A Presumption of Competence

Why free markets?  Why am I prejudiced toward emergent order vs imposed order in economic matters?  Why is my default position against government involvement?  Why do I invoke such a high standard before justifying active government involvement in the economy?

Because the presumption of competence that is prevalent throughout a free society should be applied to economics as well.  The American civil legal system and the concept of Justice, at least in theory, have presumptions of competence built in.  Parties may contract with one another, with only the need for an arbitrator if there is a disagreement or fraudulent behavior.  They don’t need government to direct their contracts; each party is assumed to understand the deal.

Other freedoms are the same way: the freedom of speech presumes that the speaker is competent and that his audience is capable of choosing whether or not to listen.  Freedom of religion presumes each person is capable of finding their own belief system (or not).  Freedom of press assumes each reader is competent to understand ideas.  Freedom to marry presumes each person is competent in choosing a life-partner.

Economics is the same.  When two people complete a transaction, the presumption of competence is with both: each person trades knowing, to the best of his ability, how to improve his situation.

What about externalities?  Externalities may require necessary government involvement, but the presumption of competency still stands.  People in groups are quite clever.  The market institution does an amazing job channeling resources to reducing all costs, not just private costs.  A presumption of competence allows the market institution to work.

Unfortunately, most economic policies (especially the interventionist ones) rely on a presumption of incompetence.  Tariffs, punitive taxes, many kinds of regulations, et cetera all contain a presumption of incompetence: these regulations must be passed because at least one party (typically the consumer) is incompetent for one reason or another to make his/her own choices.*  The justification is usually “the consumer can’t act in his own best interest.”

I defer to the emergent order because of the knowledge problem.  Without overwhelming evidence to the contrary, the presumption of competence on the parts of the actors (and incomplete information on the part of the observer) should be observed.

*A potential objection an interventionist might raise is that these regulations are necessary because of a lack of information on the part of consumer.  For example, FDA regulations and testing are necessary because otherwise firms will just try to pass off placebos or post biased results.  However, prima facie this justification doesn’t make sense for an interventionist policy, rather than an advisory policy.

29 thoughts on “A Presumption of Competence

  1. OK. I’m fine with a presumption of competence on the part of individuals. Of course the devil is in the details and on any given issue you will likely quickly find disagreements even among libertarians on when that presumption is overcome. For example, some libertarians support a guaranteed minimum income and some are outraged at the idea on the basis that it is a forbidden positive right.

    As long as we are serious about the presumption of competence on the part of individuals shouldn’t we presume that individuals are competent to select legitimate political representatives for themselves in government.

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      • A taxpayer funded UBI requires some taxpayers to support others even when they don’t want to.

        Different self described libertarians disagree on whether or not this is OK.

        The fact that even dedicated libertarians disagree on this is submitted as an example of how quickly you will find different people disagreeing on where and when exceptions to the presumption of competence apply.

        The reason that some people need a UBI is that they are not competent to provide one for themselves.

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        • If they are not competent to provide for themselves, then are they competent to elect political representatives? Or perhaps make any decisions on their own behalf? You open up a lot of difficult to answer questions when you posit that people are not competent to provide for themselves.

          Also, you create another problem with your unanimous agreement requirement. Should all political decisions require unanimous agreement?

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        • “The reason that some people need a UBI is that they are not competent to provide one for themselves.”

          I conditionally support a UBI, but that wouldn’t be the reason why. Welfare isn’t about competence (at least not as I see it). What this post is about is when the government starts directing actions (either through banning some or mandating others). Welfare doesn’t fit there

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          • Jon,

            Of course you are the ultimate authority on why YOU support a UBI. But just because you support it for other reasons doesn’t mean that other people don’t support it because they recognize that not everyone is competent to provide for their own income.

            Surely you do recognize that there are some people who are not competent to provide for their own income even if you personally support a UBI for entirely different reasons.
            This all just goes to illustrate my point that different people will quickly draw the lines in a quite spectacular variety of different places on when presumptions are overcome even when they agree on those presumptions.

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        • Greg G.

          The reason that some people need a UBI is that they are not competent to provide one for themselves.

          And that results from overly restrictive gun control laws. If people who need a UBI were armed, they could easily provide it for themselves, just as government will be able to provide it for them if it decides to do so.

          Actually it doesn’t follow that people who can’t provide for themselves can only get help from government forced redistribution of income.

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          • Ron,

            I didn’t say that it followed that forced redistribution was the only possible source of help for them.

            I did say that their incompetence at providing their own income was the reason they needed help. Despite the presumption of competence, some are incompetent.

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          • Greg G.

            You used the term “UBI” which I understand to mean a guaranteed minimum income. If that requires forced redistribution, then I oppose it. If you meant only that some people need help making their way in life, I agree completely, and I’m able and willing to help. I expect natural human compassion and generosity toward those in need to fill that need. We all step up when needed to help family, friends, neighbors and others in our communities. We even contribute generously to far away people we don’t even know when natural disasters strike anywhere in the world.

            It isn’t charity and it certainly isn’t compassion to redistribute resources through the use of force.

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  2. Excellent post, Jon! I agree wholeheartedly. I agree with libertarians on many, many issues, including a guaranteed minimum income to replace the myriad of government welfare programs and the byzantine bureaucratic system that we have now (I believe Milton Friedman proposed such a guaranteed minimum income back int he 1980s for the same reasons. Not that it is a good idea, but that it is better that the welfare programs “progressives” have enacted. And, more importantly, it would get rid of a huge chunk of the bureaucracy.)

    I believe that libertarians believe that people are competent to choose their political representatives. The problem, of course, is what power does to those otherwise competent people. That is why government must have well defined limits on government power.

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  3. “Governments act for their own benefit, not the benefit of their citizens!”

    This is another excellent reason to have a very high standard before permitting government involvement. Too many people want to trust their government officials, but as we should all know, “power tends to corrupt, and absolute power corrupts absolutely.” To limit the corruption, we have to limit what government may do. This is why corruption has grown with the size and power of government.

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    • “How about the freedom to defend oneself”

      That is more of a necessity for when seconds count, the police are only minutes away.

      “settle disputes, and settle competing claims to property”

      That is called mediation and arbitration. As Voltaire once noted, “I was never ruined but twice: once when I lost a lawsuit, and once when I won one.” You never want to go to a government-run court unless you really, really have to.

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  4. National defense is a legitimate function of the federal government, but even then the federal government’s competence is questionable given the many wars and conflicts the US has been involved in that were mostly likely unnecessary.

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  5. [Comment removed due to being unrelated to the topic. All comments are welcome, but I ask they remain on topic.] -Force4Good

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  6. Ben’s usual hobby horse examples do serve to illustrate my point about how quickly you will always find people – even libertarians – justifying exceptions to general principles.

    This is why Oliver Wendall Holmes Jr. said “General principles do not decide concrete cases.”

    It’s not that general principles don’t matter. It’s that more than one almost always applies.

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    • Ben said, “am disappointed at the usual cowardice I find in “libertarians” or free-market types.”

      It sounds like Ben is not a libertarian or a free-market type.

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  7. Jon,

    Let me try coming at this from a different angle.

    I agree (as a general principle) that the presumption of competence is a good one. Does that mean that I think individual incompetence is rare? No it does not. It simply means I think we are likely to get even worse results if we make a different default presumption about the question.

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    • Ok. I think understand what you are saying now.

      Let me respond by simply saying that i think we agree, but our standards that must be met before justification of intervention is met are different. Mine is much more strict than yours.

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      • So, we all agree that competence should be the presumption. It is just that liberals, conservatives, and libertarians disagree about the level of incompetence of the American people. But, doesn’t that take us back to the view that liberals and conservatives feel that they are so much smarter than their fellow Americans?

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        • And, the idea that some Americans feel they are so much smarter than others causes libertarians to argue that liberals and conservatives cannot be trusted with power.

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      • Jon,

        Yes, I agree with every word of that but I want to add something crucial. It’s not just that you and I will disagree on where to draw the line in specific cases. It’s that ANY two people are likely to agree once you get into the details of specific cases.

        That’s why I think libertarians focus too much on general principles (which ARE very important) at the expense of focussing on the best process to settle disagreements while minimizing violence and coercion.

        That’s why I keep coming back to the benefits of constitutional democracy while libertarians tend to want to focus on its shortcomings.

        When two people are in a a dispute that has the potential to lead to violence or coercion, what is it that determines whether or not that dispute will end in violence and coercion? I am arguing that it is not the specifics of the final decision nearly as much as an agreement on the PROCESS for reaching that final decision that makes the difference.

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        • Greg G.

          That’s why I think libertarians focus too much on general principles (which ARE very important) at the expense of focussing on the best process to settle disagreements while minimizing violence and coercion.

          Aren’t general principles the result of focusing on the best processes based on prior experience? For example a system of private property rights seems to provide the best process for settling disputes over the use of scarce resources. And the NAP seems to provide the best guidance for avoiding unnecessary violence.

          When two people are in a a dispute that has the potential to lead to violence or coercion, what is it that determines whether or not that dispute will end in violence and coercion? I am arguing that it is not the specifics of the final decision nearly as much as an agreement on the PROCESS for reaching that final decision that makes the difference.

          I agree. Everyone seeks justice. If a person has previously agreed to a specific dispute resolution process, they are more likely to abide by a decision they believe is an honest best effort at providing justice, even if it’s not in their favor.

          The trouble with your constitutional democracy system is that unless the constitution is established by unanimous consent, which AFAIK has never happened, one group has already determined what the supposed best process will be, and others may be forced to use it. It’s not clear how that minimizes violence and coercion.

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          • Ron,

            >—“Aren’t general principles the result of focusing on the best processes based on prior experience?”

            Yes but there are lots of general principles and my prior experience doesn’t indicate that one necessarily trumps all the others.

            >—” If a person has previously agreed to a specific dispute resolution process, they are more likely to abide by a decision they believe is an honest best effort at providing justice, even if it’s not in their favor.”

            True but in most cases they haven’t previously agreed.

            >—“The trouble with your constitutional democracy system is that unless the constitution is established by unanimous consent, which AFAIK has never happened, one group has already determined what the supposed best process will be, and others may be forced to use it.”

            In an an-cap system you will fall short of unanimous agreement by a much wider margin. Many will disagree with the vigilante and private security force actions taken against them. Different vigilantes will be trying to enforce different rules in the face of these disagreements.

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          • Greg g.

            Let me try that again, and this time I’ll include some content.

            . Many will disagree with the vigilante and private security force actions taken against them. Different vigilantes will be trying to enforce different rules in the face of these disagreements.

            That’s why a justice system is necessary, but it need not be a monopoly government system. I don’t believe there has ever been a society of any kind that hasn’t had some type of system of customary law, and a system for conflict resolution. Keep in mind that private security services are exclusively defensive . and there would no crimes without victims. I’m not sure there would be as many problems as you think.

            There is no perfect system, but your recommendation seems to be that one group of people can assume the authority to set the rules and force others to comply with those rules. I see a lot of tyranny and injustice “emerging” from such a system. In fact I need only look out my window.

            If unanimity is difficult or impossible to reach, maybe the group is too large.

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          • Greg G.

            True but in most cases they haven’t previously agreed.” [to a form of dispute resolution]

            That’s what contracts are for.

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  8. Ron,

    >—“That’s why a justice system is necessary, but it need not be a monopoly government system.”

    In the absence of central government, competing justice systems will each have competing police forces and those will clash with each other. Justice systems are all about deciding which rules are legitimate and which aren’t. Each is likely to decide their rules are the legitimate ones and competition’s aren’t.

    >—“Keep in mind that private security services are exclusively defensive .”

    No they aren’t. Criminal have their own private security forces. And with competing judicial and policing systems we won’t even have agreement on who is a criminal.

    >—“I see a lot of tyranny and injustice “emerging” from such a system.”

    Thank you. I see we agree that not all results of emergent processes are good results. There will be some injustice in any system. The question is how best to minimize it.

    >—“If unanimity is difficult or impossible to reach, maybe the group is too large.”

    Too large to get unanimity and also too large to get unanimity on what group size is too large.

    >—“That’s what contracts are for.”

    Many disputes (and often the worst ones) are ones where there was not a contract in place.

    >—“I don’t believe there has ever been a society of any kind that hasn’t had some type of system of customary law, and a system for conflict resolution.”

    No doubt but those other systems have all had a lot more coercion and violence than constitutional democracies. One such system is that has been commonplace is that the guy who is best at violence makes a few alliances and imposes his personal will on the others.

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