky 24.” But why should the accidental water monopolist accept the offer? He might, out of compassion, help the “unlucky 24″ while they make other arrangements. But his help would be given out of compassion, not obligation.

The Permissibility of “Good Luck”

Yes, the water monopolist may have been “lucky” with respect to water, but perhaps he has been “unlucky” in other respects. Why, if “luck” determines one’s obligations to others, shouldn’t the water monopolist’s neighbors compensate him for his episodes of “bad luck” — the dog that was hit by a car, the underground stream which provides him ample water but threatens to undermine the foundation of his house, an errant wife, incorrigible children, etc.? Must “good luck” be penalized or paid for, as an act of “social justice”?

The answer is “no.” Anthony de Jasay explains, in “Economic Theories of Social Justice: Risk, Value, and Externality“:

Stripped of rhetoric, an act of social justice (a) deliberately increases the relative share … of the worse-off in total income, and (b) in achieving (a) it redresses part or all of an injustice…. This implies that some people being worse off than others is an injustice and that it must be redressed. However, redress can only be effected at the expense of the better-off; but it is not evident that they have committed the injustice in the first place. Consequently, nor is it clear why the better-off should be under an obligation to redress it….

Since Nature never stops throwing good luck at some and bad luck at others, no sooner are [social] injustices redressed than some people are again better off than others. An economy of voluntary exchanges is inherently inegalitarian…. Striving for social justice, then, turns out to be a ceaseless combat against luck, a striving for the unattainable, sterilized economy that has built-in mechanisms…for offsetting the misdeeds of Nature.

Scenario 2: Deliberate Water Monopoly

Suppose, now, that our water monopolist came by his monopoly in an entirely different way — a way that (to most of us) seems to draw on entrepreneurship, not “luck.” Suppose that he (and he alone) drilled a well for the purpose of selling water to his neighbors, whom (he knows and they know) cannot (and never could) find water under their properties. What should the water monopolist charge his neighbors for water? Just as much as they are willing to pay, of course. Is there anything immoral in that? If there is, why is it not immoral for an auto dealer to sell you a car for just as much as you are willing to pay, even if you need that car in order to earn a living?

Why should the water monopolist (or car dealer or anyone else) be forced by a legalized mob (i.e., government) to sell his product for a prescribed price, when he is the person who took the financial risk of drilling a well, not knowing for certain that he would strike water, at what rate it would flow, how long it would flow at that rate, and whether another source of water might materialize because of unforeseeable geological or climatological changes?

The answer to the question is found in emotion, not reason. Emotionally, we hold water to be more precious than, say, automobiles. Yet, many persons consume a lot of water for what might be called non-essential reasons (e.g., watering lawns, washing cars, filling swimming pools), and many persons need cars in order to earn a living. Water, stripped of its emotional baggage, isn’t a sacred commodity; it is merely a commodity that has different prices in different places.

Which brings us to the essential question: Who should supply water?

Why a Government Monopoly Is Worse

Perhaps government should be in the business of telling everyone what kind of cars they can have (or not have). (Not far-fetched, admittedly.) Well, then, perhaps government should be in the business of telling us whom to marry, how many children to have, where to live, etc., etc., etc. If that’s an unappealing prospect, why step down the slippery slope toward it by allowing government to dictate the price of water, as it does by controlling most of the nation’s water supply through municipal and regional water authorities?

What can government do that entrepreneurs cannot? The answer is nothing, except to set prices for water that are unlikely to correspond to the prices that would be set by voluntary transactions between private sellers and their customers. Government monopolies prohibit entry where entry would be possible, for example, along large rivers and around large lakes.

Government monopolies cannot respond quickly, if at all, to changes in costs and variations in demand. The prices set by government monopolies must therefore result in the subsidization of some consumers who would be willing to pay more for their water by taxpayers and/or other consumers who are paying more than they would pay if there were private, competing suppliers of water.

What about the poor persons who, without subsidization, could not afford water for drinking, bathing, and cooking, unless they were to forgo other necessities (e.g., medical care)? So, the market for water should be monopolized by government and the price of water should be distorted for the sake of a relatively small fraction of the population? It would be better to rely on (a) private charity and (if you insist) (b) tax-funded vouchers for the purchase of water.

Scenario 3: Government vs. Private Pricing

Which leads to the next objection to the privatization of the water supply (which was mostly private for a long time in the United States). It goes like this: “Water monopolists would bleed their customers dry; they would conspire to control the supply of water and charge whatever the market will bear.”

To test those assertions, let us consider the extreme case in which the residents of a mountainous area have only one potential source of water (other than rain), which is a river that flows through the area. Suppose “greedy speculator” buys the land surround the river’s source and dams the river, at a place on his land. (I am  ignoring, for purposes of this post, the state of the law regarding such a practice.) “Greedy speculator” then pays for the installation of water pipes to various of his customers, meters their use of water, and charges them (perhaps at different rates) in such a way as to maximize his profit.

If you have been following along, you will have realized that there’ is no difference between “greedy speculator” and government, where it declares a local monopoly on the supply of water. There is, of course, a degree of (misplaced) trust in government, that is, trust that will “do the right thing,” which means robbing Peter to pay Paul. That trust amounts to nothing more than wishful thinking about government and misconceptions about the benefits of private action, spurred by the prospects of profit.

In the case of water, for example, government may not build enough capacity (to the detriment of consumers), it may build too much capacity (at the expense of taxpayers), or it may fail to keep its system in good repair (to the detriment of consumers). Private, unregulated providers, in the more usual instances where some degree of competition is possible, can respond more quickly than government to rises in demand, are less likely than government to overbuild, and are more likely than government to keep their systems in good repair.

But the provision of water a natural monopoly, is it not? That question (with its the implied answer: “yes”) arises from the belief that there is no room in a market for more than one supplier where an extensive infrastructure must be duplicated (as in the case of water plants and supply pipes). There are market solutions to such seemingly insurmountable problems, although — in the cases of electricity, natural gas, and cable TV — their implementation generally has been botched by regulatory incompetence and intent.

How could there be competition in a market for water? Consider the extreme case of “greedy speculator” who buy the land from which a river rises, and dams the river. If he sets the price of water too high, three things could happen:

  • Some residents self-ration, reducing or eliminating the use of water for such things as watering lawns, washing cars, and filling swimming pools. (Remember, my example involves a “speculator” who is interested in making a reasonable return on a large investment, which requires that he set up shop in place that isn’t destitute.)
  • Some residents leave the area for places where their total cost of living, relative to income, is lower than it becomes after “greedy speculator” sets up shop.
  • Competition arrives in the form of a supplier who hauls water in large tank trucks and installs a water storage tank for each of the homes and businesses that subscribe to his service.

Lo and behold, “greedy speculator” forestalls competition, and perhaps some departures from the area, by setting his price “just high enough.” Is that fair?

Still No Role for Government

Well, ask yourself if it’s fair of government to keep a private individual from earning a profit by providing a product of value to consumers, or to restrict that profit in the “public interest.” Ask yourself if it is fair that such practices on the part of government lead to a general reduction in the willingness of entrepreneurs to establish and expand job- and growth-producing businesses of all kinds. (Remember “that which is not seen.”) Ask yourself if it is fair of government to circumvent the private sector and provide taxpayer-subsidized goods and services to the residents of an area, just because it lacks “good” supplies of water or electricity, or just because it is frequently and predictably devastated by fires, floods, hurricanes, or tornadoes. Ask yourself if it is fair of government to provide taxpayer-funded insurance against predictable natural disasters when private insurers won’t do so — with the result that the areas prone to natural disasters remain heavily inhabited, at taxpayers’ expense.

In other words, private action — however competitive or uncompetitive — alleviates a host of problems. Government action tends to exacerbate those problems, and to create unforeseen (and unseen) ones.

CONCLUSION

It is written nowhere (but in the imaginations of statists) that government owes us a green lawn, a residence on a flood plain, or anything else but protection from predators, foreign and domestic. As soon as government strays beyond its proper role, it begins to corrupt civil society and its essential mechanisms, which include free markets.

One of the ways in which government strays is to interfere in markets and to provide services that can be and should be provided through markets. Government — at the behest of politicians, bureaucrats, academicians, and meddlers-at-large — interferes in markets and sometimes becomes a provider on the pretext that certain markets (most of them, it seems) are insufficiently competitive or otherwise have “failed” because they fall short of measures of perfection devised by — you guessed it — politicians, bureaucrats, academicians, and meddlers-at-large.

Government intervention in markets exacts a very high price, in liberty and material goods. It strips us of the ability to do for ourselves what we think needs to be done — as opposed to what some politician, other meddler, or “aggrieved” group believes we ought to do or have done to us. It strips us — even the poorest among us — of the means to do for ourselves that which we need to do. It strips us — even the poorest among us — of the fruits of those labors which are permitted to us.  The degree of theft is so vast as to be unimaginable, but unseen and therefore (mostly) unlamented.

The bottom line: Private monopolies are superior to public ones, and should not be persecuted or prosecuted. Government monopolies are for the benefit of politicians, bureaucrats, academicians, meddlers-at-large, and the the majority of citizens who have been conned into believing that government action is preferable to private action.

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