Month: December 2004

Are You an "Austrian"?

Well, I’m 95-percent “Austrian” according to my score on a 10-question quiz at the website of the Ludwig von Mises Institute:

Your score is: 95 / 100.

Each question is followed by an Austrian School answer (10 points), a Chicago School answer (5 points), a Keynesian-Neoclassical School answer (2 points), and a Socialist answer (no points)–all broadly defined….

1. What is the correct economic status of private property?

A. Property is at the heart of most serious inequalities and oppressions in modern civilization. Only by regulation, transfer payments, redistribution of property, and common ownership can society arrive at fairness, justice, and human dignity for all. Socialist answer

B. Property is a naturally arising relationship between human beings and material things. Property and enforceable property rights make possible economic calculation, a wider and more productive division of labor, and therefore increasing levels of prosperity. Indeed, civilization itself is inconceivable in absence of private property. Any encroachment on property results in loss of freedom and prosperity. The Austrian answer. http://www.mises.org/libprop.asp

C. Property is central to prosperity and economic growth. Accordingly, it is of the utmost importance that the state, or more abstractly the law, maintain and modify the bundle of property rights in such a way as to allocate transactions costs in such a way as to promote maximum growth and economic efficiency. Property does not arise naturally, but is the end product of the legal system. Chicago answer

D. Property is an important component of our social system but its status as a “right” is contingent. It must be subject to regulation and modification for the general good. The state must intervene to prevent abuses of economic power, even at the cost of reducing traditional prerogatives of owners. Keynesian/Neoclassical answer

Your answer: B

The Austrian answer. http://www.mises.org/libprop.asp

You chose the Austrian Answer!

2. What is money and how does it originate?

A. Money can emerge from barter, but private interests will probably not develop it to suit the needs of a modern economy. We need central banks to sustain the financial sector. Efforts to manipulate the economy using the money supply will at best fail, and at worst cause severe problems. Monetary authorities should not increase the money supply at their discretion. They should increase it at a steady rate, matching the long term growth rate of the economy. Chicago answer.

B. Money is a vehicle for exploitation that distorts real values. Money is neither necessary nor desirable, but is an arbitrary artifact of history. Social progress will lead to revolutionary social changes, including the elimination of money. This will end exploitation and result in a society that aims at satisfying real values, instead of aiming at private financial profit. Socialist answer

C. Money always emerges out of barter. The difficulties of finding trading partners under barter systems results in the emergence of commodity monies. Durable, portable, and divisible commodities, like gold and silver, typically fit the bill as money best. Money and related institutions emerge as an unintended consequence of self interested trading. The evolution of such institutions is best left to the competitive market forces that created them in the first place, as governmental intervention will result in inflation and other distortions. Austrian answer. http://www.mises.org/rothbard/money.pdf

D. Money is a creature of the state. Sound monetary institutions require planning and a central bank. Central banks can also stabilize markets. Central bankers can counteract booms and busts in the private sector by expanding the money supply during recessions and slowing it during booms. Public control of the institution of money is key to running the economy. Keynesian/Neoclassical answer

Your answer: C

Austrian answer. http://www.mises.org/rothbard/money.pdf

You chose the Austrian Answer!

3. What is the proper method to conduct research in economic science?

A. The economist should not mimic the behavior of the natural scientists, because the social sciences involve human beings. Human action is characterized by intentional behavior, which involves the rational use of means to achieve desired ends. The very subject matter of economics—capital goods, money, wage rates, etc.—is not defined by physical or chemical properties, but instead by the mental or subjective attitudes that human minds take toward these things. Consequently, the proper method for an economist is to start with self-evident axioms—such as that people try to achieve the highest utility at the lowest cost—and logically deduce conclusions from them. The Austrian answer. http://www.mises.org/StudyGuideDisplay.asp?SubjID=3

B. Like the physicist, the economist (if he wants to be scientific) should construct a precise model that yields quantitative predictions about economic variables, such as GDP and unemployment. Then the economist should test those predictions against the actual data as collected by statistical researchers. At any given time, the best explanation or “theory” of a certain economic phenomenon is that model which yields the best fit between predictions and actual data. The Chicago answer

C. The question is misleading; economics cannot really be scientific in the conventional sense of the term. In physics we have fixed “laws” that are the same in every society and every time period. In contrast, there are no fixed laws in economics. The economist might study a certain historical episode and conclude that, say, rent control didn’t achieve its objectives when it was tried in Manhattan after World War II. Nonetheless, it may still be true that rent control could work in Paris in 2004 if the people in charge take care to avoid the mistakes of the past. There is no distinctly Keynesian answer; this is the position of the historical school.

D. To be scientific, we need to modify the traditional economistic approach of viewing society as nothing but a collection of atomistic, egoistic individuals. In reality, human beings consider themselves to be part of a greater social whole. A more fruitful avenue of research would be to study the complex groups with which people identify, whether class, race, or sex. Such an analysis would reveal the undeniable power of relationships in society, and give a much better understanding of economic events than typical, simplistic economic models. The socialist answer.

Your answer: A

The Austrian answer. http://www.mises.org/StudyGuideDisplay.asp?SubjID=3

You chose the Austrian Answer!

4. What is the reason for the interest rate, and should it be regulated?

A. Interest payments compensate investors for their loss of liquidity when they sink cash into a business project or lend it out for a certain period; the interest rate is the price of liquidity. Interest is a monetary phenomenon, not a “real” one (as the classical economists thought). Modern economics recognizes the role of expectations or what might generically be called “confidence in the future.” For example, if the interest rate jumps from 5% to 10%, this does not mean that people have become more oriented towards present consumption; it could simply reflect heightened anxiety about the economy. Government manipulation of the interest rate is certainly one of several tools needed to smooth economic fluctuations, but by itself this approach is relatively impotent. If everyone fears a worsening recession, employers will not hire more workers or build more factories, no matter how low the interest rate is pushed. Keynesian answer

B. Interest payments are a return on capital, and the interest rate in equilibrium equals the marginal product of capital. The situation is perfectly analogous to labor, where the wage rate equals the marginal product of labor. There are various technological recipes yielding output at various future dates, and consumers have preferences for consumption at various future dates. On the margin, present consumption will be preferred to future consumption, and an extra unit of capital invested will yield an increment in output (available in the future) that just makes the consumer indifferent between consuming now or waiting an additional unit of time and consuming the higher yield made possible by the productivity of capital. The government should not meddle with interest rates, for the same reasons that the government should not meddle with wage rates. Chicago answer

C. “Interest” is just a codeword for profit; a capitalist earns interest when he spends less on wages and raw materials than he earns from selling the final product. This surplus value arises from the exploited workers hired by the capitalist. Under the wage system, workers are paid the bare minimum they need to survive, even though the full product of their labor far exceeds their compensation from the employer. In this respect, the wage system is no different from traditional slavery, where the slave owner keeps the product yielded by his slaves’ toil, and from this fund only “pays” them enough to maintain their bare survival. Obviously interest is a barbaric feature of capitalist societies, and will disappear once the system of wage slavery is overturned. The socialist answer

D. Interest payments reflect the higher value of present goods over future goods. Other things equal, everyone wants to consume sooner rather than later. The current price of a computer might be $1,000, but the price of a claim to a computer delivered in one year would currently sell for less than that, say $900. An entrepreneur might invest $900 in labor and raw materials in order to sell a product next year for $1,000; his implicit interest return is due to the fact that the factors of production represent technological “claims” on future consumption goods, and thus their current price (the $900) is less than their ultimate sale price ($1,000). Obviously the government need not interfere with the market interest rate, since it merely reflects the subjective premium individuals place on a marginal present good over a marginal future good. The Austrian answer. http://www.mises.org/StudyGuideDisplay.asp?SubjID=10

Your answer: D

The Austrian answer. http://www.mises.org/StudyGuideDisplay.asp?SubjID=10

You chose the Austrian Answer!

5. What is the economic impact of saving?

A. In normal times, saving is not economically harmful but in a recessionary environment it can cause the economy to spiral downward. Saving reduces consumer spending and may not be translated into investment spending because of investor pessimism. This will reduce total demand in the economy and lead to unemployment. One way of

Keynesian/Neoclassical answer

B. The vast accumulation of wealth within select classes and families creates an economic oligarchy that shuts out those who cannot gain a foothold within the economic system. Inheritance taxes, and taxes on dividends, are essential to a society that values equality. After all, the yield from vast bank accounts really amounts to unearned income. No society can tolerate some people living off interest while others live paycheck-to-paycheck off the meager sums offered by minimum wages. Socialist answer

C. Saving (which means forestalling current consumption) is essential for capital formation, but there is no socially optimal ratio of consumption to saving that should predominate in society. It all depends on the social rate of time preference, that is, the extent to which people prefer goods sooner to later. Individuals may choose consumption over investment or vice-versa. Government intervention can skew these choices, subsidizing or taxing savings or consumption or both. In order to have the mix reflect the most economical choices, government should have no policy toward saving, even in the case of saving for old age. The Austrian answer. http://www.mises.org/humanaction/chap18sec9.asp

D. There is no investment, and hence no economic growth, without saving. For this reason, the encouragement of saving should be an economic priority. Inflation discourages savings, which is a major reason why a policy of stable money should be the central-banking policy. Empirical studies show that saving takes place over the life-cycle of individuals. Miscalculations can occur, which is why the government might need to encourage private retirement accounts, a system that is more efficient than Social Security because it yields higher returns. The Chicago answer.

Your answer: C

The Austrian answer. http://www.mises.org/humanaction/chap18sec9.asp

You chose the Austrian Answer!

6. What is the source of economic value?

A. Physical objects such as a banana or an automobile do not possess intrinsic economic value. On the contrary, only a human mind can attribute value to such items, and only then do economists classify them as goods. An object is valuable only because there is at least one human being who believes that this object can help satisfy his or her subjective desires. For example, even if a particular root cures cancer, if no one knows this fact, then the root has no economic value, and people will not trade money for it. Consequently, value is caused by an individual’s subjective desires and his or her beliefs about the causal properties of a particular item. The Austrian answer. http://www.mises.org/StudyGuideDisplay.asp?SubjID=4

B. The value of a commodity is equal to the amount of total labor used in its construction. If one bicycle has the same market value as, say, 500 eggs, then we can write 1 bicycle = 500 eggs. In what does this equality consist? Obviously the bicycle is not “equal” to the eggs because of any of its physical properties. If we examine the matter carefully, we will conclude that the one thing that the two have in common is the amount of labor used in their construction. The socialist answer.

C. The value of a good is determined by the interdependence of supply and demand, or what might be called the interaction of cost and utility. In contrast to some schools of thought, which try to explain value on the basis of utility alone, the correct approach is that of Alfred Marshall, who realized that economic value is due to both subjective preferences and to objective technological conditions. To see this most clearly, consider that if the costs of production go up for a particular good, in the new equilibrium its final price must be that much higher. Chicago answer

D. Economic value is a complex matter that cannot be explained through simple formulas. To understand why the people in a particular society value some things more than others, we must study their culture and history. For example, a Native American tribe might have valued a particular animal as sacred. The white Europeans, of course, did not share this value system and thus slaughtered the animals. The same is true of a good or service on the market. Historical School (there is no distinctly Keynesian answer to this question)

Your answer: C

Chicago answer

For optimal results the answer must be: A

The Austrian answer. http://www.mises.org/StudyGuideDisplay.asp?SubjID=4

7. What causes the business cycle?

A. Variations in the money supply cause GDP growth to deviate from its general trend. Absent these variations the economy is relatively stable. Variations in the money supply cause inflationary booms and crashes. Lags in the adjustment of wages with these cycles mean that financial booms and busts will entail significant changes in unemployment rates. Chicago answer

B. Competition in the face of declining profits and increasing monopolization generates increasingly large crises under capitalism. Capitalists invest in labor saving devices to keep unemployment high and wages down. Competition leads to falling profit rates and crashes. Some capitalists will then get good deals on capital from bankrupt capitalists, raising their profitability for the moment. However, the tendency of capitalism to reduce profit rates will lead to further unemployment and another crash. Socialist answer

C. Expansion of the money supply artificially reduces interest rates. This causes a boom in consumer and investor spending. With businesses thinking longer term, and consumer thinking shorter term, a discoordination emerges in the economy. The time relationship between saving and investment, production and consumption, is disrupted. Market processes reveal that many investments are not really profitable but instead are clusters of errors. Businesses then liquidate these investments, causing a recession. Austrian answer. http://www.mises.org/StudyGuideDisplay.asp?SubjID=12

D. Booms begin in excessive optimism, often prompted by technological shifts, resulting in speculative frenzies. Deficient total spending then causes recessions/depressions. When total savings exceed total investment, total spending on goods falls. This decreases the demand for labor to produce these goods. Then pessimism among business investors leads to insufficient aggregate demand and economic hard times. Keynesian/Neoclassical answer

Your answer: C

Austrian answer. http://www.mises.org/StudyGuideDisplay.asp?SubjID=12

You chose the Austrian Answer!

8. What causes economic growth?

A. A balanced relationship between aggregate demand and aggregate supply is the leading determinant of economic growth. Because private markets cannot always provide this, stable institutional environments are necessary. The public sector plays a vital role in securing economic growth by providing a framework of legal and financial institutions. A variety of public-sector efforts such as low-interest rates and subsidies may also play a positive role. A limited amount of regulation is necessary, but this is not necessarily true. Chicago answer

B. Private consumer demand is not enough for economic growth. Overall private spending is often too little, too manipulated by business, and rife with choices that overlook social priorities. Consumers may save too little or too much. This sometimes makes public deficit spending necessary to stimulate the economy. Also, private spending fails to supply public goods. Public spending in such areas is necessary for economic growth—particularly in education, infrastructure, and scientific research. Keynesian/Neoclassical answer

C. The capitalist process causes economic growth, but this is a non sequitur. While capitalism is the most productive system, the distribution of wealth under capitalism is wrong. Whole classes of citizens are left out. Capitalists take advantage of workers by paying them the lowest possible wage instead of the value of their labor. So capitalism delivers the goods, but to the wrong addresses. What we need are workers’ democracies where productivity can go hand-in-hand with a more just distribution of wealth. Socialist answer

D. The source of economic growth is mutually beneficial, voluntary exchange. Within the exchange economy, consumers spend part of their income on goods and services to satisfy their most immediate wants. This drives current production. Consumers save part of their income according to their less immediate wants. This drives entrepreneurial investment in future production and leads to the development of sophisticated capital markets. Private contracts, competition in markets, and private institutions that allow for capital investment and accumulation are all you need to attain optimal economic growth. Austrian answer. http://www.mises.org/journals/qjae/pdf/qjae2_2_5.pdf

Your answer: D

Austrian answer. http://www.mises.org/journals/qjae/pdf/qjae2_2_5.pdf

You chose the Austrian Answer!

9. Do markets create and sustain monopolies and what should be done about it?

A. If the history of capitalism shows us anything, it is that it leads to business concentration. With fewer and fewer firms dictating the terms, the result is ever higher prices combined with ever lower wages. Unions and antitrust enforcement have had some measure of success in curbing this, but neither institution goes far enough to counter the trend toward monopoly within market settings. We must also question the idea that competition itself should be a policy goal. Most often, it is socially wasteful and a slogan repeated by monopolists to justify exploitative behavior. The ideal of cooperation between all, a truly democratic economy, should be the ideal. Socialist answer

B. The market tends to generate monopolies of varying sizes and types. Business should not be permitted to exercise monopoly power in pricing. It can be detected by various formulas comparing costs with output price according to a perfectly competitive model. Geographic monopolies may not be as important as they once were due to advances in transportation technology. What we face today are a variety of technologically driven monopolies, such as the example of Microsoft shows. Still, regulators need to be constantly on the lookout for businesses that attempt to employ market power, enriching themselves at consumer expense. Competition needs rigorous enforcement. Keynesian/Neoclassical answer

C. Economists of the classical school were right to define a monopoly as a government-grant privilege, for gaining legal rights to be a preferred producer is the only way to maintain a monopoly in a market setting. Predatory pricing cannot be sustained over the long haul, and not even the attempt should be regretted since it is a great benefit to consumers. Attempted cartel-type behavior typically collapses, and where it does not, it serves a market function. The term “monopoly price” has no effective meaning in real market settings, which are not snapshots in time but processes of change. A market society needs no antitrust policy at all; indeed, the state is the very source of the remaining monopolies we see in education, law, courts, and other areas. Austrian answer. http://www.mises.org/StudyGuideDisplay.asp?SubjID=7

D. Monopoly regulation has caused more harm than good by protecting particular competitors, not competition. Some types of regulation against trusts are based on flawed models that fail to understand that some firms gain market share solely because of their products’ desirability to consumers. Most cited cases of “path dependency” turn out to be mythical. What is left for regulators to do? As Adam Smith said, they should prevent business conspiracy, blatantly predatory behavior, and otherwise assure a level playing field leading toward genuine competition. Finally, some goods lend themselves to being best provided by monopolies, e.g. courts and defense. Chicago answer

Your answer: C

Austrian answer. http://www.mises.org/StudyGuideDisplay.asp?SubjID=7

You chose the Austrian Answer!

10. What is the role of equality and inequality?

A. Equality is a term that properly relates to mathematics but not to social science. Human beings are unequal in their endowments, opportunities, and will to achieve. Unequal does not mean inferior or superior; it merely means different. Differences are the very source of the division of labor, and, within a market setting, lead not to conflict but cooperation. While differences should be celebrated, property owners have every right to treat people unequally because it is owners that bear responsibility. Legislators, however, should not have any concern for bringing about equality of result or opportunity, either between individuals or groups of individuals classified according to any criterion. The only place for equality concerns the law, which should treat all individuals the same without regard to their station in life. Austrian answer. http://www.mises.org/fipandol.asp

B. It is a great mistake to make equality of result a policy goal, because egalitarian legislation can kill incentives to improve. Punishing the rich is self defeating, even for the poor striving to make their way. Equality of opportunity, however, is something different. It something everyone merits by their very dignity as a human being. Thus should a nation strive for quality educational institutions, institute a limited inheritance tax, and otherwise assist those who, through no fault of their own, lack the means to gain entry into the division of labor. Once these institutions are in place, we will find that the forces of market competition will achieve egalitarian goals through predominately voluntary means. Chicago answer

C. Inequality is an intrinsic feature of a social structure that is mired in a prejudicial overhang from the long and shameful history of the manner in which Western society has treated women and other minorities. The prejudicial impulse, rooted in the spirit of conquest that gave birth to Western capitalism in the first place, is a form of violence and yet part of the corrupt infrastructure of the market economy itself. If the owners of capital were left to their own devices, excluded groups would remain so in perpetuity, so society had to act to restrain them. Full equality will continue to elude us, so long as we have a society that treats people as goods to be bought and sold, and so long as we make a god out of private property. Socialist answer

D. The modern emphasis on equality is the great policy advance of the last century. No longer does the political and economic system exclude women and minorities from participation but rathers include them as a matter of law. These groups tend to be artificially undervalued by the “invisible hand” of the market, which is why there is a role for anti-discrimination and public-accommodations law. The welfare state, too, has benefited society by insuring that the benefits of rising wealth are spread throughout society, so that the rich do not become richer at the expense of the poor. We’ve come a long way, but we still have a long way to go. Keynesian/Neoclassical answer

Your answer: A

Austrian answer. http://www.mises.org/fipandol.asp

You chose the Austrian Answer!

Are You an "Austrian"?

Well, I’m 95-percent “Austrian” according to my score on a 10-question quiz at the website of the Ludwig von Mises Institute.

The quiz is an education in itself. For each question, the quiz-taker must choose from among four detailed and sometimes subtly different answers: an Austrian School answer (10 points), a Chicago School answer (5 points), a Keynesian-Neoclassical School answer (2 points), and a Socialist answer (no points, though negative points would be more appropriate). I chose a Chicago School answer to one question and the Austrian School answer to the other nine questions. Thus my score of 95/100.

To see all 10 questions and answers, click here.

For a more arduous test of your economic philosophy, try the 25-question quiz.

Race, Intelligence, and Affirmative Action

In “Affirmative Action: A Modest Proposal,” I began by writing about the findings of a study which

shows that the income of a Korean orphan who was adopted in the U.S. between 1970 and 1980, through a process of random selection, is about the same regardless of the income of the adoptive parents. On the other hand, the income of the biological children of the same parents is highly correlated with the parents’ income; that is, low -income parents tend to produce low-income children, whereas high-income parents tend to produce high-income children….

I went on to say this:

…The obvious implication of these findings is that intelligence (and hence income) is a heritable trait, one that remains differentiated along racial lines (a consistent but controversial finding discussed here, for example). Thus the findings give further evidence, if any were needed, that affirmative action policies — whether government-prescribed or voluntarily adopted — tend to undermine the quality of workplaces and educational institutions. (I am speaking here of the quality of effort and thought, not the value of workers and students as human beings.)

A reader objects — sort of. He begins by saying:

[T]here’s a flaw in your guest blogger’s logic. He takes the adoption study as evidence that intelligence is a heritable trait and thus passed through racial lines (fine). He then says since affirmative action rewards racial minorities who may be less qualified (fine), that affirmative action tends to undermine quality of work.

[H]is conclusion may be correct, but is only tenuously related to the first premise. he seems to be saying that, on average, if you give preference to minorities, the quality of work will suffer, because on average minorities are less intelligent….

Let’s stop right there and take things one step at a time. What I said is that intelligence “is a heritable trait, one that remains differentiated along racial lines (a consistent but controversial finding discussed here, for example).” There is less controversy about the persistence of the racial differential and more controversy about race, per se, being the underlying cause of that differential. For a sample of the controversy, go to the linked article and follow the many links in the article. One of those links leads to a statement by Charles Murray, co-author of the infamous The Bell Curve, who says in a footnote:

Intelligence is known to be substantially heritable in human beings as a species, but this does not mean that group differences are also heritable. Despite our explicit treatment of the issue, it is perhaps the single most widespread source of misstatement about The Bell Curve.

How is it that intelligence is “substantially heritable” and yet “group differences” may not be heritable? Here is Professor Richard E. Nisbett of the University of Michigan, a noted opponent of the notion of inherent racial disparity:

Estimates of heritability within a given population tell us nothing about the degree to which differences between populations are genetically determined. The classic example is an experiment in which a random mix of wheat seeds is grown on two different plots of land. Within either plot, the environment is kept uniform, so the height of the different plants is largely or entirely genetically-determined. Yet the average difference between the two plots is still entirely environmental, because the mix of genotypes in each plot is identical….

In other words, there’s a school of thought that a racial group that starts out “behind” because of environmental causes (e.g., nutrition and exposure to education and other experiences that “stretch” the mind) stays behind, even as the average intelligence of all racial groups seems to advance over time (a phenomenon known as the Flynn effect). In any event, inter-racial differences in intelligence seem to be real and persistent, and racially related genetic causes cannot be ruled out. (Again, refer to this article.)

The distribution of those differences does not follow the pattern supposed by the reader, who goes on to say this:

[I]f I understand the studies correctly, they say that each race has members that represent the full spectrum of intelligence, and that it’s only on average that the scores are lower.

I’m not sure that the reader correctly understands the distribution of intelligence and its implications for the labor market. Let’s say there’s a pool of 200 “typical” black applicants and 1,200 “typical” white applicants for a “typical” job that requires an IQ of 100. (I use 200 blacks and 1,200 whites because the 1:6 ratio reflects the relative numbers of blacks and whites in the U.S. I take an IQ of 100 because that’s about the mean for whites, whereas the mean for blacks is about 85. IQs are assumed to be normally distributed around those means, with a standard deviation of 15 IQ points.) Now, of the “typical” applicants for this “typical” job, only 32 (16 percent) of the blacks would have an IQ of at least 100, whereas 600 (one-half) of the whites would have an IQ of at least 100. Thus the ratio of qualified blacks to qualified whites would be about 1:19 for the “typical” job.

Bump it up a notch and set the intelligence qualification at an IQ of 115. Then, only 5 (2.5 percent) of the 200 black applicants would qualify, whereas 192 (16 percent) of the 1,200 white applicants would qualify — a ratio of about 1:38. In other words, it gets harder and harder to find qualified blacks as jobs require more intelligence (not to mention specific kinds of education and training). So, it’s irrelevant that there are some blacks at the higher end of the spectrum of intelligence. Why? Because there are proportionately few of them, and fewer still who have the requisite education and training for the kinds of jobs that are associated with high intelligence (e.g., astrophysics, computer engineering, advanced mathematics).

To look at it another way, take 200 randomly selected blacks and 200 randomly selected whites: 100 of the blacks and 168 of the whites would have an IQ of at least 85 (a ratio of 1:1.7); 5 of the blacks and 32 of the whites would have an IQ of at least 115 (a ratio of 1:6.4).

The black-white difference in average intelligence is meaningful, despite what the reader seems to think, because it reflects a significant difference in the distribution of intelligence. University slots and jobs that require at least average (white) intelligence can’t be filled in proportion to the number of blacks in the population, or in proportion to the number of black applicants, without tending to dilute the quality of universities and workplaces. (Again, I am speaking of the quality of effort and thought, not the value of workers and students as human beings.)

That leads me affirmative action, about which the reader says:

Thus [because there are some blacks at the high end of the spectrum of intelligence], affirmative action can be structured in such a way as to give special preference to the higher-achieving members of any minority, who face the difficult task of not being stereotyped by the lower scores of their fellow minorities. I.e., If a white person and a black person have the same or nearly the same qualifications, then you pick the black person.

Yes, as I have just shown, there are blacks at the high end of the spectrum of intelligence, and those blacks are courted assiduously by universities and employers. Why? Because universities and employers are anxious to demonstrate their commitment to affirmative action, diversity, racial equality, or whatever you want to call it. What better way to do that than to admit or hire the “best and brightest” blacks, which is a relatively risk-free proposition for universities and employers. What happens to those blacks who aren’t in the higher reaches of the spectrum of intelligence? Well, that’s where affirmative action, as most Americans know it, kicks in.

Here’s how it seems to work at universities: Blacks get preferential treatment for being black, to the extent that universities can concoct and defend affirmative-action plans that allow them to give preferential treatment. Sometimes a university fails (as in Gratz v. Bollinger), and sometimes it succeeds (as in Grutter v. Bollinger). But if there’s a prevailing tendency among the left-dominated universities of the United States, it’s to allow blacks to meet a lower standard of intelligence, thus displacing some whites who would have made better students and, eventually, better employees. So, at universities, affirmative action isn’t just about “picking the black person” who has “the same or nearly the same qualifications.”

What about affirmative action in the workplace? Here, I speak from long experience. (See my credentials.) Affirmative action, in theory, is supposed to be about hiring and promoting regardless of race, among other attributes. As an example, here’s the Department of Labor’s summary of its guidelines for federal contractors and subcontractors:

Each contracting agency in the Executive Branch of government must include the equal opportunity clause in each of its nonexempt government contracts. The equal opportunity clause requires that the contractor will take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, color, religion, sex or national origin….

It doesn’t say “If a white person and a black person have the same or nearly the same qualifications, then you pick the black person,” as the reader would have it. What it says, in effect, is this: Faced with two equally qualified candidates for hiring or promotion, you can’t discriminate against a black person or a person who belongs to any of the other protected groups. To act in the way that the reader suggests would amount to blatant discrimination in favor of black job candidates over white job candidates, and that’s facially illegal, even though universities sometimes get away with similar discrimination in the name of “diversity.”

Nevertheless, what happens, in practice, is what the reader suggests, and then some: If a black person seems to have something like the minimum qualifications for a job, and if the black person’s work record and interviews aren’t off-putting, the black person is likely to be hired or promoted ahead of equally or better-qualified whites. Why?

  • Pressure from government affirmative-action offices, which focus on percentages of minorities hired and promoted, not on the qualifications of applicants for hiring and promotion.
  • The ability of those affirmative-action offices to put government agencies and private employers through the pain and expense of extensive audits, backed by the threat of adverse reports to higher ups (in the case of government agencies) and fines and the loss of contracts (in the case of private employers).
  • The ever-present threat of complaints to the EEOC (or its local counterpart) by rejected minority candidates for hiring and promotion. Those complaints can then be followed by costly litigation, settlements, and court judgments.
  • Boards of directors and senior managers who (a) fear the adverse publicity that can accompany employment-related litigation and (b) push for special treatment of minorities because they think it’s “the right thing to do.”
  • Managers down the line learn to go along and practice just enough reverse discrimination to keep affirmative-action offices and upper management happy.

The following case, about an employee who was victimized by reverse discrimination, illustrates just about everything I’ve said about the practice of affirmative action in the workplace:

A Federal Aviation Administration employee recently settled an employment discrimination case where he said he was passed over for promotions because of his gender and race.

Michael C. Ryan of Toms River, N.J., who worked at an FAA research and development facility as a GS-14 manager, said that between 1995 and 1997 he was denied eight promotions to GS-15.

After complaining to the FAA, Ryan went to the Equal Employment Opportunity Commission. Nine years later, a formal consent order gives Ryan, a 28-year FAA worker, the managerial and supervisory position he wanted. The order also begins a three-year agencywide policy review intended to reform FAA’s affirmative action policies.

Ryan, a white male, said he was qualified for the promotions he applied for at the William J. Hughes Technical Center in Atlantic City, N.J., but was passed over by people with less experience because he was not a woman or a minority. During the trial, Ryan’s attorney, Hanan Isaacs, argued that four of the seven minority candidates who were promoted were not selected using merit principles, including one person that Ryan trained who had 13 years less seniority.

According to Isaacs, the 22-day trial showed that the candidates were promoted ahead of Ryan so that minority and women promotion quotas could be met. Isaacs said FAA’s 1988 affirmative action plan, which called for “a workforce that looks like America by 2000,” started to go afoul when it compared the racial and gender composition of technical positions to the general population rather than to the minority composition of the comparable workforce.

Isaacs said that an unwritten but well publicized “50-50″ policy” required FAA managers to promote women and minorities at least 50 percent of the time in order to get career and financial incentives. This type of affirmative action has no end-plan and perpetually discriminates against nonminorities, Isaacs argued.

Ryan was offered a settlement a year ago that would have given him back pay – which could total about $100,000 – and the promotion, but Isaacs said Ryan refused because he wanted to see the agency’s policy change.

John G. Larsen, a FAA senior policy analyst, testified during the trial that the agency was not in compliance with the law after 1992 and that its affirmative action program would “almost always come up with the appearance of under-representation.”

Larsen, a 36-year FAA employee, said that after a 1995 Supreme Court ruling which found that preferential treatment based on race almost always is unconstitutional, even when it is intended to benefit minority groups that suffered injustices in the past, the agency’s affirmative action policies became illegal.

He said the FAA refused to conduct a review requested by the Clinton administration following the ruling that would have brought the agency back into compliance with affirmative action laws. “The culture of the agency was one, in my opinion, that did not entertain challenges or disagreement … and nothing changed,” Larsen said.

The agency did not admit liability in the settlement, but did agree to start a three-step comprehensive review of its programs and policies on hiring and promotion to put them into compliance.

A Justice Department spokesman said the department was happy to resolve the nine-year-old case. He said that with the assistance of the court, the department was able to reach a settlement that is fair to both parties and upholds the FAA’s commitment to ensure a workplace free of unlawful discrimination of any form.

That’s the real, illegal, world of affirmative action. And here is the price tag:

Because of affirmative action — and legal actions brought and threatened under its rubric — employers do not always fill every job with the person best qualified for the job. The result is that the economy produces less than it would in the absence of affirmative action….

[A]ffirmative action reduces GDP by about 2 percent. That’s not a trivial amount. In fact, it’s just about what the federal government spends on all civilian agencies and their activities — including affirmative action….

Moreover, that effect is compounded to the extent that affirmative action reduces the quality of education at universities, which it surely must do. But let us work with 2 percent of GDP, which comes to about $240 billion a year, or more than $6,000 a year for every black American….

So, the reader has it about right when he says, in his closing sentence,

It may be true that in practice affirmative action tends to downgrade quality….

But he glosses over the high price we pay for affirmative action, in dollars and divisiveness. And then he closes with this:

…but this [downgrading of quality] doesn’t follow necessarily from the heritability premise, and I find [the guest blogger’s] attempt to use this to bolster his argument inflammatory and intellectually dishonest.

The downgrading of quality — and the price we pay for that — follows directly from the demonstrable premise that affirmative action — as it is practiced — puts race ahead of quality in the selection of students and workers. Putting race first affects quality because of the unequal distribution of intelligence between the races, as intelligence is usually measured. The cause of the unequal distribution of intelligence may be controversial, but as far as I can tell there is no settled science in the matter. The notion of inherent racial differences in intelligence is still on the table, and it carries with it stark implications for the long-term success of blacks in an economy that increasingly demands more intellectual skills and fewer physical skills.

Therefore, it isn’t “intellectually dishonest” to raise the issue of inherent racial differences in intelligence. Nor is it “inflammatory,” except to those who — unlike me — are unwilling to review dispassionately the evidence on all sides of the issue. But dispassion is hard to come by in any discussion of race or affirmative action. That is why I offered my “modest proposal” — which I mean to be taken seriously. It cuts through all the cant and controversy about race, intelligence, and affirmative action. Here it is, again:

…End affirmative action and give every black American an annual voucher for, say, $5,000 (adjusted annually for inflation). The vouchers could be redeemed for educational expenses (tuition, materials, books, room and board, and mandatory fees). Recipients who didn’t need or want their vouchers could sell them to others (presumably at a discount), give them away, or bequeath them for use by later generations. The vouchers would be issued for a limited time (perhaps the 25 years envisioned by Justice O’Connor in Grutter), but they would never expire.

That settles affirmative action, reparations, and school vouchers (for blacks), at a stroke….

Favorite Posts: Affirmative Action and Race

A Final Volley

Timothy Sandefur’s latest post in our exchange of views about the origin of rights is helpful because it enables me to pinpoint the source of our apparent disagreement. We have been talking past each other.

Sandefur has insisted that “rights are real even when they are not being enforced.” He finally makes clear (to me) that his basis for saying that rests on the proposition of self-ownership. That is, if we own ourselves — and I agree that we do — then our right to be left alone, as long as we leave others alone, arises from within and is not a grant from anyone else — not a family, a Pleistocene hunting party, a tribe, or a formally constituted state.

I’ve been taking all of that for granted. I’ve expressed the concept of self-ownership — ineptly, it seems — in my notion of a primordial yearning for rights among humans. Sandefur asks,”Is their “yearning” based on the fact that, as human beings, there are certain things that may be done and not done to them…?” Yes, of course.

What I’ve been talking about in my exchange with Sandefur isn’t whether rights are real, or whence they flow, but how they are given force. There is a difference between having a right and being able to exercise that right. That’s where groups come in, be they families, Pleistocene hunting parties, tribes, or formally constituted states. Even though there are certain things that may not, by right, be done to an individual, the individual may not be able to prevent those things without help from others. And it often takes political bargaining to procure that help. (Politics precedes the state and goes on independently of it, for politics is “the process and method of decision-making for groups of human beings. Although it is generally applied to governments, politics is also observed in all human group interactions….”)

In the extreme case, a multitude of individuals will band together to overthrow a government and to form a nation-state for the purpose of preventing the existing government from oppressing the rights of the multitude. That was the rationale for the American Revolution. It was also the ostensible rationale for the Russian Revolution (among many others of its ilk), and look where that led.

So, I don’t insist — and have never insisted — that the state is the source of rights. All I’ve been trying to say is that the state may (or may not) enable persons to exercise their rights. In the United States, for example, the central government was formed so that Americans could exercise certain rights, but the same government was an accessory to the practice of slavery, for almost 80 years following the end of the Revolutionary War. Then, with Lincoln’s accession to the presidency, the central government not only opposed slavery but fought a war that ended it. The central government also since acted to recognize and enforce rights in other instances (e.g., securing votes for women, securing votes for blacks, and ending the military draft).

Yet that same central government has done much through taxation, legislation, and regulation — especially in the last 70 years — to suppress the free exercise of rights. The big question is how to reverse that suppression, as I discuss here. The two most promising ways, in my view, are through the appointment of Supreme Court justices who are federalists (in the contemporary meaning of the word) and the devolution of power to the States. As I said in my previous post,

the power I would devolve wouldn’t include the power to roll back those rights now recognized in the Constitution. Rather, I would devolve legislation, regulation, and taxation to the maximum extent consistent with preserving those rights.

There’s a lot more to be said about federalism and devolution than I have time to say right now. I’ll save it — and many other things — for the promised post in which I will state systematically what I believe about rights, government, and governance.

In closing, I hope that this post clears up the apparent disagreement between Sandefur and me about the origin of rights and the role of government in securing the free exercise of rights. If it doesn’t, so be it. For, this is my last volley in this exchange, and my last substantive post at this blog, but for the one mentioned above, which I’ll get to in my own good time. I’m taking a break from blogging and from reading blogs — probably a long break, perhaps a permanent one.

Sandefur and God

Timothy Sandefur, has responded to “Rights and Obligations“) in this post. I will not address Sandefur’s post point-by-point here. Rather, I will address two of Sandefur’s key points, then, in a later post I will state systematically what I believe about rights, government, and governance. I have written dozens of posts about my views on those subjects, but I have never strung my ideas together in a single post, which may explain Sandefur’s apparent misunderstanding of my views.

Sandefur opens by saying that “[t]here are many reasons to object to [my] view that rights are conferred by ‘political institutions’.” I have many reasons to object to Sandefur’s mischaracterization of my political philosophy throughout his post, not the least of which is the allegation that I deny that the Constitution “is based on pre-political notions, such as equality or consent.” To the contrary, as I said in the very post that he attacks,

[h]uman beings — having a primordial yearning for rights — form a political institution and adopt a constitution for the purpose of defining and securing those rights, as they define them through bargaining.

He has a problem with the final clause of that sentence, which I’ll come to. For now, I want to set the record straight about my view of the origin of rights. When I agree with Maxwell Borders (whom I was quoting) where he says that “[r]eal rights are conferred by political institutions,” I agree because the operative word is “real” — as opposed “dreamt of” or “hoped for” or “recognized and enforced by common consent within a band of hunter-gatherers, only to be violated by a rival band of hunter-gatherers.” The rights of Americans are not “real” unless they are secured (to the extent practicable) through the police, courts, and armed forces — and sometimes even by Americans acting in their own defense.

Sandefur might object to the sense in which I am using “real.” For, he says that “[r]eality is not ‘defined’ by some entity standing outside of it and determining its contents; it simply is.” Regardless of where rights come from, I don’t think they’re “real” until they’re actually recognized and enforced (realized) — be that by a band of hunter-gatherers that’s able to police itself and repel marauders; be that by the police, courts, and armed forces of the United States of America; or be that by those relatively few Americans who have the wherewithal to defend themselves against direct attacks on their persons and property. If Sandefur means to imply that rights are “real” in a Platonic sense, that is, existing independent of the human mind, then he simply believes in a different kind of god than that of the religionists whose beliefs he rejects. (I apologize if I’m misinterpreting him as badly as he misinterprets me.)

The second point I will address here is Sandefur’s suggestion that my view about the role of political institutions in the realization of rights makes me something other than (less than?) a libertarian:

[H]ow is [he] to object when the “political institutions” which create our rights are drawn in such a way as to exclude blacks, or other politically unpopular minorities from the “bargaining” process? [He] has (I hope, unknowingly) adopted the view of Stephen Douglas, which is as far from libertarianism as one can go. True libertarianism reveres the freedom of the individual. [He], however, has adopted a principle that reveres the freedom of states. It is not neo-libertarian; it is paleo-conservative.

Here, Sandefur conflates the ideal and the real. Libertarianism is an ideal (perhaps a Platonic ideal in Sandefur’s mind). Its tenets can be realized only through political bargaining — whether that’s in a band of hunter-gatherers or in the United States of America — which sometimes takes the extreme form of warfare. The ideal and the real would be identical only in a world in which almost everyone believed and practiced the tenets of libertarianism. (The holdouts could be bribed or coerced into going along.) There is no such world. To believe otherwise is to believe in a vision of human nature that is belied by history and current events. (Hobbesianism is merely a realistic view of the world.)

None of that means acceptance of the status quo by libertarians. Political bargaining led to the recognition of slavery in the original Constitution and left the question of slavery to the States. But political bargaining — in the extreme form of warfare — led to the abolition of slavery. Further political bargaining, led to Brown v. Board of Education, its enforcement, and the Civil Rights Act of 1964, and so on. The end of slavery and the recognition of equal rights for blacks couldn’t have been attained without political bargaining.

Do I want to devolve some power to the States and, thereby, to the people? You bet (as I have discussed here and here). But the power I would devolve wouldn’t include the power to roll back those rights now recognized in the Constitution. Rather, I would devolve legislation, regulation, and taxation to the maximum extent consistent with preserving those rights. (For more about my view of the respective powers and rights of the central government, the States, and the people, read this, this, and this.)

So, you can call me a classical liberal, a libertarian, a neo-libertarian, or Hobbesian libertarian (and I have called myself each of those things at one time or another, in an effort to label my principles) — but I don’t see how anyone can suggest that I might be a paleo-conservative. That would be as off-target as suggesting that Sandefur is a Christian.

Sandefur may choose to comment on this post; that’s his prerogative. But he might want to wait until I’ve systematically exposed my views about rights, government, and governance in the followup post.

Why We Fight

December 7, 1941


September 11, 2001


I was far too young on December 7, 1941, to understand what had happened on that awful day in American history. I remember September 11, 2001, all too well.

I am not by nature an empathic person. But on the morning of September 11, 2001, I immediately empathized with those Americans who — 60 years earlier — must have felt the kind of shock, fear, and rage that I felt when I saw and learned what 19 vicious fanatics had unleashed in New York, Virginia, and Pennsylvania. Now we are engaged in a war — at home and abroad — against the comrades and supporters of those 19 vicious fanatics.

Some Americans support that war but question the way our government is pursuing it. Other Americans wonder why we are engaged in that war or whether it is worth the cost. I will not try to persuade either of those groups, nor will I call them names. My thoughts, today, are aimed at those who have supported the war and the way the government is pursuing it, but who may be beginning to waver in the face of what the press portrays as adversity.

Don’t lose heart. Don’t fall victim to the post-Vietnam syndrome of American defeatism. I will explain.

Vietnam was the wrong war, in the wrong place, at the wrong time. But once we had committed our forces there, we should have fought to win, regardless of the amount of force required for victory. Why? Because our ignominious withdrawal from Vietnam changed the national psyche — especially coming as it did within a generation of the stalemate in Korea. As a result of Vietnam, we went from believing that we could win any war we set our minds to win to believing that there wasn’t a war worth fighting.

Our (incomplete) victory in the Gulf War of 1991 came so quickly and at so little cost that it didn’t really reinvigorate America’s military self-confidence. Our 1999 bombing campaign in Kosovo succeeded only in showing our willingness to win a quick victory (if it was that) in a situation that posed little or no threat to American forces.

On the other hand, the new, defeatist American psyche — which most of the mainstream press has been striving for 30 years to perpetuate — manifested itself in our abrupt withdrawals from Lebanon (1983) and Somalia (1993) after the public saw “too many” body bags. Then there was our legalistic response to the 1993 World Trade Center bombing and our tepid military response to the 1998 bombings of the U.S. embassies in Kenya and Tanzania. The sum total of American actions in 1983, 1993, and 1998 — coupled with the obvious ascendancy of American defeatism — surely led Osama bin Laden to believe that he could accomplish his aims through a few spectacular terrorist attacks within the U.S., and the threat of more such attacks.

Thus, although we may be having a hard time in Iraq — and the hard time may continue for a while — we cannot back down. We must redouble our efforts to quell the insurgency and to build a stable Iraq. To do otherwise would be to admit that the American psyche remains defeatist. It would invite our enemies and potential enemies to take bold actions — if not directly against us, then against our interests around the world. We would find it harder and harder to fight back, diplomatically and militarily, against increasingly emboldened enemies and rivals — even if we had the will to fight back. Vital resources would become exorbitantly expensive to us, if we did not lose access to them altogether. America’s economic and military might would descend together, in a death spiral, and with them — very likely — the remnants of domestic civility.

And that is how bin Laden will destroy America, if he can. And that is why we must persevere in Iraq.

Some argue that such scenarios are so unrealistic as to be unthinkable. Well, that’s what English pacifists were saying about Hitler until 1939.

Then, there are those who profess to believe that America would be better off shorn of its economic and military might. They should reflect on the 1930s, when we were mired in the Great Depression and surrounded by a rising tide of totalitarianism.

Others, mimicking the one-worlders who dominated the conventional wisdom about foreign policy after the two world wars, suggest that our hubris foments hatred, hostility, and rivalry toward America . Their naïve notion — based on hope rather than reality — is that we would court less trouble and find more support by suppressing our sovereign pride and adapting our values, interests, and policies to those of “the international community.” Those who think that should consider this:

The sovereignty of the United States is inseparable from the benefits afforded Americans by the U.S. Constitution, most notably the enjoyment of civil liberties, the blessings of more-or-less free markets and free trade, and the protections of a common defense. To cede sovereignty is to risk the loss of those benefits….

Given the low estate of civil liberties and free markets in Europe — and most of the world — it is worth almost any price to preserve America’s sovereign independence, which is the bodyguard of America’s values and interests. The immediate price we must pay is the price of perseverance in Iraq.

Rights and Obligations

When it comes to the origin of rights,* I’m with Maxwell Borders, who — in the course of a long, delightful post at Jujitsui Generis — says this in reply to another blogger:

…“Real rights are conferred by political institutions” is not the same as saying “real rights are conferred by a sovereign.” The former expresses the complex relationship in a social contract between agents, their laws, and their government. So, yes, they are both conferred and protected by such institutions, unless you are one of these anarcho-capitalists who lives in a fantasy world where private Team Americas will go off and protect us from the baddies….

I would put it just a bit differently: Human beings — having a primordial yearning for rights — form a political institution and adopt a constitution for the purpose of defining and securing those rights, as they define them through bargaining.** The U.S. Constitution, as amended, therefore amounts to a contract. (It’s an unusual sort of contract, to be sure, in that breaches are hard to remedy and those who inherit it can amend it only by an arduous process.)

A contract that grants rights usually assigns obligations, as well. What obligations does the U.S. Constitution implicitly or explicitly assign to Americans, as citizens? Here’s my list, in no particular order:

  • Obey the law, generally
  • Pay taxes
  • Accept the money of the United States as legal tender
  • Respect patents, copyrights, and other recognized forms of intellectual property
  • Refrain from rebellion and insurrection
  • Serve in the armed forces (if the law requires it)
  • Refrain from committing treason
  • Serve on juries
  • Do not take anyone into slavery or involuntary servitude.

The list doesn’t seem onerous. Then I think about some of the laws we must obey and the burden of taxation we bear. That line of thinking enables me to understand what drove a brave band of men to rebel against British rule, create a new nation, and establish the Constitution — which has been so badly breached.

__________
* I’ve addressed the nature and origin of rights in several posts at Liberty Corner: here, here, here, here, here, and here. (Please overlook the somewhat sloppy treatment of natural rights in the earlier posts.)

** Of course, things don’t always work out as intended. See here, here, and here, for example.

No Way Out?

The three branches of the federal government, individually and severally, have been harassing the Constitution since 1789, and raping it since the New Deal. When the legislative and executive branches aren’t conspiring to infuse new meaning into the Constitution, the judicial branch seems to take up the slack. What to do?

Secede and form a more libertarian union? Secession is an appealing idea (for Red-Staters), if an unrealistic one. There is the idea of “taking over” a State in order to create a haven of liberty, but that idea — propounded by the Free State Project — seems to be going nowhere. And besides, what’s the good of taking over a State when the central government already has usurped most of the powers of the States and many of the liberties of their citizens?

Nullify disagreeable statutes and court rulings? That’s been tried, but it’s no more likely to succeed than secession. Anyway, nullification is a recipe for legal chaos. It would yield lucrative, lifetime employment for yet another army of lawyers, who would advise individuals and businesses with interests in several States as to their rights and obligations, and who would represent those individuals and businesses in endless litigation.

Strip courts of jurisdiction or invoke the doctrine of departmentalism? Those might be good solutions if courts were the only problem. But jurisdiction stripping and departmentalism, to the extent they’re constitutionally valid, leave us defenseless against legislative and executive fiat. The courts aren’t entirely useless, it’s just that you never when they’re going to stop the rape of the Constitution or join in.

Promote federalism? Well, that’s where the Supreme Court could help the cause of liberty. But to get there, the president must nominate the right judges and the Senate must confirm them. I don’t think that the left is really ready to accept devolution of power to the States (even to Blue States), especially if it seems likely that a federalism-minded Supreme Court would overturn Roe v. Wade.

That’s my list of not-so-serious and serious options for restoring the law to something resembling the meaning of the Constitution. Promoting federalism seems the most promising option, but it requires an unlikely (unholy?) alliance between left and right.

Libertarianism and Conservatism

Timothy Sandefur said this in a recent post:

…As I argued just the other day, libertarianism is a variety of liberalism. Its primary concern is with the liberation of the individual. Conservatism, properly understood—I mean, real, honest to god conservatism of the Russell Kirk, Richard Weaver, Robert Nisbet variety—is nothing like this. It is about the stability of society….

…Some large libertarian segments, most notably Reason magazine, have simply given up on the right wing, and are overtly courting the left, hoping that social issues will draw the left into greater embrace of economic freedom. I’m really not sure whether that strategy will work—I think the left is as resolutely hostile to individualism as the conservatives are—but do we really have anything to lose?…

I’ve been pondering that question, because I am rather a Hayekian, whereas Mr. Sandefur is an Objectivist. (Libertarianism is a big tent, isn’t it?) I, too, am concerned with the liberation of the individual — but I view a stable society as a necessary condition of liberation. Stability helps to ensure that we keep the liberation we’ve gained as individuals, without sacrificing other values, such as the prosperity we enjoy because of somewhat free markets and the security we enjoy because we remain resolute about fighting criminals and terrorists.

Of course, there is such a thing as too much stability. For example, a society that frowns on actions that do no harm to others (e.g., a white person’s trading with or marrying a black person) and then uses the government to bar and penalize such actions is not conducive to liberty.

But efforts to secure personal liberation can be destabilizing, and even damaging to “liberated” groups, when “liberation” proceeds too swiftly or seems to come at the expense of other groups (e.g., the use of affirmative action to discriminate in favor of blacks, the insistence that marriage between man and woman is “nothing special” compared with homosexual marriage). For, as I said here, “[t]he instincts ingrained in a long-ago state of nature may be far more powerful than libertarian rationality.”

Where does that leave libertarians? Well, it leaves this libertarian rather more sympathetic to conservatives, who are more reliable than leftists about defending life and economic liberty. As I said here:

…Social freedom has advanced markedly in my lifetime, in spite of rearguard efforts by government to legislate “morality.” Government control of economic affairs through taxation and regulation has advanced just as markedly, especially under Democrats.

In sum, libertarians may be repulsed by the moralists who have taken over the Republican Party, but that moralizing, I think, is a lesser threat to liberty than regulation and taxation. For that reason — and because Republicans are more likely than Democrats to defend my life — I’m not ready to give up on the GOP.

When I say “defend my life,” I mean on city streets as well as overseas.

So, yes, in answer to Mr. Sandefur’s question, I think libertarians have a lot to lose by throwing in with leftists. And they probably have nothing to gain that won’t be gained anyway, as society proceeds — in its glacial way — to liberate individuals from the bonds of repressive laws.

Why should libertarians make a Faustian bargain with the left to achieve personal liberation — which, with persistence, will come in due time — when the price of that bargain is further economic enslavement and greater insecurity?

The State of Nature

Is the “state of nature” literal or metaphorical? I have always thought it metaphorical, but I may have to think again after reading a review by Denis Dutton of Paul H. Rubin’s Darwinian Politics: The Evolutionary Origin of Freedom. Here’s a relevant sample of Dutton’s very long review:

The scene of evolution is the Environment of Evolutionary Adapted-ness, the EEA, essentially the Pleistocene, the whole, long period lasting from 1.6 million years ago up until the shift to the Holocene with the invention of agriculture and large settlements 10,000 years ago. Our present intellectual constitution was achieved by about 50,000 years ago, or 40,000 before the Holocene….It was in the earlier, much longer period that selective pressures created genetically modern humans….

Pleistocene evolution is often associated with the savannahs of East Africa, but human evolution occurred in many places out of Africa — in Europe, Asia, and the Near East. It was going on in the Ice Ages and during interglacial periods. The wide-ranging, hunter-gather species we became did not evolve in a single habitat, but adapted itself to all sorts of environmental extremes….It is all of these forces acting in concert that eventually produced the intensely social, robust, love-making, murderous, convivial, organizing, squabbling, friendly, upright walking, omnivorous, knowledge-seeking, arguing, clubby, raiding-party, language using, versatile species of primate we became: along the way to developing all of this, politics was born.

Rubin begins with that bracing idea that the often-coercive political control placed on human beings since the advent of cities is character­istic only of the Holocene. The human desire for freedom, he argues, is an older, deeper prehistoric adaptation: for most of their existence, human beings have experienced relative freedom from political coer­cion. Many readers will find Rubin’s thesis counterintuitive: we tend to assume that political liberty is a recent development, having appeared for a while with the Greeks, only to be reborn in the eighteenth century, after millennia of despotisms, for the benefit of the modern world. This is a false assumption, a bias produced by the fact that what we know best is recorded history, those 500 generations since the advent of cities and writing.

Our more durable social and political preferences emerged in prehistory, during the 80,000 hunter-gather generations that took us from apes to humans….

…In what follows, I’ll review a few basic components of hunter-gatherer political structures as described by Rubin.

Group size. Hunter-gatherer bands in the EEA were in the range of 25 to 150 individuals: men, women, and children….

This group size for hunting parties remains a persistent unit of organization even in mass societies of millions of people — or, say, industrial firms or college faculties of thousands. It is in fact the default “comfortable” size for human working groups….We can try as a thought experiment to imagine alternative default group sizes: under different conditions….In our actual world, however, hunting with two hundred people would be an organizational challenge, if not a nightmare, as are most working parties of that size: that is why working groups such as company boards, university committees, and fielded soccer, football, and baseball teams tend to be hunting-band size.

Dominance Hierarchies. The formation of hierarchies, common among animals and found in all primates, is another trait universal in human societies. In the EEA, Rubin surmises, social life was generally orga­nized by so-called dominance or pecking-order principles….

Dominance hierarchies of the Pleistocene did not feature strong coercion from the top of the order, what we might term dictatorship, but required cooperation down the line….A desire for freedom, then, for relative personal autonomy within the group, is a powerful Pleistocene adapta­tion pitted against extreme coercive hierarchy….

Envy in a zero-sum society. One difference between a hunter-gatherer mentality and understandings needed today involves the nature of hierarchy itself. Hierarchies in the EEA evolved for a zero-sum resource environment: whatever was available was divided according to power or status. Trading in such circumstances is a zero-sum game: every bit of resource one person or family owns is something another family does not own. This default Pleistocene view of a zero-sum economy dogs our thinking today and results for the modern world in two undesirable features. First, we are prone to envy, to feeling dispossessed or cheated by the mere fact that others own what we do not own….Second, zero-sum thinking….makes it hard for us easily to understand how trade and investment of capital can increase the sum total of wealth available to all. We are therefore not well adapted to make sense of today’s economic system….

Risk and welfarism. Rubin speculates that in the EEA, resource availability fluctuated unpredictably (owing to weather change, disease, and natural events beyond a group’s control). Skill and hard work could help to meet these threats when they occurred, but individuals still would be “subject to significant variations in income” that could be fatal. Such risks, Rubin argues, predisposed humans to look for ways to insure survival through periods of hardship. An evolved moral prefer­ence for resource sharing is one form of such insurance, one way of handling risk. Societies of families, which is what we were in the EEA, are generally risk-averse….

Such… conservatism goes along with two other impulses. The first is our impulse to share as a form of insurance for lean times. The second, intrinsically connected with envy, is our desire to knock down pecking-order hierarchies, to foil the concentration of too much wealth at the top of the order. The first tendency, part of ancestral altruism, is a source of welfare in the modern state, but so is the second, which inclines us to tax the rich: an impulse toward income redistribution for the poor is a deeply Pleistocene adaptation, according to Rubin.

These preferences produce much tension in modern polity….

Youth, defense, and monogamy. Sports teams gather in stadiums over the world to engage in combat, cheered by their home fans….Despite the odd, wasteful way organized team sport consumes time and resources for very little utility beyond amusement, it is a human universal. This seems less strange, Rubin says, if we consider two aspects of sport: “First, the actions of the players are closely related to what would have been military actions in the evolutionary environment. Running, throwing projectiles (balls), kicking, hitting with clubs (bats, hockey sticks), and knocking down opponents — all of these actions are direct modifications of ancestral actions that would have been related to defense from others or offense against them.” The second aspect gets down to the evolutionary use of strong, aggressive young men: “the lives of our ancestors often de­pended on the strength and prowess of their young males….”

…Young fighters have a place in a general pattern of thinking in the Pleistocene: “human tastes for defense, and sometimes offense, are natural. . . . Pacifism is not a belief that would have been selected for inthe EEA.”…

Untenable libertarianism. Rubin’s summary of the political impulses and preferences of the Pleistocene presents a mixed and contradictory picture. This makes it possible for most political theorists to find inspiration for a favored point of view somewhere in hunter-gatherer psychology. Looking at life in the EEA, fascists and militarists can take heart, and so can Rawlsian egalitarians, Peter Singer socialists, and liberals of either the free-market or welfarist stripe. Still, the big picture for Rubin shows behavioral tendencies that we ignore at our peril. One, for example, is that as practiced in recent U.S. history, affirmative action programs are liable to create social friction and undermine the legitimacy of the state, perhaps outweighing benefits of such programs in the long term….

Before anyone jumps to the conclusion that Rubin is using evolution­ary psychology merely to support his own political predispositions (an antipathy to affirmative action being one of them), we should note what he says about libertarianism. Rubin confesses that libertarianism — the minimal interference by the state in the life of the individual — appeals to him personally: “in a libertarian regime, government would define and protect property rights, enforce contracts, and provide true public goods, but would do nothing else.” That is obviously not what people want, or there would have been more libertarian governments, Rubin says. Libertarianism was not a viable strategy for the EEA. The actions of individuals produce by-products to affect whole communities, and “we have evolved preferences to control these actions.” We are genetically predisposed, it seems, “to interfere in the behavior of others,” even where the behavior has little demonstrable adverse effect on a community….We are fundamentally meddlesome creatures.

Rubin speculates that this impulse to control our fellows, even in matters that have little or no material effect on living standards or resource allocation, is an adaptation designed to increase group solidarity….

Darwinian Politics in its way exemplifies Kant’s famous remark that “from the crooked timber of humanity no truly straight thing can be made.” It is not, to play on Kant’s metaphor, that no beautiful carving or piece of furniture can be produced from twisted wood; it is rather that whatever is finally created will only endure if it takes into account the grain, texture, natural joints, knotholes, strengths and weaknesses of the original material. Social constructionism in politics treats human nature as indefinitely plastic, a kind of fiberboard building material for utopian political theorists. Evolutionary psychology advises that politi­cal architects consider the intrinsic qualities of the wood before they build….

If Dutton correctly interprets Rubin, and if Rubin is on the right track, it’s no wonder that libertarianism seems to succeed only at the margin. For every success (e.g., deregulation of airlines and telephone service, abolition of the draft) there have been many countervailing and costly failures (e.g., Social Security, Medicare, excessive environmentalism, campaign-finance “reform”, affirmative action, gross abuse of the Commerce Clause, and on and on). And that may the best we can hope for. The instincts ingrained in a long-ago state of nature may be far more powerful than libertarian rationality.

Race, Intelligence, and Affirmative Action

In “Affirmative Action: A Modest Proposal,” I began by writing about the findings of a study which

shows that the income of a Korean orphan who was adopted in the U.S. between 1970 and 1980, through a process of random selection, is about the same regardless of the income of the adoptive parents. On the other hand, the income of the biological children of the same parents is highly correlated with the parents’ income; that is, low -income parents tend to produce low-income children, whereas high-income parents tend to produce high-income children….

I went on to say this:

…The obvious implication of these findings is that intelligence (and hence income) is a heritable trait, one that remains differentiated along racial lines (a consistent but controversial finding discussed here, for example). Thus the findings give further evidence, if any were needed, that affirmative action policies — whether government-prescribed or voluntarily adopted — tend to undermine the quality of workplaces and educational institutions. (I am speaking here of the quality of effort and thought, not the value of workers and students as human beings.)

A reader objects — sort of. He begins by saying:

[T]here’s a flaw in your guest blogger’s logic. He takes the adoption study as evidence that intelligence is a heritable trait and thus passed through racial lines (fine). He then says since affirmative action rewards racial minorities who may be less qualified (fine), that affirmative action tends to undermine quality of work.

[H]is conclusion may be correct, but is only tenuously related to the first premise. he seems to be saying that, on average, if you give preference to minorities, the quality of work will suffer, because on average minorities are less intelligent….

Let’s stop right there and take things one step at a time.

Click here for full post.

More about Social Security

UPDATED, 12/16/04 – 12/18/04

Earlier, I explained why privatizing Social Security makes economic sense. Now, Arnold Kling has an article (“Social Security’s Worn-Out Roof“) at Tech Central Station on the same subject:

Suppose that we want to reform Social Security so that your contributions go into a reserve account. One particular form that this reserve account could take would be a savings account in your name and under your control (within limits). That is called “privatization.”…


Your contributions that go into a reserve account cannot be used to pay benefits to current retirees. The government will have to borrow additional money in order to meet its obligations. However, by the same token, because of the reserve account, when you retire the government will not have to find as much money to pay for your benefits. The additional borrowing in the short term is like taking out a loan to repair [your] roof. But just as the new roof reduces future maintenance costs, putting your contributions into a reserve fund reduces the government’s future cost of providing Social Security benefits.

If “privatization” or a similar reform were to be enacted, the government would have to borrow more money.[*] That would be the “cash flow cost.” However, the economic cost is zero. The government is extinguishing an off-balance-sheet liability (unfunded promises to pay benefits) and creating an equivalent on-balance-sheet liability (new debt). To put it another way, the government’s “cash flow cost” incurred today will be offset by a “cash flow benefit” many years from now, as you receive lower tax-financed benefits and instead live off your reserve account. The net effect is essentially a wash….[**]

It is important to understand that, to a first approximation, there is no difference between maintaining the status quo and undertaking privatization that is financed entirely by borrowing. Either way, future generations have a liability.[***] Under the status quo, that liability is off the government’s balance sheet, like the dilapidated roof. Under privatization, the off-balance sheet liability is extinguished in exchange for debt that appears on the balance sheet.

As I have pointed out elsewhere, privatization financed by borrowing would have some advantages relative to the status quo. In particular, it would create a “lockbox” that would keep government from adding to the disconnect between its promises and the ability to find tax revenue to make good on those promises….

Precisely.

UPDATE:
I want to be clear that I’m not rescinding my earlier suggestion that the creation of private Social Security accounts would spur economic growth (see here, for example). With higher incomes, future taxpayers could more readily afford to bear the burden of supporting those retirees who remain somewhat dependent on Social Security.

I agree with Kling on two points: Privatization would take decisions about future benefits (and thus taxes) out of the government’s hands. Privatization is a “wash” to the extent that government borrowing to finance the transition to private accounts simply recognizes — and finances — future deficits.

I disagree with Kling that privatization is a wash when it comes to economic growth. Kling believes that the net economic stimulus from privatization is approximately zero because he subscribes to the crowding-out hypothesis: A dollar spent by the federal government is a dollar that can’t be spent in the private sector; in particular, a dollar borrowed by the federal government is a dollar that can’t be invested in growth-producing capital.

The crowding-out hypothesis, however, is based on a static analysis — a mere truism — which says that a given level of national output can be reallocated, but not changed. But the crowding-out hypothesis, which has reputable critics and doubters (see here, here, here, and here, for instance) doesn’t apply to a dynamic economy. The actual effect of government borrowing on interest rates — and thus on the cost of private capital formation — is minuscule, and perhaps nonexistent, as Brian S. Westbury explains:

The theory [that deficits drive up interest rates] suggests that deficits “crowd out” private investment, putting upward pressure on interest rates. In other words, government borrowing eats up the available pool of capital. But today’s forecasted deficits of $300 to $500 billion are just a small drop in the pool of global capital markets. In the U.S. alone, capital markets are $30 trillion dollars deep, for the world as a whole they approach $100 trillion. Deficits of the size projected in the years ahead cannot possibly have the impact on interest rates that many fear….

Our dynamic economy will take privatization for what it is: a continuation of consumption spending by retirees, legitimated by government borrowing, plus an infusion of new saving, generated by the diversion of Social Security taxes to private accounts. That infusion will spark new, growth-producing business investments, undeterred by vanishingly small increases in interest rates.

Privatization — no, the certain promise of privatization — will act as a spur to economic growth that wouldn’t have occurred otherwise. There is such a thing as a free lunch in aggregate economic activity.

As we know well from long experience, the course of the economy isn’t expressed by a smooth, upward rising curve of progress. Aggregate economic output can be thought of as a quantum phenomenon, in that it has many potential values at each point in time. Shocks and stimuli determine which of those potential values becomes reality. Shocks (e.g., the collapse of the American stock market in 1929) can lead to sharp and prolonged downturns that can be reversed only by strong stimuli (e.g., the mobilization for World War II). Despair feeds on itself, as does hope. And hope fuels the kind of creativity that we saw, for example, in the aftermath of the Civil War, when the rapid invention and adoption of new technologies and production processes took us to new heights of prosperity in the 1920s.

The same kind of creativity resurfaced in the late 1900s — spurred by the stimulus of an inflation-busting recession and significant cuts in marginal tax rates. Will it last? Will it take us to ever-higher levels of economic output? It might, but not as a matter of historical inevitability, as some suggest. Historical inevitability is what we see in the rear-view mirror of experience. Something must happen to spur the creation and adoption of new technologies that will take us to new economic heights.

There is no practical limit to human creativity: The greater the stimulus, the greater the response. Human creativity thrives on the stimulus of hope — hope that a better future is attainable and that those who help to create that better future will be amply rewarded. What better way to inject additional hope into the economic system than to fund capital markets?

Yes, that infusion would amount to a form of government intervention in the economy. But it would be — or could be — a relatively neutral form of intervention, as long as private accounts can be invested in total-market stock and bond index funds. Moreover, it would be intervention with a noble purpose: cleaning up the government-created mess known as Social Security. So, let the privatization of Social Security begin — and hope that it continues until the whole system is privatized.

In sum, the privatization of Social Security, in whole or in part, should have four beneficial effects:

  • Future retirees will be more self-sufficient, thus reducing the burden on future taxpayers.
  • The economy will grow more rapidly.
  • Future taxpayers will therefore find it easier to bear the remaining burden of Social Security and other government programs.
  • More Americans — perhaps the vast majority of them — will acquire a stake in free-market capitalism.

__________
My notes:

* Actually, as long as Social Security receipts from payroll taxes exceed benefits (until 2018), the government wouldn’t have to borrow all the money needed to cover benefits. It’s true that the government probably would use the surpluses to finance other government programs, so that diverting the surpluses to private accounts would require the government to borrow more in order to finance those other programs. But the real cause of the borrowing would be the existence of those other programs, not the privatization of Social Security.

** The “wash” is a wash with respect to the government’s true liabilities. But future retirees who invest in private accounts would be better off than if they opted for “traditional” Social Security.

*** Again, the unchanged liability is the amount of government debt. Meanwhile, Social Security (or at least a large portion of it) is in a “lockbox,” where it is invested in real assets, and thus contributing to economic growth, unlike government debt.

Nonsense and Sense about Social Security

E.J. Dionne Jr., writing in The Washington Post on November 30, opined that

…President Bush carries a heavy burden in trying to sell the country on his plan to carve private accounts out of Social Security. Bush has been pushing privatization since he first ran for the presidency in 2000. But he keeps changing his explanation of how the program will be paid for and what its effect on the deficit will be….

Dionne goes on in that vein throughout his column, using what seems to be a discrepancy between what Bush said four years ago and what he and his aides are saying now to play “gotcha.” Worse than that, however, Dionne — who is a Washington insider of sorts — spends much of his column spreading confusion about Social Security; for example:

The big cost of privatization comes from allowing individuals to keep a share of the Social Security taxes they now pay into the system and use it for private investment accounts. This reduces the amount of money available to pay current beneficiaries. Since Bush has promised the retired and those near retirement that their benefits won’t be cut, he needs to find cash somewhere. The only options are to raid the rest of the budget, to raise taxes or to borrow big time….

[During the 2000 presidential campaign] Gore…challenged Bush on his numbers. “He has promised a trillion dollars out of the Social Security trust fund for young working adults to invest and save on their own, but he’s promised seniors that their Social Security benefits will not be cut and he’s promised the same trillion dollars to them,” Gore said at that third presidential debate. “Which one of those promises will you keep and which will you break, Governor?”

…Bush is about to offer an easy answer to Gore’s challenge: More borrowing….

…Last week The Post’s Jonathan Weisman reported that Republicans were considering moving the costs of social security reform “off-budget” so that, on paper at least, they wouldn’t inflate the deficit. And Joshua B. Bolten, the director of the White House’s Office of Management and Budget, let the cat out of the bag over the weekend in an interview with Richard W. Stevenson of the New York Times. “The president does support personal accounts, which need not add over all to the cost of the program but could in the short run require additional borrowing to finance the transition,” Bolten said. “I believe there’s a strong case that this approach not only makes sense as a matter of savings policy, but is also fiscally prudent.”

A huge new borrowing — “from hundreds of billions to trillions of dollars over a decade,” as Stevenson notes — is suddenly “fiscally prudent” in the administration’s eyes….

Dionne betrays such stupendous misunderstanding of the issue that the only way to deal with his ignorance is to explain the whole megillah, step-by-step:

1. The cost of Social Security is the cost of the benefits paid out, not the payroll taxes or borrowing required to finance those benefits. There are two basic issues: how much to pay in benefits and how to finance those benefits.

2. Assuming, for the moment, that benefits will be paid to future retirees (today’s workers) in accordance with the present formula for computing benefits — which today’s workers believe is a “promise” they have been made — something must “give” when payroll taxes no longer cover benefits, beginning in 2018.*

3. No matter how you slice it, someone will pay for those future benefits. The question is: who and when? There are three conventional ways to do it:

  • Raise future workers’ payroll taxes by enough to cover benefits.
  • Borrow enough to cover benefits, thus shifting the immediate burden from future workers to willing lenders, who are also the “future generations” that “bear the burden” of the debt. The cost of borrowing (i.e., interest) raises the cost of the program a bit, but interest is also income to those who lend money to the government. In other words, borrowing — on balance — doesn’t create a burden, it merely shifts it, voluntarily.**
  • Raise taxes and borrow, in combination.

4. There’s an “unconventional” way to deal with the looming deficit in Social Security: invest payroll taxes in real assets (i.e., stocks, corporate bonds, mortgages). Why? Because money invested in real assets yields a real return that’s far higher than the “return” today’s workers will receive on their payroll taxes. (See, for example, figure 2 in this paper.) There are three ways to “privatize” Social Security by investing in real assets:

  • Abolish Social Security and make individuals responsible for their retirement (perhaps with a minimal “safety net” funded by general taxation).
  • Let the government do it, through a “blind trust” run by an independent agency.
  • Let individuals do it, through mandatory private accounts.

5. I assume that the first option is off the table, for now, even though Social Security (like so many other government programs and activities) is unconstitutional. Given the large sums of money involved, the second and third options would yield about the same result, on average. I’ll continue by outlining the third option, which is the proposal that has drawn the ire of E.J. Dionne and so many other anti-privatization leftists.

6. Workers would invest some (or all) of their payroll taxes in real assets (private accounts). Those same workers would agree to receive lower Social Security benefits when they retire. (The precise tradeoff would depend on the age at which a worker opens a private account and how much the worker has already paid into Social Security. Workers who are over a certain age — say 50 or 55 — when privatization begins wouldn’t be allowed to drop out, but would receive the Social Security benefits they expect to receive.) That leads to a series of questions and answers:

  • Q: What happens when the shift of payroll taxes to private accounts results in a deficit, that is, when payroll tax receipts are less than benefit payments? A: The government borrows to make up the difference. (See the discussion of borrowing in point 3 and the second footnote, below.)
  • Q: What happens to the money invested in private accounts? A: It would belong to the workers who invested it. They’d receive smaller payments from “regular” Social Security, but those smaller payments would be more than made up by the income they’d receive from their private accounts.
  • Q: When does it all end? A: It would depend on how much workers are allowed to invest in private accounts and how much those private accounts earn. If workers were allowed to invest all of their payroll taxes in private accounts, and if all workers elected to do so, Social Security — as we know it — would wither away. Every worker would have his or her own source of retirement income. That income come from earnings on real assets, not from taxes paid by those who are then working. And that income would exceed what the retiree would have received in Social Security benefits — even for private accounts invested “safely” in high-grade corporate bonds or mortgage-backed securities.

In sum, whether or not Bush is telling the same “story” now that he told four years ago, there is no shell game of the kind suggested by Dionne, and Gore before him. Dionne (and Gore) are simply unable to grasp the notion that by diverting payroll taxes to real investments, with real returns, no one would be made worse off, and many would be better off. They’re hung up on the borrowing that must take place in the initial stage of privatization, and they overlook the return on that borrowing, namely, higher income for future retirees and lower payroll taxes on future workers. And the threat of borrowing, as I have explained, is a bogeyman, which the economically illiterate use to scare the economically illiterate.

__________
* As I’ve explained here, here, and here, the so-called Social Security trust fund, which won’t be exhausted (on paper) until 2042, is just a myth.

** If you’re still bothered by the prospect of borrowing, read my post on “Curing Debt Hysteria in One Easy Lesson.”

An Emerging Left-Right Consensus?

Timothy Sandefur, in his recent response to this post, said:

Now that Dole and the Bushes have almost perfected the elimination of the Goldwater faction of the GOP…there is an ever-diminishing role for us [libertarians] in that party. Some large libertarian segments, most notably Reason magazine, have simply given up on the right wing, and are overtly courting the left, hoping that social issues will draw the left into greater embrace of economic freedom. I’m really not sure whether that strategy will work—I think the left is as resolutely hostile to individualism as the conservatives are—but do we really have anything to lose? “Libertarian” has become an epithet within the controlling faction of the Republican Party. I for one am sick of it, and were it not for the war, as I’ve said, I would have voted Democrat this year. And I suspect at least some leftists will be drawn to our side if we tell our story right: if we show that the liberation of previously oppressed people must include economic liberty….

Perhaps Mr. Sandefur is on to something. Here’s Jonah Goldberg, writing at NRO yesterday:

Federalism! It’s not just for conservatives anymore! That’s right. All of a sudden, liberals have discovered federalism and states’ rights. I discovered this while listening to a recent episode of NPR’s Talk of the Nation, in which host Neal Conan and various callers discussed the idea as if some lab had just invented it….It’s not surprising that liberals would suddenly be interested in federalism, given that a sizable fraction of them think George Bush is an evangelical mullah, determined to convert America to his brand of Christianity. As conservatives have known for decades, federalism is the defense against an offensive federal government….

The problem with the last half-century of public policy is that liberals have abused the moral stature of the civil rights struggle to use the federal government to impose their worldview — not just on racial issues but on any old issue they pleased. But now, all of a sudden, because they can’t have their way at the federal level anymore, the incandescently brilliant logic of federalism has become apparent: Liberals in blue states can live like liberals! Wahoo! (Whereas, according to liberals, conservatives could never have been sincere when they talked about states’ rights; surely, they meant only to “restore Jim Crow” or some such.)

The bad news, alas, is that conservative support for federalism has waned at exactly the moment they could have enshrined the ideal in policy. Just this week, the Bush administration argued against California’s medical-marijuana law. Bush is also moving ahead toward a constitutional prohibition on gay marriage (which many conservatives, including National Review, support). After decades of arguments that Washington should stay out of education, Bush has made it his signature domestic issue.

It’s not that the White House doesn’t have good arguments for its policies. But it is impossible to restore federalism unless you start by allowing states to make decisions you dislike. Otherwise, it’s not federalism, it’s opportunism.

If large numbers of liberals (or leftists, as I prefer) begin to understand that a powerful federal government can do things they don’t like — as well as things they like — those leftists might just get on board with federalism. I imagine there are still enough pro-federalism conservatives out there to forge a formidable, pro-federalism coalition.

Now, federalism isn’t libertarianism, by any means. Some States might have strict gun-control laws and other States might have none at all, for example. But, to the extent that individual States can’t repeal the Bill of Rights and related law, federalism strikes me as a good second-best to the present regime, in which Washington seems willing and able to micro-manage almost all social and economic activity.

As I wrote here:

Libertarian purists argue that government should have almost no power. Libertarian pragmatists argue that government power should be devolved to the lowest practical level. The pragmatists’ case is the better one, given that the urge to regulate social and economic practices is especially strong where people (and votes) are concentrated….

…City dwellers prefer more government because they “need” more; country folk feel less “need” for government because they don’t rub up against each other as much as city dwellers.

Thus the ultimate argument for devolution: Push government functions to the lowest practical level and allow citizens to express their preferences by voting with their feet.

To extend the caricature, those who like guns and oppose abortion can move to Texas, and those who hate guns and approve abortion can move to New York. A typical Austinite (which I am not) might prefer New York’s policies but Austin’s weather. Well, it’s a tough choice, but at least it’s a choice.

ADDENDUM: Jesse Walker, writing at Tech Central Station on November 8 (“The War Between the Statists“) offered this bit of wisdom about federalism:

…The authoritarian conservative wants to maintain the old taboos. The authoritarian liberal wants to introduce some new ones, and he’s had a lot more success. The religious right may despise homosexuality and pornography, but the gay movement is thriving, despite last week’s losses, and porn is more freely available than ever before.

The liberal puritans, by contrast, are riding high in the media and in the courts. For many Americans, the Democrats are the party that hates their guns, cigarettes, and fatty foods (which is worse: to rename a french fry or to take it away?); that wants to impose low speed limits on near-abandoned highways; that wants to tell local schools what they can or can’t teach. There is no party of tolerance in Washington — just a party that wages its crusades in the name of Christ and a party that wages its crusades in the name of Four Out Of Five Experts Agree.
Sometimes they manage to work together. I say fie on both.


Since Election Day, a series of satiric proposals for blue-state secession have been floating around the Internet. Here’s an idea for liberals looking for a more realistic political project: Team up with some hard-core conservatives and make a push for states’ rights and local autonomy. If you have to get the government involved in everything under the sun, do it on a level where you’ll have more of a popular consensus. Aim for a world where it won’t matter what Washington has to say about who can marry who and whether they can smoke after sodomy….

Affirmative Action: A Modest Proposal

Recent posts by Alex Tabarrok at Marginal Revolution discuss a study that reveals the effects of nature and nurture on income. (Tabarrok’s original post is here. He has posted some clarifying remarks here.) The study shows that the income of a Korean orphan who was adopted in the U.S. between 1970 and 1980, through a process of random selection, is about the same regardless of the income of the adoptive parents. On the other hand, the income of the biological children of the same parents is highly correlated with the parents’ income; that is, low -income parents tend to produce low-income children, whereas high-income parents tend to produce high-income children. The obvious implication of these findings is that intelligence (and hence income) is a heritable trait, one that remains differentiated along racial lines (a consistent but controversial finding discussed here, for example). Thus the findings give further evidence, if any were needed, that affirmative action policies — whether government-prescribed or voluntarily adopted — tend to undermine the quality of workplaces and educational institutions. (I am speaking here of the quality of effort and thought, not the value of workers and students as human beings.)

The premise of affirmative action finds expression in a 1986 speech to the Second Circuit Judicial Conference by Justice Thurgood Marshall, where he

urged Americans to “face the simple fact that there are groups in every community which are daily paying the cost of the history of American injustice. The argument against affirmative action is… an argument in favor of leaving that cost to lie where it falls. Our fundamental sense of fairness, particularly as it is embodied in the guarantee of equal protection under the laws, requires us,” Marshall said, “to make an effort to see that those costs are shared equitably while we continue to work for the eradication of the consequences of discrimination. Otherwise,” Marshall concluded, “we must admit to ourselves that so long as the lingering effects of inequality are with us, the burden will [unfairly] be borne by those who are least able to pay.” [From “Looking Ahead: The Future of Affirmative Acton after Grutter and Gratz,” by Professor Susan Low Bloch, Georgetown University Law Center.]

In sum, affirmative action is a way of exacting reparations from white Americans for the sins of their slave-owning, discriminating forbears — even though most of those forbears didn’t own slaves and many of them didn’t practice discrimination. Those reparations come at a cost, aside from the resentment toward the beneficiaries of affirmative action and doubt about their qualifications for a particular job or place in a student body. As I wrote here:

Because of affirmative action — and legal actions brought and threatened under its rubric — employers do not always fill every job with the person best qualified for the job. The result is that the economy produces less than it would in the absence of affirmative action….

[A]ffirmative action reduces GDP by about 2 percent. That’s not a trivial amount. In fact, it’s just about what the federal government spends on all civilian agencies and their activities — including affirmative action….

Moreover, that effect is compounded to the extent that affirmative action reduces the quality of education at universities, which it surely must do. But let us work with 2 percent of GDP, which comes to about $240 billion a year, or more than $6,000 a year for every black American.

Thus my modest proposal to improve the quality of education and the productivity of the workforce: End affirmative action and give every black American an annual voucher for, say, $5,000 (adjusted annually for inflation). The vouchers could be redeemed for educational expenses (tuition, materials, books, room and board, and mandatory fees). Recipients who didn’t need or want their vouchers could sell them to others (presumably at a discount), give them away, or bequeath them for use by later generations. The vouchers would be issued for a limited time (perhaps the 25 years envisioned by Justice O’Connor in Grutter), but they would never expire.

That settles affirmative action, reparations, and school vouchers (for blacks), at a stroke. If only I could solve the Social Security mess as easily.

Favorite Posts: Affirmative Action and Race

Does the Constitution Allow This?

The First Amendment says that “Congress shall make no law…abridging the freedom of speech, or of the press….” Great stuff. I buy it. But then there’s this, from a story at latimes.com:

On the evening of Oct. 14, a young Marine spokesman near Fallouja appeared on CNN and made a dramatic announcement.

“Troops crossed the line of departure,” 1st Lt. Lyle Gilbert declared, using a common military expression signaling the start of a major campaign. “It’s going to be a long night.” CNN, which had been alerted to expect a major news development, reported that the long-awaited offensive to retake the Iraqi city of Fallouja had begun.

In fact, the Fallouja offensive would not kick off for another three weeks. Gilbert’s carefully worded announcement was an elaborate psychological operation — or “psy-op” — intended to dupe insurgents in Fallouja and allow U.S. commanders to see how guerrillas would react if they believed U.S. troops were entering the city, according to several Pentagon officials.

In the hours after the initial report, CNN’s Pentagon reporters were able to determine that the Fallouja operation had not, in fact, begun.

“As the story developed, we quickly made it clear to our viewers exactly what was going on in and around Fallouja,” CNN spokesman Matthew Furman said.

Officials at the Pentagon and other U.S. national security agencies said the CNN incident was not an isolated feint — the type used throughout history by armies to deceive their enemies — but part of a broad effort underway within the Bush administration to use information to its advantage in the war on terrorism….

Surely the viewers of CNN included our enemies, or persons friendly to them who passed along the information broadcast by CNN.

I know the arguments about undermining the credibility of the news media — and the government — by using the media to broadcast disinformation. But those are just arguments. The fact is that the U.S. is engaged in a legal war against a determined and ruthless enemy, and the use of disinformation is a time-honored tactic of warfare. Why not risk undermining the credibility of the media — to the extent that the media have much credibility left — if it helps to win the war?

Unless CNN’s report and the news story I’ve quoted are part of a disinformation campaign, it seems that media may be undermining the war effort by revealing particular instances of disinformation and giving the enemy hints as to the shape of our disinformation campaign.

That leads to my question: Is there an interpretation of the Constitution that would make it illegal for the media to publish information that compromises military operations?

ADDENDUM: If there is a compelling governmental interest in the regulation of political speech (i.e., campaign-finance “reform”) and a compelling governmental interest in allowing publicly funded universities to pursue “diversity” (a concept that I cannot find in the Constitution), why not a compelling governmental interest in the suppression of media reports that undermine the prosecution of a constitutional war?

I’m being provocative here because I hope to draw out my host and some of his readers on this issue.

Cabinetry

Bret Stephens, writing at OpinionJournal (“What Is a Cabinet For?“), captures the “conventional wisdom” about Bush’s cabinet appointments in this paragraph:

“Now that Condoleezza Rice has been nominated to be the next secretary of state,” the New York Times editorializes, “the whole world seems to be noticing that George Bush is stuffing his second-term cabinet with yes men and women. It’s worrisome. . . .” David Gergen, former wise man of Public Broadcasting, frets that Mr. Bush is “closing down dissent and centralizing power in a few hands.” Andrew Sullivan, in his column for the London Times, bemoans the cast of “flunkies” and “servants rather than peers” around the president. “Fierce loyalty is a prerequisite for serving Bush,” writes the disapproving Mr. Sullivan.

Allow me to speak from experience in the matter of appointing lieutenants. A leader must be confident that he and his lieutenants have common goals. A leader expects his lieutenants to give thoughtful, candid advice, but to give it privately and not leak it to the press in an effort to embarrass the leader or to shape policy. Sharing common goals and giving candid advice, privately, isn’t a sign of blind obedience in a lieutenant, it’s a sign of loyalty, in the best sense of the word. The alternative to the good kind of loyalty is disfunction and disarray — but perhaps that’s what the pundits want.

Experience gives the best proof of loyalty. That’s why good leaders tend to select lieutenants whom they have come to know and trust. Bush isn’t the first leader to select his lieutenants from a trusted, inner circle. Nor will he be the last.

But all of this is lost on reporters and pundits who have never managed anything bigger than an editorial page or a blog.

Reality and Public Schools

In my previous post here I commented on two of Timothy Sandefur’s posts (here and here) about creationism vs. evolution. I closed my post by asking: “Who defines reality, and who decides to confront us with it? The state?” Mr. Sandefur responds thusly:

…Reality is not “defined” by some entity standing outside of it and determining its contents; it simply is. It is discovered, and observed, by all of us—some more skillfully and carefully than others….

All right, then, who decides which of us is the more skillful and careful observer of reality? It shouldn’t be the state. (I believe that Mr. Sandefur and I are firmly agreed on that point.) But, we do have government-run schools, and they do dominate education in the United States. Perforce, it is those schools, in their vast inadequacy, that decide what to teach as “reality.”

I share Mr. Sandefur’s concern that proponents of “intelligent design” would use the state to compel the teaching of ID as an alternative to evolution. But government schools that teach evolution are also the schools that teach a lot of things that skillful observers like Mr. Sandefur and I do not recognize as truth — things that might be wrapped up in the phrase “government as ultimate problem-solver.”

Now, I do not mean to suggest that government schools might just as well go for broke and teach more untruth by adding ID to their curricula. What I mean to suggest is that government schools already teach — and have long taught — ideas that are far more subversive of liberty and the pursuit of happiness than ID.

I find the belief in creationism far less threatening than the widespread belief in government as ultimate problem-solver. That is why, given the limited amount of time I have for blogging, I tend to shoot at the left and ignore the right.

Who Defines Reality?

On reading Timothy Sandefur’s recent posts about creationism vs. evolution (here and here), I’m prompted to ask who is the “we” who decides what to teach? Toward the end of the post linked second above, Mr. Sandefur says this about the teaching of evolution:

I believe that all men are created equal, and that they deserve to be treated like responsible adults—which means, confronted with the reality, and charged with the obligation to recognize it, or evade it and bear the consequences….

Who defines reality, and who decides to confront us with it? The state?

What’s a Libertarian to Do?

My earlier post about political realignment ends with an observation and a question:

… The current Republican era will end — if and when it does — in the aftermath of an economic, social, or military trauma whose nature and timing are unpredictable.

Will the continuation of the current Republican era be good or bad for the cause of libertarianism? Republicans, for the most part, seem to have given up on “limited government” for the sake of winning elections. Now, the GOP is the party of “relatively limited government.” But the alternative — a return to Democratic dominance — is probably worse. What’s a libertarian to do?

Timothy Sandefur, in his commentary on that post, says:

Now that Dole and the Bushes have almost perfected the elimination of the Goldwater faction of the GOP—to such a degree that party members ridicule Goldwater’s latter-day defense of gay rights as though it was evidence of senility—there is an ever-diminishing role for [libertarians] in that party. Some large libertarian segments, most notably Reason magazine, have simply given up on the right wing, and are overtly courting the left, hoping that social issues will draw the left into greater embrace of economic freedom. I’m really not sure whether that strategy will work—I think the left is as resolutely hostile to individualism as the conservatives are—but do we really have anything to lose? “Libertarian” has become an epithet within the controlling faction of the Republican Party. I for one am sick of it, and were it not for the war, as I’ve said, I would have voted Democrat this year. And I suspect at least some leftists will be drawn to our side if we tell our story right: if we show that the liberation of previously oppressed people must include economic liberty….

Getting the left (i.e., Democrats) to buy into economic liberty may prove to be just as hard as getting Republicans to buy into gay marriage, abortion, and decriminalization of drugs. Bill Clinton alienated much of his party by supporting welfare reform and NAFTA. He also raised taxes (against Republican opposition), tried to nationalize medicine by the back door after his 1993 plan failed (thanks to Republicans), and seldom saw a regulation he didn’t like (whereas the Bush administration has slowed the pace of regulation considerably).

Are Democrats likely to offer us another “Clinton” (but not Hillary) anytime soon? Perhaps the results of the 2004 election will cause them to do so. But that prospect doesn’t do much to brighten my day. Social freedom has advanced markedly in my lifetime, in spite of rearguard efforts by government to legislate “morality.” Government control of economic affairs through taxation and regulation has advanced just as markedly, especially under Democrats.

In sum, libertarians may be repulsed by the moralists who have taken over the Republican Party, but that moralizing, I think, is a lesser threat to liberty than regulation and taxation. For that reason — and because Republicans are more likely than Democrats to defend my life — I’m not ready to give up on the GOP.