Today’s Quote of the Day…

…is from page 15 of Bruno Leoni’s excellent 1961 work Freedom and the Law: (emphasis in original)


It seems to be unquestionable that we should, on this basis, reject the resort to legislation whenever it is used merely as a means of subjecting minorities in order to treat them as losers in the field. It seems also unquestionable that we should reject the legislative process whenever it is possible for the individuals involved to attain their objectives without depending upon the decision of a group and without actually constraining any other people to do what they would never do without constraint. Finally, it seems simply obvious that whenever any doubt arises about the advisability of the legislative process as compared with some other kind of process having for its object the determination of the rules of our behavior, the adoption of the legislative process ought to be the result of a very accurate assessment.

JMM: So often in the field of economic policymaking, little thought is given toward whether an action should be taken.  It’s trivially easy to come up with models that show, under certain circumstances, this or that policy can be enacted and it will resolve a market failure.  But little thought is given to whether these policy prescriptions are prudent.  There are no general maxims of economic policymaking that stand to guide actions; economists rarely discuss these matters deferring them to legislators, lawyers, or philosophers.  

But economists are in a unique position to advise precisely on those general maxims.  We built the models after all.  Our job is to explore the kinds of processes that lead to rules of our behavior, and they are more than just the legislative.  The economist who designs models without consideration to their prudence does a disservice to himself, his profession, and science as a whole.

The Logical Impossibility of Absolute Rights

There is an important implication of my post from yesterday (or, perhaps more accurately, I should say this post as important implications that lead to yesterday’s post): universally absolute rights are logically impossible.

We tend to hear arguments by libertarians and anarcho-capitalists that certain rights, namely property rights, are absolute (for example, see Murray Rothbard’s article here).  No one can prevent us from doing what we want with our property (including our bodies) or enjoying our property as we see fit.  While on the surface, this seems reasonable, it is a logically impossible thing to enforce.

Let’s consider an example, similar to the one I gave yesterday.  Two neighbors have an abutting piece of land.  One neighbor, Joe, has a pool and a nice backyard he enjoys lounging in.  However, one thing he does not like is the smell of smoke and the sound of loud noises.  These things reduce the enjoyment of his property.  The other neighbor, Bob, has a backyard as well, but he likes to sometimes hold barbeques, bonfires, and parties.  When he does this, he generates noise and smoke that inevitably flow over to Joe’s yard.  In other words, Joe’s “stuff” is being messed with.

If both parties have absolute property rights, how can this situation be resolved?  If Joe cannot request, require, or negotiate some end to Bob’s activities, his ability to enjoy his property as he sees fit is diminished by Bob’s actions.  Likewise, if Joe’s ability to enjoy his property is maintained, then Bob’s enjoyment of his property must necessarily be reduced by reducing or eliminating his barbeques, bonfires, and parties.  Either way, someone‘s property right is not absolute.  Something has to give.

It is important to note there is no necessary need for state intervention here.  Joe and Bob can (and likely will, absent major costs) find some mutually beneficial arrangement.  But that arrangement must result is someone’s rights being attenuated.  If one of them has an absolute right, the other cannot.

The question should not be whether some rights are absolute or not.  Absolute rights are a logical impossibility.  Rather, the question should be how to resolve conflicts that inevitably arise when rights collide.  If libertarians cannot address these conflicts, then we necessarily secede the argument of conflict resolution to the statists.  By insisting on absolute rights, a logical impossibility, we state outright libertarianism has no place in the real world as it cannot resolve conflicts.  This has to end.

The Confusion Around Shithole

Predictably, Trump made an undiplomatic description of certain people and countries and, just as predictably, people on the Left have objected to his comments.  And, just as predictably, Trump defenders have appeared with cries of “political correctness.”

However, the problem with Trump’s comments is not the profanity or disparaging of certain countries, as undiplomatic as they may be.  The problem is much older:

Socialism, like the ancient ideas from which it springs, confuses the distinction between government and society.

Given the context of Mr Trump’s comments, that he was questioning the wisdom of having immigrants from “shithole” countries, Mr Trump makes exactly the mistake Bastiat discusses: he confused people for the government.  The countries may, in fact, be shitholes (however one defines that), but the people aren’t necessarily so.  We are not our government; we are individuals.  And, as I have written elsewhere, the institutions under which we live matter a whole lot.

In their rush to criticize Trump, the Left has made similar errors.  They have focused on defences of the targeted nations or of blanket cries of “racism.”  They’ve ignored the individual aspect of immigration (no surprise given the Left’s overt infatuation with socialism).

Similarly, in their rush to defend Trump, many of his supporters miss the context and point of Trump’s comment.  They wonder why Trump can’t call a country a shithole, citing concerns about political correctness.  But they too make the mistake of confusing the government and the society.

In short, Trump, his defenders, and his detractors on the Left all show their socialist leanings, and subsequent fallacious thinking, with this flap over shithole and immigration.

Different Rules for Different Worlds

It’s Christmas Time.  That magical time of year where friends get together, families visit, and, for a little while, all seems well.

But, as sure as Christmas time comes around, we also get economic defenses of Scrooge and calls for cash to be given rather than gifts.  From a mainstream economic point of view, there’s nothing inherently wrong with these articles.  However, they miss a larger point, a point once known to economists, but have since been forgotten (or trivialized): moral rules matter.

Humans, as social creatures, live in two worlds at once (to paraphrase Hayek).  We live in our personal worlds, which have their rules, and we live in the commercial/interpersonal world, which has its own set of rules.  We must move in between these worlds constantly and manage the two rule regimes.  What is appropriate in one world may not be appropriate in the other.

By way of example, imagine if a friend asked you for a ride somewhere.  It’d be frowned upon if you asked him for money (outside gas money or maybe tolls). However, for a taxi to do the same thing, you’d expect to pay and there’d be no impropriety. No one would accuse the taxi driver of inappropriate behavior and no disapprobation levied on him. However, for a friend to make a profit, it’d be inappropriate and he would be saddled with disapprobation (considered a bad friend, etc).  Asking for money would violate the rules in the personal world but not the interpersonal world.  To try to apply the rules of one to the other would be problematic.

We expect people to behave in certain ways.  The cold indifference Scrooge shows toward Cratchit elicits feelings of disapprobation, especially during Christmas.  We expect this time of year to bring about beneficence and we expect employers to treat their employees a certain way.  When the interpersonal rules are applied in this situation, they appear wholly inappropriate, at least within a certain level of propriety.   Further, Scrooge’s transformation at the end of A Christmas Carol is itself praiseworthy.  He becomes benevolent, which is virturous.

I hasten to point out that nothing Scrooge does, either before or after his transformation, is unjust.  Scrooge, at no time, violates any rules of justice: he does no harm to anyone.  But simply because an act is just does not mean it is praiseworthy.  As Adam Smith says, the rules of justice can be obeyed by sitting still and doing nothing; but that behavior is hardly grounds for any approbation.  Justice is a negative virtue; it only affects other people when ignored.  Benevolence and the other virtues are positive, and they can do real good through acting.  While Scrooge was surely just, he was hardly praiseworthy.

Another example of the difference between these two worlds is from cash as a Christmas gift.  Again, from a purely economic point of view, there is hardly anything to object to.  But we are not in the interpersonal world of economics, but rather the personal world, where different rules exist.  One of those rules is: you give gifts to those you love.  Money is unacceptable according to these rules.  Loved ones are expected to exchange thoughtful gifts, not cash.  Violations of those expectations lead to hurt feelings and disapprobation.

One of the things these economic models of gift-giving do not take into account is the moral currency from obeying the rules.  This is likely why an institution that is so inefficient on its face (gift-giving) has remained a tradition for centuries.

Humans are social creatures and we live in multiple worlds at once.  Using a set of behavior from one world as a role-model for the other is a poor choice.  We must consider what makes a person good and just.  And that is the role of moral philosophy.

Today’s Quote of the Day…

…is found in a letter from Frederic Bastiat to Richard Cobden (leader of the Anti-Corn Law League) dated 8 April 1845.  The letter can be found on page 58 of the Liberty Fund’s collection of Bastiat’s correspondence, The Man and the Statesman (emphasis added):

Sir,

Since you have permitted me to write to you, I will reply to your kind letter dates 12th December last.  I have been discussing the printing of the translation [of Cobden’s speeches and pamphlets] I told you about with M. Guillaumin, a bookseller in Paris.

The book is entitled “Cobden and the League, or the Campiagn in England in Favor of Free Trade.”  I have taken the liberty of using your name for the following reasons: I could not entitle this work “The Anti-Corn Law League.”  Apart from the fact that this would have a barborous sound for French ears, it would have brought to mind a limited conception of the project. It would have presented the question as purely English, whereas it is a humanitarian one, the most notably so of all those which have brought campaigning to our century.

By presenting the issue of free trade as a humanitarian issue rather than a sectarian or nationalist issue, he demonstrates the universality of the principles of free trade.  Many opponents of free trade like to argue that free trade is conditional.  They may argue that free trade requires “transnational rule-making institutions.”  Or that trade only is good if one nation (ie the nation of the speaker) benefits.  Or that free trade needs to be “fair” (whatever that means).  But Bastiat makes no such prerequisites.  Bastiat and Cobden both argue that free trade is not an English concern, not a French concern, not an American concern, but a human concern.

The Anti-Corn Law League that Cobden was part of was founded in opposition to the Corn Laws, a series of mercantilist legislation that raised the price of food within Great Britain by restricting imports.  Given this legislation occurred at the same time as the Irish Potato Famine, the Corn Law, by artificially increasing scarcity of food, likely caused many deaths in Ireland from the famine.  The Corn Laws contributed to a humanitarian crisis.  We are seeing similar situations going on in Puerto Rico, where scarcity is increased because of the Jones Act, and Houston and Florida where scarcity is increased because of anti-price-gouging legislation.  Free trade is a humanitarian concern, not a sectarian concern.

Immigration and Institutions: A Response to Jonny Anomaly

Writing at Quillette, Dr. Jonny Anomaly (yes, that’s his real name) discusses immigration, institutions, and why some immigration restrictions may be necessary.  It’s an interesting article, although I find his rationale for immigration restrictions rather weak.

Dr. Anomaly writes:

For one thing, the social norms and political institutions that promote prosperity are often quite fragile, as evidenced by recent events in Turkey, and the failure of constitutional democracy to take hold in Iraq after American attempts to replace dictatorship and tribalism with a secular liberal order.

I disagree with his interpretation of the evidence here.  The two examples he provides are where a liberal order was forced upon the area, rather than developed naturally.  Institutions, when imposed, do tend to be fragile.  This is seen in the work of many great developmental economists work (for example, see Doing Bad by Doing Good by Chris Coyne or The Tyranny of Experts by William Easterly).  However, where liberal institutions develop naturally, they tend to be highly robust.  The United States is an excellent example where despite many shocks to the system over the approximately 250 years of our existence, we remain a highly liberal country.  Shocks have included invasion, mass immigration (by both intelligent and less intelligent people), famine, drought, civil war, terrorism, etc.  The US is not ideally liberal, and there have been missteps, but the whole thing hasn’t collapsed the way it would have if institutions were inherently fragile.

He goes on to say:

Many supporters of open borders fail to distinguish between different qualities of immigrants. They assume that if a high level of immigration has benefitted some countries in particular eras, such as the United States, Canada, and Australia in the 19th and 20th centuries, then it is simply the quantity of migrants, rather than the composition of migrants, that caused prosperity in these nations. But this is a fallacious inference that depends on the assumption that all people are just as likely to promote the welfare of a country regardless of their values, skills, or traits.

In his recent book, Garrett Jones argues that a nation’s wealth and welfare depend crucially on the qualities of its citizens, including IQ, conscientiousness, and the ability to delay gratification. These personality traits are heritable, are (according to Jones) positively correlated with prosperity, and (according to criminologists) negatively correlated with crime.

The problem with this argument is that it doesn’t appear, at least prima facie, to be correct.  The mass immigration of the 19th and 20th Centuries was not of high-skilled immigrants.  Rather the opposite, really: they tended to be the dregs of European society.  And yet, America prospered.  Those who attempted to turn America toward Socialist institutions were not uneducated immigrants, but rather highly educated native WASPs.

This is not to discount the importance of intelligence in economic activity; quite the opposite.  But rather, an economy is made up of all kinds of goods: high quality, low quality and everything in between.  A dynamic economy allows all resources to find a niche, including labor.

There’s more I could say on this article, and maybe I will down the line, but I want to finish off with this: the evidence on immigration’s impact on the economy is far from crystal clear.  There are copious amounts of evidence pointing in both directions.  Given this ambiguity, I argue a liberal society demands that freedom is preserved and that the action which would restrict freedom (in this case, restricting freedom of commerce of the citizens of the society) must be shunned until evidence beyond a reasonable doubt is presented.