Tag: capitalism

Five Assumptions About Fire Codes (why laws are less important than we think)

Originally posted here.

A friend and I were discussing the provision of fire services, and he made a comment in passing about how, thanks to government fire codes, fires have dramatically declined. It is true that fires have declined over the last 35 years (at least), but is it true that government fire codes are the reason?

There are at least five untested assumptions behind the idea that fire codes are the cause of a safer world.

Assumption 1: Cause and Effect

The most obvious assumption is that fire codes cause a reduction in fires. It is easy to see how unlikely this is when you perform a simple mental exercise: Imagine enacting US fire codes in, say, India. In India it is not uncommon for electricity to arc between two buildings or for people to pirate electricity by tapping in to an existing power line with a makeshift wire draped across the ground. Surely fire codes would prevent the dangerous electrical fires that sometimes result. The problem is, fire codes already exist in India, but nobody follows them. Why not? Because no one can afford to follow them.

Before government regulations can be broadly followed, they first have to be of limited consequence. Child labor laws only take effect once there are very few children in the work force, due to economic growth. It is well documented that OSHA regulations only came into effect after workplace accidents dramatically declined on their own. If you tried to impose the U.S. minimum wage on a very poor country, no one would follow it because if they did many would die for lack of work, income and food. You cannot wave a magic wand and demand that people take on major costs if the majority of people are not already able to bear the cost. Government regulations have a damaging effect to be sure, but it is primarily on people at the fringes of the economy—the poorest.

Government fire codes receive the credit for reducing fires, when in reality it is economic growth that makes people wealthy enough to spend money on safer construction. The codes come after the fact and claim the credit.

Assumption 2: Irrational Consumers

The idea that government fire codes reduce fires also assumes that, absent such codes, people would not protect themselves from fire. Are people so short-sighted that they would not think to protect their own property if the government didn’t force them to?

It is in everyone’s interest to protect their property from catastrophe like fire, and as such the vast majority of people do. Insurance is a common way to do so, but people also seek safe construction and other assurances against disaster. In fact, insurance companies have a tremendous incentive to only insure buildings with good fire prevention techniques in the first place (except when, as is not uncommon, the government interferes and prohibits insurers from placing stipulations on policies).

It can hardly be granted that people are too foolish to protect their own property from fire damage at all, so maybe it is assumed that people will merely protect their property at a minimum level and not “enough” without being forced to. But what is “enough?”

Assumption 3: Less Fire is Better

Fires are on the decline, and this is universally good, right? Not necessarily. Economist Steve Horwitz gives a question to his students that goes something like this: If a massive earthquake hit a city, what would be the economically optimal number of buildings destroyed? The answer: greater than zero.

How could that be? We all know destruction is not good for the economy (everyone, perhaps, except Paul Krugman). Consider that the cost of making the least valuable shanty in town entirely earthquake-proof is probably more than the value of the building itself. The same goes for fires. Not all structures are of equal value, and not all structures have equal risk of burning down. Because of this, it makes sense that people will have different risk preferences when it comes to protecting their property.

If I own a pole barn full of ice far away from any other buildings or woods, I am unlikely to invest in sophisticated fire prevention or suppression technology (unless compelled by the state), whereas a fancy condo owner in a downtown location is far more likely to pay for the best of the best. It’s easy to see how silly it would be to mandate that every single structure be built to withstand F5 tornadoes, category five hurricanes, massive floods and epic earthquakes. The same principle applies to lesser degrees of protection. For many structures, government fire codes are not worth it and the risk of a fire is lower than the cost of prevention. For others, government codes are not nearly sufficient and much more stringent precautions are in order.

The problem with government codes is that they are blunt and uniform and force everyone into the same mold, squelching innovation and disallowing the kind of marginal risk assessment that conserves resources. Not only are less valuable structures forced to overprotect, but often government codes are so widely accepted that more valuable structures are perceived to be sufficiently protected if they meet government standards, when in fact they may be better off with more.

Assumption 4: Irrational Politicians and All-knowing Bureaucrats

For fire codes to be the cause of enhanced safety it would require irrational political actors. Elected officials and bureaucrats would have to act not in their own rational self-interest, but on behalf of the public at large. To choose just the right amount of fire protection and just the right technologies to supply it requires not only a denial of potential individual profit (by cozy deals with some companies, etc.), but also a superhuman knowledge of what kind of construction everyone needs in every situation.

In reality we see that “rent-seeking” is prevalent everywhere the government intervenes—indeed, it could not be otherwise. How is a politician to choose the physical properties that must be present in caulk used between drywall and copper piping in a commercial building? Without the expertise they—or a wide array of public agencies—must rely on the information provided by competing companies. If it all sounds the same, do you think the company that donates to the right political campaigns might get an advantage? It is a fairy tale to imagine political actors wise and selfless enough to pick exactly the right amount and type of fire protection for every application. Every time they do pick, it reduces the options available to consumers and stunts the discovery procedures of the market in finding the best methods.

Assumption 5: The Government Did It

A final assumption is that the codes and norms of fire safety are, in fact, created by the government. In our discussion my friend mentioned government fire codes but also added a, “Thanks to UL.” UL is Underwriters Laboratory, a non-government organization that certifies goods for safety. They have built up quite a reputation in the marketplace and are highly trusted. (So much so that one professor has taken to chewing on UL certified power cords to prove how safe they are!)

It is often assumed that the order we see around us is the result of a government mandate—after all, mandates do exist for almost everything. But more often than people realize there are private entities and institutions doing the heavy lifting—UL is just one of them. There is a market demand for fire codes, and the market supply is far more complex, subtle, efficient and diverse than a government could ever be.

Conclusion

It is easy to assume government ought to get the credit for a great many life improvements. After all, government agents are constantly taking any opportunity to claim credit for everything under the sun, and to pass laws and regulations that demand certain improvements, whether or not they already exist. The existence of indecent exposure laws is not what keeps me from running naked through the shopping mall, and such laws shouldn’t be credited with my propriety. It’s naïve to assume that fire codes are the cause of a safer society, not merely a reflection of it.

Laws are less powerful than we think they are.

Environmental Protection is a Consumption Good

Originally posted here.

People love a clean, healthy, beautiful natural environment. The trouble is, not everyone can afford it. If you are lost in the woods on the brink of starvation, you are less likely to look at a frog and think, “I hope that species of frog survives” than “I wonder how much meat is on that frog.”

If you live in grinding third-world poverty, you may want a cleaner stream in the village, but you cannot afford to do anything about it while your children are malnourished. You may want a low-emission heater for your hut, but since you have neither the money nor the electricity, the fire pit will have to do for now. In a world of scarcity, there are tradeoffs. You cannot afford precious time, energy and resources beautifying your landscape and protecting “greenspaces” if you are fighting hunger and disease.

Environmental protection is a consumption good. Not only that, but it is further up on the hierarchy of human needs than goods like food and shelter that ensure your family’s survival. If a forest was experiencing a natural, healthy fire and a child was trapped in it, even a passionate environmentalist would not say, “Let it burn; the forest is more important than my daughter’s life.” Few would disagree that this is a normal and necessary ordering of human preferences.

Like all consumption goods, you cannot purchase more environmental protection until you can afford it, and you cannot afford it without economic growth. Economic growth, not legislation, is the key driver to improvements in environmental quality. There is a great deal of mythology that suggests passing laws is the key to a healthy earth. Similar to the myth that laws ended child labor in the United States, cause and effect have been reversed. Try banning child labor in the third world. Not only will many people die, but enforcement will be nearly impossible because so many people rely on it for survival. Try clamping down on pollution in the third world, and, again, lives are at stake and enforcement is not realistic. Only when a great majority of people can afford such laws and only when they are rich enough to spend time thinking of the welfare of others or the earth do such policy changes occur.

Policies that were tacked on to the tail end of naturally occurring trends typically get the credit for the change. Make no mistake; it is economic growth that has raised the American consciousness about environmental quality, and approval-seeking politicians have jumped on the bandwagon when it was convenient to do so — i.e., when most of their constituents could afford it.

The narrative above might suggest that as long as you’re rich enough to afford it, government efforts to protect the environment are OK. This is incorrect for two reasons. The first is that the process of government itself systematically produces special-interest favors, rent seeking, monopoly protections, and all manner of other policies that benefit small interests at the expense of the rest. The information and incentive problems in legislative and bureaucratic bodies make them consistently fail to achieve their own stated ends. (See work by Mark Pennington for excellent analysis on this topic, as well as Richard L. Stroup’s book Eco-nomics.)

The second problem with passing environmental legislation once you can afford to do so is that many people still cannot. Environmental protection measures — taxes on oil, land-use restrictions, emissions standards, ethanol subsidies, etc. — affect more than just the rich people who advocate them. They raise the price of basic survival goods — food, water, land — across the globe. The wealthy can deal with the higher prices; indeed as I’ve said many of them may be happy to purchase perceived environmental improvement for a few bucks more at the pump. The poor cannot. Many suffer and some die.

Environmentalists want to protect the environment because they have reached a point on their hierarchy of needs where a healthy wood is the next highest good. There are no poor environmentalists. This is all well and good until they attempt to force their preferences on others via legislation. In a market, the rich are free to act upon their preferences and purchase goods others cannot afford. They are also free to try to persuade poorer people that they should value luxury goods more than basic goods. But can you imagine a law that forced every citizen to purchase a luxury car? If those who valued the sight of roads full of beautiful cars lobbied to force everyone to drive luxury cars it would be considered outrageous discrimination against the poor. Why is environmental activism not seen in the same light?

(It bears mentioning that some environmentalists are motivated less by a clean earth for its own sake and more by an obligation to future generations. This does not fundamentally change the reality that environmental protection is a consumption good that can only be addressed after more basic needs are met. Who considers the life of future generations more important than the life of their currently living children? You don’t think five generations out until the current generation is secure enough to afford you the luxury.)

Everyone, including environmentalists, has needs more basic than a pristine environment. We don’t worry about the earth until our survival is secure. This is a natural ordering of needs. Yet environmentalists, after meeting their own basic needs, want to force the poor to reverse their preferences and put the earth before their own survival. I don’t think most environmentalists intend this, but it is the inevitable result of using the force of government to enact protection measures. This is neither desirable nor effective in the long run.

You may be able to do great harm to many of the world’s poor in exchange for some government attempt at environmental improvement (more likely to result in special-interest enrichment), but in the long run it is impossible to convince people to subjugate their survival to the perceived needs of their ecosystem. The real promise for environmental improvement is economic growth. Until people are wealthy enough to consider paying the cost of a cleaner environment, the fight to force their choices is inhumane and ultimately ineffective.

Environmentalists should seek the freedom that creates economic growth among the poor so they can afford to care about the earth. They should peacefully persuade those who can afford it to place a higher value on the environment relative to other nonessential goods. Economic growth and persuasion, not legislation, will make a greener world.

Voters are Liars

I recently heard a political commentator bemoan the results of surveys and elections.  He said the sad truth, whether libertarians wanted to hear it or not, is that Americans want big government.  They want handouts, high taxes, regulatory interference, and on and on.  They vote for people who talk about it.  They re-elect them when they deliver it.  On opinion surveys they favor entitlement programs and broad intervention.  I couldn’t help but laugh.

A person who studies only quarterbacks is likely to interpret an NFL game as the result of QB play.  A person who immerses themselves in politics is likely to interpret society as the result of political opinion and activity.  In the former case, there is at least plausible evidence that QB’s are a major factor.  In the latter, it is almost entirely an illusion that politics and political sentiment reveal the broader health of liberty.

Voters are liars.  They tell the truth about their opinion in the abstract, free from trade-offs and constraints, but this has little to no meaning when translated into the real world.  If I asked you to vote between a person who offered a better world, and one who offered a less bad world, and promised that your vote was guaranteed to not change the outcome either way, what would you do?  What could I conclude about your preferences from your vote?

If I polled you and asked whether or not you like the idea of someone giving you something for free, again promising that how you answered had no bearing on the real world, what would you say?  What could I learn from that about your values?

Voting and surveys are free ways to express a sentiment or indulge in a real or desired preference.  Not only that, the sentiments expressed are not about the real world.  Politics is a zero sum game, completely unlike nearly every other arena of life.  Imagine how different your preferences would be if everything were zero-sum like politics.  What if you had to choose once for all between brands of coffee, cars or clothing?  What if you could not go back, at least not for several years, and try another?  What if whatever a majority in your area voted on would be applied to everyone else?  Under this scenario we could poll people and ask which of three or four brands they prefer.  We’d get some data, but it would reveal nothing whatsoever about what people actually value if they were choosing in the non-zero-sum marketplace and bearing the full costs and benefits of their choices.

Back to society today.  Do people really favor less liberty and more government?  Elections and polls are a very poor measure.  Let’s not look at stated preferences about the artificial political world, but revealed preferences in the real world of win-wins, marginal decision making, internalized costs and benefits, and trade-offs.  If you examine the market, what would you say people are “voting” for?  Radically individualistic technology.  More and more choice.  Freedom from being lumped in with groups.  The ability to choose everything.  Private alternatives to government dominated services like transportation, information transmission, education, protection, rule-making  social norms and values, health maintenance, and on and on.

Don’t listen so much to what people say, look at what they reveal by their actions.  Nobody admits to loving Barry Manilow, but the guy sells a ton of records.  No one says they want to abolish public education, but they keep putting their resources into alternatives to it.

Frankly, I don’t care what people say in polls or who they vote for in the fairyland of politics.  What I see around me – the revealed preferences of billions of earth’s citizens – is a vote, indeed a mandate, for more freedom.

Why Don’t Universities Try Something Crazy?

What if a university decided to try something crazy: What if they hired professors based entirely on the quality of their research and/or teaching?

Imagine if the hiring committee dropped all other criteria.  They ignored where the applicant got their degree, or even if they had one.  They ignored who they studied under.  They ignored which journals they were published in, or where they presented papers.  They examined in depth the quality of the research; the ideas, the writing, the breadth and implications of the work, the ability to draw on multiple thinkers to make a serious and credible case.  They tested, in front of real classrooms, the teaching skills and took seriously student feedback in person and things like ratemyprofessor.com.

If they wanted top researchers, they focused only on that.  If they wanted great teachers, they focused only on that.  If they wanted someone who was good at both, they focused on both.

This would seem common-sense in any other business, but it sounds radical in academia.  Of course there is value in the filtering mechanisms of degrees granted by prestigious programs, of publications that make it into the top journals.  There is value to the university in hiring people with prestigious repuations.  School ranking, the protective journal publication process, and all the credential hierarchies exist for a reason and they provide valuable signals.  They make the hiring committees job easier, as they have to do less serious digging themselves, and can rely on the stamp of approval given by others.

All that is well and good, but still I wonder what would happen if a pioneering university just scrapped it all. Would they suffer?  In what way?  If a university made very public that they no longer cared about anything but excellent teaching, excellent knowledge of subject matter, and excellent research, wouldn’t it attract some excellent job applicants, some of whom may not have PhD’s at all?  Wouldn’t it attract some interesting and excited students?

I understand the basic incentives in the university system, but it still seems to me there would have been by now some entrepreneurial president who would have tried to break free from the institutional norms and tried something like this.  Maybe the time is near.

It’s Not Always About Scalability

In the business and startup world scalability is the word of the day.  Products that can be built once and used infinite times by infinite consumers are the ultimate prize.  The hype might cause us to overlook other valuable products and services.

The quest for scalability makes sense with software, online products and social media applications.  They can be built relatively cheaply, honed in beta mode, and then sold an infinite number of times at no additional production cost.  But it’s not true that scalability equals profitability, nor is it true that the inability to costlessly scale means lack of profitability.

There are countless examples of great products and services that are non-scalable, yet highly profitable.  Personal trainers, legal counsel, health care, home repair, tutoring, food production, etc., etc., are not scalable.  Sure, they realize some economies of scale as they grow, but each new customer means new inputs like labor, raw materials and time.  It’s also true that some of these like legal or health advice or general education can be produced once and shared infinitely at zero marginal cost online.  But that is not the same as a visit with a physician who gets to know your unique symptoms and gives a tailored recommendation.

In fact, most of the best things in life are not scalable.  I can’t produce quality time with the family, or a night out at a fancy restaurant with my wife once and reuse it over and over at zero cost.  There is no demerit in a product that is not scalable.  One of the great virtues of the things that are scalable is precisely that they free up so much time and so many resources that can then be devoted to things that are not scalable.

Modern technology opens a world of possibility and the ability to realize amazing returns on small investments due to scalability.  But don’t overlook the innovation, benefit, and profitability of non-scalable or less scalable products.

Inequality vs. Favoritism

Inequality is inescapable and morally neutral.  There is no virtue in trying to eradicate it, and it makes no sense to talk of reducing it.

My children were born unequal.  They will remain unequal as they learn, achieve and acquire.  Any efforts to make them equal do harm to all parties involved.  Many people agree that I could never make them equal, but maybe I should try to make them more equal.  Equality is not a more or less concept, it is either or.

3 is not equal to 2.  Neither is 4 equal to 2.  It is meaningless to call one more equal to 2 than the other.  We could say that 3 is more equal to 2, because it is only one whole integer removed from 2.  We could say 4 is more equal to 2 because it is divisible by 2, and only one even number removed.  It is entirely dependent on our frame of reference.  Equality between individuals is as impossible as equality between 2 and 3, and degrees of inequality are entirely subjective; a matter of perception, different for all observers and participants.

It is fruitless to attempt to lessen inequality or increase equality.  In fact, it’s worse than fruitless, it is destructive.  Not only does it produce arbitrary and unpredictable results which disillusion and demotivate the targets, it fuels strife, envy, and limiting one’s potential to the achievements of their perceived betters.

Still, there is something to the desire to create equality.  I would be a terrible parent if I lavished gifts and affirmation, or insult and condemnation, on one child far more than the others.  Not because it would make them more unequal; they are and will always be unequal.  But because my deliberate action of applying the family rules, mores and norms selectively and unfairly would break trust and breed conflict.  I would be engaging in favoritism, either negative or positive.

I will not try to clearly define favoritism, because I think putting it into words actually makes it less understandable than if we stick with our intuitive and tacit understanding of the term.  It is not merely acting differently towards different people.  If I speak Spanish to a Spanish speaking person and English to an English speaking person I am not acting uniformly towards them, but I am not showing favoritism.  Interacting with my unequal children in ways that best resonate with their unique “language” is not favoritism either.  Favoritism is when the spoken or unspoken rules of the house are not consistently applied.

If it is known that doing X chores will get you Y payment, or that treating Dad’s iPad carelessly will result in less access to the iPad, these norms must be applied in a uniform way.  I may communicate the norms and remind my children of them in different ways based on their individuality and inequality, but if one kid gets paid more for the same work, or one gets access to the iPad despite throwing it against the wall and the others don’t, I’m engaging in favoritism that damages everyone.

Uniform application of the family norms will result in inequality, as is inevitable with unequal children.  Some will get more chores done and earn more money.  Some will have a hard time controlling emotions and end up throwing the iPad and losing access to it.  Their nature and choices will produce unequal results.  There is no evil in this.  To aim at equality puts the focus on outcomes; the relative positions resulting from individual actions within an institutional context.  This is a meaningless point of reference, and incredibly poisonous when chosen as the basis by which to judge institutions.  It devolves into, “Anything that rubs me the wrong way, or anything you excel at must be curbed.”  It’s a sentiment that coddles and nurtures our least civil and humane and most barbaric and short-sighted tendencies, usually in the name of the opposite.  It is the uniformity of treatment in relation to the understood rules and norms that matters, not the inequality that results.

The attempt to make my children equal, or more equal, or even treat them equally is futile and destructive.  It is enlightening and beneficial to keep an eye out for favoritism and uniform application of the rules.  I have to check my tendency to selectively apply the mostly unspoken institutional arrangements of the family, and it’s healthy to audit myself in this way.  But the minute I make equality the goal, confusion and frustration take hold, and the rules become more, not less, arbitrary.

Of course society is not a mirror of the family, but the lessons still apply.  To seek equality, or more equality, or less inequality, is an unproductive pursuit, and typically a mask for other frustrations we’re trying to ameliorate where we want the moral sanction of our peers to do so.  Drop it.  Inequality is morally neutral and needn’t be resisted or defended.  Focus on reliable and fair institutions that don’t systematize and reward favoritism, but make it harder and more costly.

Creating Disequilibrium is Good

Originally posted here.

There is no denying that our economy is undergoing dramatic changes. That brings not just difficulty, but also opportunity for entrepreneurs. In fact, the “creative destruction” of the market is part of what drives economic growth.

Putting aside the causes of our current economic troubles (except to say free markets are not the culprit), we can’t forget that, though massive bubbles are not necessary, markets are by nature dynamic even in the most stable of times. This dynamism is not an evil to be avoided at all costs but the very thing that makes free economies so productive.

Classical economists often treated economic growth as a mechanistic operation that happened at a stable rate as a result of unchanging levels of investment and production — as if economies simply grew on their own as long as production was steady and inputs were not disrupted. The problem with this view is that, quite simply, the real world doesn’t work that way. In 1911, economist Joseph Schumpeter’s Theory of Economic Development radically changed this view, and his insights are still relevant today.

Schumpeter stressed the role of the entrepreneur in economic growth and argued that, far from a static maintenance of equilibrium in production, it was the entrepreneurial ability to causedisequilibrium that created wealth. The constant innovation of these economic actors shakes the economy up, breaking down old methods and building up newer and better ones.

It’s not just increases in production that create wealth but a radical reforming of the way production itself is done. Think Henry Ford’s assembly line. Such entrepreneurial innovations disrupt the unrealistic ideal of a stationary economy. They do destroy the old order — like the classic example of buggy makers losing their jobs when the automobile took hold — but they cause growth because what they create is more valuable than what they replace. Can you imagine halting the progress of the automobile in order to preserve buggy makers?

Schumpeter argued that the role of the entrepreneur was different from that of the inventor, manager, laborer, or capitalist. Entrepreneurs need not be wealthy or even especially intelligent. They may be all or some of these things, but that’s not what makes them entrepreneurs. Schumpeter said the entrepreneur was the person who creates new combinations in production.

The creation of a new good or service — a new way to produce the same good or service, a new market for the good or service, a new source of supply, a new organization of the industry — these are the entrepreneurial functions. Such innovation does not necessarily require new invention, just a different utilization of available knowledge and technology.

As Schumpeter said in a 1928 edition of the Economic Journal,

“[I]t is not the knowledge that matters, but the successful solution of the task … of putting an untried method into practice.”

The entrepreneur, by seeing and acting on different combinations of existing knowledge, products, and services, disrupts the economic order and creates growth. There is evidence of this “creative destruction” all around us: every year millions of jobs are created and destroyed, yet the overall long-term trend is continued economic growth.

The growth could not happen without both creation and destruction; it is the driver of growth, not a problem to be solved. If the economy were static — if jobs were never lost, prices never shifted up or down, investments never enjoyed large profits or major losses — we would not live in a stable utopia but a stagnant subsistence economy.

Don’t be afraid to disrupt the economy. Look for ways that things can be done differently — goods, services, and production methods that can be rearranged, new technologies that can be better used. Right now, as the economy reshuffles, there are more opportunities to generate change than ever — the kind of dynamic change that we need to grow out of this slump.

Don’t just sit there, create some disequilibrium!

There’s No Such Thing as a ‘Public-Private Partnership’

It’s long been a trend for local and state governments to create agencies and entities that are supposed to enhance commercial activity in their area.  There are myriad legal and logistical arrangements, but they all have some common features.  They’re all reliant on government in structure and law, they all use taxpayer funds to accomplish their projects, and they all love to use newspeak phrases like, “public-private partnership” to describe their activities.

An online dictionary definition of partnership is useful:

“A legal contract entered into by two or more persons in which each agrees to furnish a part of the capital and labor for a business enterprise, and by which each shares a fixed proportion of profits and losses.”

And,

“A relationship between individuals or groups that is characterized by mutual cooperation and responsibility, as for the achievement of a specified goal.”

Clearly, government economic meddling projects do not fit either of these definitions.  How can “the public” enter into a partnership?  How can “the public” share in profit or loss?  In reality, governments take money from people in their vicinity by force, then they give some of it to suits in an agency who give it to favored businesses and investors.  “The Public” never agrees to anything.  There is no mutual cooperation and certainly no responsibility or profit/loss sharing.

The absurdity of calling it a partnership can be illustrated with the following thought experiment.  Imagine your friend took some money from your wallet, deposited it in his checking account, kept most of it for himself and gave the rest to another guy to start a business.  No strings attached, just a gift of start-up capital.  Then your friend started publicly talking about how this was a partnership between you and startup guy.  After getting over your initial anger that he took your money and didn’t even consult with you before throwing it after some business venture, you try to consider the possible upsides of this unjust act.  You ask him if that means you will own shares in the company.  No.  Does it mean you get some percentage of any profit?  No.  Do you get an interest payment on your stolen and loaned money?  No.  He assures you it’s OK though, because neither are you on the hook for any losses (besides of course the loss of the money he already took, which you’ll never see again.)  In other words, this is nothing like a partnership.

What you get is money taken from you, spent on middle-men who are paid to give the rest to whatever business they want to.  You are not a partner, you are a victim.  Partnership implies consent.  Partnership implies shared benefit and responsibility   Partnership implies choice.  There is no such thing as a public-private partnership.

Institutions Can Improve Even If People Don’t

Originally posted here.

Airlines are loaded with passengers who surf the Internet while soaring through the air, chatting in real-time to anyone else on the globe, posting in social media, shopping, and downloading and reading books on a wide variety of readers. Such a scene would have astonished a person living 50 years ago, to say nothing of a person living 500 years ago.

How do we account for this? A person born five centuries ago is probably just as smart as someone born today. The raw material of the human brain has not changed much during this span of time. Yet people are today infinitely more capable of accomplishing almost any task imaginable than people in 1512.

The greatest navigator of centuries past would have found it a monumental task to leave from one destination and arrive at a precise latitude and longitude halfway across the globe, and it would have taken months. Today, a half-witted teenager can use Google Maps and modern transportation to accomplish the same feat in a single day.

The greatest communicators in the past were unlikely to reach 1 million people with their ideas in a lifetime. Today, the most-incoherent celebrities can reach millions in minutes on Twitter. Conversely, if the greatest scientists today were sent back in time, they would be able to achieve almost nothing absent computers and modern lab equipment.

A weak and feeble worker today can move more tons of earth than the strongest shovel-wielding excavator of the past. Given the inherited technological progress of humanity, even an average Joe can do amazing things with ease. It does not take a superior human to achieve superior results.

Economically speaking, the marginal productivity of workers increases with the capital and technology available to them.

But let’s broaden the point to issues of morality. How can we become better people — more peaceful, cooperative, and creative — in the same spirit in which we have become more effective and productive with better technology? We need better moral “capital” and moral “technology” that enables morally superior outcomes even without morally superior people.

The moral technology I am speaking of is social and political institutions. A person born today is no more or less likely to be moral than a person born 500 years ago, but they can be more or less likely to act morally based on the institutions around them.

Moral institutions change and evolve just like technology. They can reduce or expand not only the morality of individuals on the inside, but the harm or good caused by their actions on the outside. The most saintly person born into a world where slavery was the norm would have very limited ability to stop the practice, though she could abstain from participating in it at great personal cost.

A horrendously evil person born into a world where slavery is considered abhorrent would be unable to lord over slaves, without tremendous personal cost. It is entirely possible that many people living today have it in them to be on par with the worst slave masters in history — only the opportunity for their evil does not present itself, given the progress in this area of our social and political institutions.

This does not mean that individual choices are meaningless. Far from it. A moral person can always do good within their institutional framework, and a good framework can exponentially enhance the good one can do. Individual choices are vastly important.

But in order for the world to be free of oppression by states, for example, it does not require that every individual be an angel or that the average morality of the population be better than it currently is.

How can institutions improve if morality does not? Institutions are ultimately the result of our beliefs. Better beliefs will result in better institutions, but better beliefs do not require morally superior people any more than beliefs in a heliocentric solar system require more-intelligent people.

Many people believe the Earth revolves around the sun not because they are smarter than ancient peoples, but because they grew up in a world where that was accepted. Many people believe slavery is wrong not because they are morally superior to all people from ages past, but because they grew up in a world where slavery was condemned.

The broader social narrative creates the institution. But where does this narrative come from? Here’s where individuals come in again.

Progress typically begins with iconoclasts and radicals espousing and experimenting with ideas that challenge the status quo. This is true of technological, intellectual and moral progress. The few who advance these radical ideas attract small, but influential followers, and some minds are changed by argument alone. But the real change comes when discussion turns into demonstration.

When the Wright brothers got off the ground, when slavery ended in some countries and the economy did not collapse — these occasions did more to change the prevailing beliefs about manned flight and slavery than did the necessary intellectual work that preceded them.

People do not have to possess superpowers to learn and adapt. All humans do it. Learning even to reject foundational and dearly held beliefs is possible and frequent in history, especially because the change typically takes place over several generations, so that each generation has to learn to give up only a part of the cherished belief. When it is understood that a new belief will result in better outcomes, it can be adopted with relative speed and ease, sometimes without any conscious “a ha!” moment at all.

Neither technological nor institutional progress is inevitable. History is replete with times of retrogression and collapse. When there are no radicals challenging the status quo, innovating and demonstrating new and better beliefs, it is not long before the prevailing institutions stagnate or advocates of a romanticized past win the day and drag humanity backward.

Progress is not inevitable, but progress is entirely possible even with flawed humans like us. Our beliefs can change as we learn better ways of doing things, and with our beliefs will change our institutions. Better institutions — free institutions, rather than coercive ones — will result in a better world.

We ought to continue to discuss and demonstrate the fact that states — their oppressions, confiscations, impositions, kidnapping, counterfeiting, and war — are not necessary or beneficial. Better morality is always better, but if we change the prevailing narrative about states, we can live in a stateless world even without a saintly populace.

It is a false and arrogant belief that only angelic geniuses are capable of believing that statelessness is possible and desirable. If a bunch of idiots can live in a world of technological wonder, so too can a bunch of jerks live in a world of freedom.

But Who Would Bilk the Roads?

But who would create the long lines in which to wait to be told you have the wrong documents?  Who would build the bridges to nowhere?  Who would pay $300 for a toilet seat?  Who would lose your important items in the mail?  Who would force you to turn off your cell phone while taxiing on the runway?  Who would pay a horseshoer to not shoe horses?  Who would pay a farmer to not grow crops?

Who would encourage the poor to buy education and housing they can’t afford?  Who would encourage workers not to work?  Who would encourage the generous not to give?  Who would encourage the productive to stop producing?

Who would punish the innocent for doing what makes them happy?  Who would subsidize some chemicals and plants and ban others?  Who would perpetuate gang wars across the globe?  Who would encourage and prop up organized crime?  Who would jail sickly grandmothers for seeking natural pain-relief remedies?

Who would incentivise healers not to heal?  Who would force entrepreneurs to become legal experts rather than creators?  Who would create laws sufficient to make everyone a criminal?  Who would artificially raise the price of health care?  Who would artificially lower the price of waste?

Who would prevent people from seeking damages when another pollutes the water?  Who would fail to maintain the forests?  Who would squander the resources?

Who would help well-heeled businesses crush their competition with laws and regulations?  Who would steal half of the production and spend it on stifling the other half?  Who would pay thousands of agents to create thousand of rules to penalize millions of people for making a living and not properly filling out paperwork to classify and justify it all?

Who would force the children into factory schools?  Who would cram bad ideas into their heads?  Who would drive them to near madness with tedium and tyranny controlling their every waking minute?  Who would call it bullying or a disorder when they reacted?  Who would cram pills down their throats when they thought divergently?  Who would lie to them about the value of schooling?  Who would teach them to obey arbitrary authority instead of their own consciences?

Who would force the peaceful to pay for war?  Who would encourage the violent to aggress and call it honorable?  Who would give sanction to racist, hateful tendencies and call it security?  Who would attack the innocent?  Who would build the drones?  Who would man the concentration camps?

Indeed, who would carry out the genocide?  Who would massacre the millions?  Who would force famines?  Who would torture?

Want a Better World? Make a Profit

A few days ago, I noticed a post on Fast Company’s Co.Exist titled, “Is Working on Wall Street Actually the Most Ethical Career Choice?”  The post is about a project called 80,000 hours that is trying to get people to think about how best to spend the average 80,000 hours they will be in a career.

Somewhat refreshingly, the project encourages people to consider going into high-income careers rather than the non-profit world.  It describes the outsized impact you can have by funding several causes vs. working in one.  But the premise remains: to do good, it’s nonprofits that provide the boots on the ground.  You might have to bite the bullet and take a high-paying job so that you can support such efforts, but it’s very clear that aid and charitable organizations are what make the world a better place.

What’s so odd about this perspective is that all the evidence in world history reveals just the opposite.  There has not been a single, massively transformative development driven by charity work.  But millions upon millions have seen the end of poverty, disease and plague; we’ve seen lifespans extended, air and water cleaned, culture, art and beauty preserved and enhanced, and lives saved by profit-seeking enterprises.

Working for profit is, in a free-market, always a win for others.  Profit is a signal.  It reveals when value has been added to society, as measured by the subjective values of those in society.  Resources are purchased for a price.  That price is what the resources are valued at for their next best use.  Profit-seekers then do something to the resources.  They apply ideas, time, other resources and labor.  What comes out the other end is sold.  If consumers willingly pay a price high enough to cover the cost of inputs plus some, profit is made.  What does that profit signify?  It signifies value created.  It shows how much more valuable the resources are after the transformation than before.  It shows, in dollars, how much better off people are because of the enterprise.

Of course dollars are not a perfect measurement of value.  And of course economic value is subjective and changing.  But there is no perfect measurement, and there is none clearer, cleaner, or fairer.  You can ask people what they value, but when they willingly trade their dollars for it, it speaks volumes.  Any uncoerced exchange that generates profit should be hailed as a wonderful benefit to the world.

Sure, you can make a bunch of money so you can give lots away to causes you believe in.  That’s a wonderful thing.  It feels good.  It can help some people in tangible ways that are fulfilling to be a part of.  The truth is, whether you like it or not, you’re doing more good for the world by the activity that makes you the money (so long as it’s not subsidy, tax, or regulation supported) than by the activities you support in giving it away.

I highly recommend this excellent article by F.A. Harper on “The Greatest Economic Charity“.

Review: Madmen, Intellectuals, and Academic Scribblers

Any book that uses an Oxford comma in the title is immediately in my good graces. Add the nicely designed cover, the slim size, and the intriguing topic, and Edward Lopez and Wayne Leighton would have had to commit heinous rhetorical or logical crimes to turn me off of their new book, Madmen, Intellectuals, and Academic Scribblers. Fortunately, they commit no such crimes but present a sweeping and readable examination of the forces that generate social change.

I have long been obsessed with the question of how to change the world. In my personal life, this question took me from humanitarian mission trips, to politics, to policy advocacy, to education, to developing educators, to raising support to develop educators. To borrow the old adage, I found I could do more in teaching a man to fish than giving a man a fish…then I took it further: Now I raise the capital to build the factories to make the rope to produce the nets to give the teachers to teach people to catch millions of fish.

This doesn’t mean I’ve discovered once for all the secret of changing the world; far from it. Every day my approach changes as I gain experience and learn new ideas. Madmen is, in many ways, a clear articulation of many of the ideas I’ve come to hold about social change. It details how Public Choice Theory reveals that governments have all the wrong incentives for positive change. It discusses the role of ideas, and how they are able to overcome the vested interests that Public Choice makes seem so insurmountable. It lays out Hayek’s description of social change coming from intellectuals, and spreading through the general public. But Madmen adds a new dimension, one I have not been able to integrate into my worldview until recently: the bottom-up role of culture, and the circumstance of time and place.

It is not only coherent, conscious ideology that determines what institutions will be tolerated, and therefore what incentives exist and what outcomes result. The conscious beliefs of individuals in society do play a major role, and are something we focus on perhaps because we feel capable of altering them through education and persuasion. But there is also a role for bottom-up, experiential, subconscious or tacit knowledge. The kind of knowledge that culture carries from generation to generation, passing on when it produces better outcomes.

Often no one is aware the valuable function of such cultural trends or norms. Economist Peter Leeson has done research on a variety of bizarre superstitions and practices embedded in various cultures; memes that seem to have no value. If you asked the members of that culture what the purpose was, they would likely provide an answer steeped in their religion or mythology. Yet time and again, the practices have proven efficient means of achieving desirable ends, at least compared with the known alternatives. Such cultural norms needn’t be recognized for what they are even by the people that benefit from them in order to have influence over institutions, incentives, and outcomes – good or bad.

I’ve come to believe that, when it comes to bringing about a better world, valuing freedom because we’ve experienced it and consider it normal is just as important as valuing freedom because it makes sense in the moral or utilitarian abstract. A generation that believes in the power of voluntary cooperation because they take part in it every day is no less valuable than one that reads libertarian theory.

Madmen integrates the top-down flow of ideas from intellectuals to the general public with the bottom up influence of learned cultural memes, and uses the combined forces to explain where the ideas come from that shape the institutions in which (as Public Choice reveals) incentives will lead to predictable outcomes. To create this integrated view of social change, Leighton and Lopez ask and answer three questions:

1. Why do democracies generate policies that are wasteful and unjust?

2. Why do failed policies persist over long periods, even when they are known to be socially wasteful and even when better alternatives exist?

3. Why do some wasteful policies get repealed (airline and telephone regulations) while others endure (sugar subsidies, tariffs)?

They offer answers in less than 200 pages, yet somehow manage to work in an expansive history of economic and political thought, beginning with the earliest philosophers and ending with the most current economists. This is an excellent tour of political economy as a discipline: what questions it asks, what personalities populate the field, and what competing and complimentary theories they present. There is enough detail to satisfy the wannabe economist in me, and enough colorful storytelling to sate my inner layman.

The book opens with a story of the shot-clock that saved basketball, and closes with a story of hybrid wheat that saved millions of lives. It is full of examples of social change, both good and bad, and the authors’ thoughts on why it happened when and how it did. If you are interested in how the world works from a ten thousand foot vantage point, I cannot recommend Madmen, Intellectuals, and Academic Scribblers enough.

How the World Will Change

(Originally posted here.)

When the world becomes free it will not be by the creation of new laws, or the removal of old, or new political leaders or any election result. It will not be because of a change in government, but because of a change in attitude toward government. It will not be because of legislation, but because of disregard for legislation.

Genuine change will come when the state is ignored, not reformed. It will come not when politicians are better, but when they are irrelevant.

When state-made law is no longer deemed necessary or important it will not be respected. When it is not respected it will not be enforced because it will not be enforceable.

This is how the world will change.

Evidence in the Face of Disbelief

The world can become free of the barbarous relic called the state. The state is a dangerous fiction whose power rests entirely on people’s belief in its necessity, or inevitability. Belief in the state is not insurmountable. It is not hard-wired into the human mind. It is not a given that a state must or will always exist. The state, like so many other superstitions now thought to be outrageous, inhumane and inefficient, can be left in the ash heap of history.

Many once laughed at the notion that an institution as old as humanity itself, the institution of slavery, would or could ever be removed. The prevailing wisdom for centuries, even among those who had discovered the moral repugnance of slavery, was that it was just a part of human nature. Reformers argued the best thing was to work for a more humane version of slavery.

Slavery was an institution that, however evil it may sometimes be and however utopians might imagine a more perfect world without it, was here to stay. Some embarked on efforts to improve the institution, to teach masters to be “good” to their slaves. Some setup rules and mores designed to limit the nastiest outcomes of the institution. But the institution itself was as unavoidable as scarcity and death.

The fatal flaw in this thinking is that slavery and government, unlike scarcity and death, are human institutions. They are, above all, mental constructs. Their physical manifestations are not physical realities humans simply encounter in nature, but realities we create, and humans only create by first imagining. An idea does not become an action unless the individual actor believes that the idea is worth acting on. To subjugate another human being, or to condone or allow the subjugation of one by another, one must first have the idea of subjugation and must believe that acting on it is preferable to ignoring or condemning it. Scarcity and natural death need no such human consent. The old saying about death and taxes turns out to be only half true.

If the state, like slavery, is the result of the ideas held by people it is not inevitable. Some day humanity could look back on the institution called the state with the same sense of shame and wonder that we now have about slavery. How could so many people – many of them good people – live their lives day in and day out surrounded by an institution so inhumane, so nakedly violent and demeaning? Did they really think it was necessary? Did they not understand how degrading it was? It will be hard to understand how so many humans thought the state was inevitable, tolerable and even good. As sure as slavery became a hated relic, so can the state.

How It Happens

When slavery ended it was not by changes in rules or laws or political leaders. Such changes often quickly follow changes in belief and mistakenly receive the credit, but they are never the cause. Slavery ended as people’s ideas about it changed. People began to believe it was not only an evil, but an unnecessary one. People began to believe it so evil that they were willing to tolerate the short-term sacrifices of ending it in order to reap the long-term improvement in the human condition.

The calculation of cost and benefit changed as people’s sense of morality trumped their sense of conservative institutional stability. The unknown outcome of ending slavery became an acceptable risk when considered against the known evil of the institution, which became an unacceptable reality.

Political Reform

Political reform can never bring about liberty. It can on rare occasion expand a bit of liberty for a few, but as long as that expansion occurs via political methods, it means bargaining that often takes away freedom in some other arena, or the long-term furtherance of trust in the state. The political game is about reshuffling and re-enforcing the necessity of the state.

The political game attracts great attention, and as such many suggest using it as a means of educating people about the power of liberty. Politics as education is only valuable in the long term to the extent that it educates people that politics is at bottom bad and government cannot ever be good. If it merely inspires people to advocate that the state do to things better, it is not, in the end, going to make society more free. It is disbelief in politics and in the state that leads to freedom.

The Chinese army fired on their fellow citizens in Tiananmen Square. This massacre was not caused by political leaders and generals saying, “Shoot”; but by men in the Chinese army deciding to shoot. It was not caused ultimately by bad leadership, but by a belief in the necessity of obeying orders. There will always be people with a will to power; a desire to control. Only when the rest don’t believe that power to be necessary and therefore do not obey does freedom reign.

Shift Focus

Humans want to solve problems in the most immediate and direct way possible. We want to know where the problem of restricted liberty begins. We discover the source in a gradual progression. First the focus is on people – the wrong political leaders. This quickly generalizes to political parties or groups, then to policies or laws, then to agencies and institutions, and finally to the state itself.

Here it seems we’re at the core of the problem: the state itself. Not any of the personalities or parties or bureaus or laws under its aegis. But a further shift in focus is required. The state is not the root of the problem. The real problem is not an institution, but an idea. It is the idea that government is necessary. That’s the culprit and final basis for every bad thing the state has ever done.

To a small degree, a shift in focus is happening now. A great many people don’t believe that a particular politician will solve the problems created by the state. An increasing number don’t believe one party is more likely than another to do so. It is more common to hear institutions or the incentives built into the system of government blamed. This is progress. It is, however, still rare to hear the existence of the state itself blamed, and rarer still to hear blame placed on the idea that a state is necessary.

The belief in its necessity gives rise to the state, which by definition is full of bad incentives that attract and nurture bad people in bad parties. To say the people, parties, or policies are the problem would be like blaming the sidewalk for breaking your leg after you walked off a tall building because you were ignorant of the staircase and elevator. Frustration with the sidewalk is useless and ignorant. The proper response would be to question the necessity of walking off the building; perhaps in so doing you would discover other less painful methods of achieving your goal and reaching the ground floor.

There is no form or arrangement of a state that can guarantee liberty. The answer is always peace, markets, and voluntarism. The ring of power cannot be wielded for good, but must be thrown into the fire before it uses good for evil.

Changing Lives and Changing Life

I do not wish to downplay the possible outcomes of attempts to reform the state. By such efforts lives can be changed. A court decision can save an individual or a whole neighborhood from being bulldozed by the state. The removal of a regulation can change the life of an entrepreneur and allow her to pursue her dream. These activities are analogous to disaster relief or soup kitchens; they can genuinely change lives and offer welcome relief. They can change lives, but they cannot change life.

Disasters will still come and go. The conditions that brought about hunger are not ameliorated with the appetite of the person receiving soup. The liberty-crushing actions of the state do not cease when it ceases to crush one neighborhood or regulate one industry for some period of time. The state will – must – continue to seek its own expansion, and it will push at every weak point it finds to do so, ensuring that an endless stream of lives will remain to be helped, but that the conditions of life itself will not be fundamentally altered. Treating disease is noble, but it is different than eradicating disease.

Changing lives is good and fulfilling work. But for those courageous enough to dream, changing life itself is bliss, and can only be done by undermining, not improving the state.

What to Do?

The only tactic worth pursuing is enlightenment. Enlightenment of self and of others, and both continuously. This does not mean telling people what to believe or what to do. It is more akin to discovery than education. A teacher may help you discover truth by providing information, but the discoverer has to have curiosity and openness. It is the discoverer himself who chooses to discover.

Become a free person, and your freedom will be a beacon to others who are searching. Create liberty in your own life, exchange ideas, be open to the power of human creativity. Free your own mind and you will begin to help others to free theirs not by telling them what to believe, but by demonstration and discussion.

The market does not produce new innovations and technologies because smart people tell others what to design; instead it is a constant dynamic give and take, show and tell, creation and imitation, trial and error, the greatest ongoing play of economic exchange.

The building of a free-society needn’t wait until the state is limited or absent; indeed the state will not wither until the free society is first built to replace it. The explosive power of ideas will destroy the foundations of the state as free people continue to live and breath those ideas and demonstrate the life, energy, fun, progress and fulfillment in freedom.

This does not mean everyone who wants liberty must do the same thing. Demonstrating and discussion the ideas of a free society is such a broad and evolutionary task that it opens endless doors. The differences we have in ability and interest lead to numerous efforts, and enlightenment leaves ample room for differentiation.

Our differences will manifest in which “others” we exchange with, and what methods and mediums we use. But it must be an exchange of ideas and the building of a free society. It cannot mean deceiving, cajoling, “nudging”, forcing, bribing, or dictating. These, in the end, will only lead to less freedom.

Liberty not inevitable, but it is possible. A state that does not trample liberty is not possible. So long as the state is deemed necessary it will exist, and the state will always grow beyond its originally desired limits. The state will prey upon society until it destroys it, and then destroys itself. But if the belief in the necessity of the state remains, the deposed state will soon be replaced by a new one and the process will begin again.

The only foundation that society can be built on without collapse is a belief in statelessness.

It must be belief. Consequential (practical) and deontological (moral) arguments against the state miss the point. People will accept an inefficient and immoral system if they believe it necessary. Once they find it unnecessary, they will abandon it and give moral or practical reasons for doing so, but the belief in the necessity of the state must go first.

Imagine Liberty

Ludwig von Mises described three preconditions to human action. An individual must have dissatisfaction with his current condition, a vision of something better, and a belief in the ability to achieve that vision.

Everyone has dissatisfaction with government. Almost no one has a vision of something better. People have visions of a differently structured “necessary evil”, but their lack of imagination makes them keep the modifier, “necessary”. The Proverb says that for lack of vision people perish.

If we open up our imagination there is abundant evidence of order without the state. Non-state norms and institutions produce the majority of the world we see around us. Historically, society precedes the state, and there is ample evidence of stateless solutions to problems we are taught to believe only the state can solve.

Beyond past or present evidence, an application of our knowledge of human potential can also help us envision what could be. Science fiction writers imagine unheard of technologies by looking at technological advances in the here and now. They extrapolate and predict where human ingenuity, if it continues on its present course, may go. The best social thinkers do the same with society.

Some advocates for liberty do have a vision of something better. They can imagine multifarious social arrangements without the state. But most still lack the third condition of human action; a belief in the ability to get there. After so many vein attempts at revolution and political activism it seems there is no answer. But in some ways, the second condition of action is the answer to the third. If enough people can imagine a better solution, they will cease to support an inferior one (even in the face of the unknown, if they believe it to hold promise) and cease to prohibit new experiments. People with imagination too small to envision an automobile may very well accept restrictions on road building. But people who can’t envision the specific manifestation of the automobile, but can imagine human progress and invention capable of surprising them will be reticent to restrict the construction of something with unknown promise.

This is why we needn’t all share the same, or even a very specific, vision of a stateless world. We must, however, be brave and broad-minded enough to see in human relations the potential of order without the state.

For those who can imagine such a world, the task is to open others up to the same possibility. Show them, intrigue them, inspire them. Where imagination is wanting, so is liberty.

When It Happens

Perhaps the beginning of the end of the state will be gradual. Maybe state efforts to restrict minor activities will be increasingly ignored. Bans on food and drink may be laughed at and become unenforceable. Perhaps it will slowly extend to ignoring bigger and bigger restrictions.
Perhaps it will start with a bang. The prohibition of drugs may simply come to an abrupt end, and sooner than anyone expects. Public schooling may suddenly become so little used and so uncompetitive in the face of educational innovation that it disappears.

It may happen without a big production. The visage of the state may not even die with its function. The royalty of England still exist, but they are longer relevant in regulating daily life. They exist as reflection or memory of what was once believed. Some Native American tribes perform rain dances not because they believe, as they once did, that they will bring rain, but as an homage to their past. The state may transform similarly. It may never “go away”, but it may cease to have meaning except as a tradition. Parades and pomp may remain while power over our lives withers.

Fast or slow, big or small, conscious or unconscious as it may be, the world will change. The state can be a relic of the past, harder to understand as time moves on, like slavery in America today. In so many ways the trend is well underway and we are already in a mostly stateless world, though it is little appreciated or understood. It may be a matter of merely realizing what is already true: the state is not, and never has been necessary.

Realistic and Radical

The dissolution of the state doesn’t rely on people to become better or morality to change, or for the next step in evolution. It is a fallacy that government is inevitable and necessary. It could wither away in no time. It is only a matter of us changing our beliefs, paradigms, and theories of world. It only requires that we realize that it is not necessary. I say only, but the power of imagination necessary to see that the state is not is no small thing. Opening our minds to this possibility is the greatest and most promising intellectual and practical adventure.

Why Corporations Don’t Support Freedom

There is a common assumption that advocacy of free-market ideas is funded in large part by big corporations.  As much as I wish the many great organizations and projects that are educating in liberty received financial support from large corporations, almost none of them do, and when they do it is in very small amounts when compared to the other things such firms support.

But why?  Businesses are constantly hampered and harassed by government regulation, taxation, and the uncertainty of the legal landscape one day to the next.  Don’t they stand to gain from laissez faire?  Well, yes, businesses stand to gain tremendously from market freedom.  Entrepreneurs, owners, employees, consumers, and every other market participant stands to gain.  Businesses of all sizes stand to gain, provided they can produce what consumers demand.

Aye, there’s the rub.

You see, while business stands to gain from free exchange, nobody knows which specific businesses will be most successful in a competitive environment.  Consumers are a tough bunch to please.  It takes a lot of work, and there’s a lot of uncertainty.  The creative destruction of the market is a little daunting to a businessperson who dwells on it for long.  It’s easier, for those who can afford it, to cozy up to the state and ensure that it’s restrictions and interventions hurt you a little less than they harm your competitors.  If you have resources enough and play your cards right, you might even be able to get policies that make you more profitable or put your competitors out of business entirely.

The result?  Bigger businesses tend to support state intervention, because they have the lawyers and money and can hire the guns of government.  It is entirely possible that some of these very businesses would fare better under economic freedom, but they don’t know for sure, so they go the somewhat safer route of state cronyism.  Smaller businesses typically aren’t organized enough and lack the resources to manipulate policy in their favor.  Worse still, the unimaginable number of new ventures that would have been created were it not for government impediments have no voice at all; we don’t even know who would have created them.

In short, freedom is good for business, but scary to businesses.

The Problem of Paradigms

Here’s an old and dusty blog post on paradigms.  Recent events brought it to memory so I’m posting it here.  Also see this post on worldviews.

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Johan Norberg wrote a brilliant and devastating critique for the Cato Institute on Noami Klein’s recent book, The Shock Doctrine.

Norberg’s article is well worth a read.  It reminded me of the immense importance of the long-term battle of ideas.  The practice of teaching political ideas on a simple continuum of left to right, with fascism on one end and communism on the other, has resulted in all manner of untruthful re-interpretations of history, philosophy and economics.   This book is probably the strongest example of the major problems this simplistic and inaccurate paradigm creates.

Klein is unable to see the world through any lens besides the left/right paradigm.  Because of this, she is forced to make everything fit into this vision.  She crams big government Republicans, fascists, despots, corporate welfare leeches, bureaucrats, militarists, and libertarians all into one bizarre category.  No matter how strongly reality disagrees with this view, and no matter how impossible it is to fit these different shapes together, she still tries and apparently believes she’s succeeded.

The paradigms we form early in our intellectual endeavors can prove incredibly hard to shake.  Seeing the world as merely a left/right world is the root cause of almost all of Klein’s inaccurate, and frankly stupid, conclusions.  It seems glaringly apparent that libertarians and neoconservatives are not even close to the same thing – scads of books, websites, essays and debates are widely available which make this overtly clear to even a casual observer.  Yet Klein holds so firmly to her left/right paradigm that she fails to see these distinctions, and sometimes even offers critiques of government and calls them critiques of free-markets.

If we are to analyze policies and philosophies on their moral and practical merits, it is imperative that we learn to break out of overly-simplistic paradigms, and allow each argument to stand on its own rather than be mashed together in unnatural associations that are easier to label and fit on our continuum.  (Though also simplistic, here’s another at least somewhat better way to view political ideas – one that allows for more deviations and does a better job of explaining the world that we actually see.)

Paradigms are important and necessary mental tools that help us understand abstractions and put them into a broader and more meaningful context.  However, they are only mental tools – the paradigm should never be confused with the truth itself.  When reality does not fit into our paradigms, we need to explore new ones rather than bend and twist reality and deceive ourselves into believing it fits.  Paradigms should be checked against logic; a sometimes difficult task that would’ve saved Ms. Klein from a great deal of error.

Klein’s book should serve as a reminder that the current left/right political spectrum is one of the least useful or explanatory paradigms around, and adherence to it in the face of divergent realities can be dangerous – to freedom and to truth.