Archive for the Category Libertarianism

 
 

Which issues are important (to me)?

I sometimes say that inequality is not one of the top issues facing America. Several commenters asked me what I thought were the top issues. I find it hard to rank issues as to their relative importance, but as of today I’d say there are 4 issues that I regard as being of primary importance to America. (BTW, I care much more about foreign issues.)  I’ll put my own policy views in parentheses:

Most important issues (no particular order):

1.  US Military intervention (I’m mostly against it)

2.  Immigration (more, more, more)

3.  War on Drugs  (end it, let out 400,000 prisoners)

4.  Right to Die  (I’m for it, read Scott Alexander if you don’t think it’s important.)

Second level issues, still very important:

1.  Abortion  (pro-choice)

2.  Health care  (deregulate it, plus vouchers for the poor)

3.  Arms control  (favor reduction in nuclear stockpiles, ideally global elimination)

4.  Existential risk  (plan for it, don’t know enough to say how)

Third tier, still very important issues:

1.  Military budget  (cut in half)

2.  Monetary policy  (NGDPLT)

3.  Prostitution  (legalize it)

4.  Education (universal vouchers, with a dramatic reduction in total spending)

5.  Occupational licensing  (end it, ALL of it)

6.  Global warming  (carbon tax, geoengineering as last resort)

7.  Tax reform  (progressive consumption tax)

8.  Economic Inequality  (low wage subsidies, end cigarette taxes)

9.  War on terror  (downgrade to skirmish on terror)

10.  Intellectual property rights  (weaken protection)

11.  Lawsuits   (make it easier to sign away your right to sue)

Fourth tier, but still somewhat important:

1.  International trade barriers  (end them)

2.  Domestic trade barriers (car dealers, taxis, etc.—end them.)

3.  Financial system (stop encouraging lending)

4.  Land use  (allow greater density)

5.  Farming  (end farm subsidies)

6.  Water  (use market prices)

7.  Eminent domain  (for infrastructure, not condos)

8.  Firefighting  (Privatize, and close 1/2 of fire stations)

9.  High speed rail  (Build the Texas proposal, reject the California project.)

10.  $7.25 Minimum wage  (against it, and regarding the $15 nation-wide proposal, bump up to a higher tier of importance)

Other issues:

1.  Dueling  (Too young to have a useful opinion)

2.  Microaggression  (Too old to have a useful opinion.)

3.  Affirmative consent  (Too old to have a useful opinion.)

4.  Age of consent  (How should I know? I came of age during the (dissolute) 1970s, and went on my first date as a junior in college.)

I used a utilitarian criterion.  On another day, I’d put many of these in totally different categories, but that’s how I feel today.  On many of the key issues I’m not really with either party, but perhaps lean a bit Dem on the top issues.  I vote libertarian.  I left out some issues like feminism, racial equality, gay rights, etc., because it’s hard to pin down the specific public policy issues that are relevant today.  Thus instead of feminism I have abortion and prostitution, issues that especially impact women.  Obviously I support the gains that various groups have made over time in achieving greater respect and legal rights.  I suspect that animal rights should be high on the list, but don’t know much about the issue.

PS.  The importance of an issue reflects the interaction if its intrinsic importance, and the plausibility of changing the outcome with different public policies.

PPS.  Regarding inequality, commenter Justin D recently said:

And why concede that income inequality is an issue worth thinking about at all? Shouldn’t the real concern be whether people have basic needs? People are unequal in an enormous variety of ways – attractiveness, health, intelligence, confidence, etc., and some of these are more important than income. I’d gladly trade places with a person earning 20% of my income but in perfect health.

I mostly agree with that, especially the final sentence.  But I can’t quite concede that economic inequality is not a problem worth thinking about, even if other types of inequality are far more damaging. Many of those can’t be addressed (easily) by public policy.  Yes, poverty in the US is a modest problem (especially compared to other countries, and other periods of history) but it is still a problem.  In contrast, forcing Larry Ellison to downshift from a 500-foot yacht to a 400-foot yacht is an utterly trivial problem.  If we can solve a small problem by creating another utterly trivial problem—then do it!  In addition, addressing the inequality issue makes it easier to promote market friendly reforms elsewhere.

 

 

Does libertarianism mean we have to pay for everything?

I don’t know the answer to the question, but Noahpinion seems to:

Since the dawn of time, libertarians have equated property rights with freedom. Intuitively, this makes a lot of sense: if the government can come and confiscate your stuff, or tell you what to do with it, you don’t feel very free at all. But libertarians tend to take this basic concept to its maximal extent; the more things are brought within the cash nexus, the more free we become. No limits, no exceptions. A direct implication is that the more government functions we can privatize, the more free we will be.

But is that right? What would it really feel like to live in a society where almost every single thing is privately owned and priced?

Walking around urban Japan, I feel like I am seeing a society that is several steps closer to that ideal than the United States. You may have heard that Japan is a government-directed society, and in many ways it is. But in terms of the constituents of daily life being privately owned and marginally priced, it is a libertarian’s dream world.

For example, there are relatively few free city parks. Many green spaces are private and gated off (admission is usually around $5). On the streets, there are very few trashcans; people respond to this in the way libertarians would want, by exercising personal responsibility and carrying their trash home with them in little baggies. There are also very few public benches. In cafes, each customer must order something promptly or be kicked out; outside your house or office, there is basically nowhere to sit down that will not cost you a little bit of money. Public buildings generally have no drinking fountains; you must buy or bring your own water. Free wireless? Good luck finding that!

Does all this private property make me feel free? Absolutely not! Quite the opposite – the lack of a “commons” makes me feel constrained. It forces me to expend a constant stream of mental effort, calculating whether it’s worth it to spend $4 to sit and rest for 10 minutes, whether it’s worth $2 to get a drink.

I just spent 12 days in Italy, and it reminded me a bit of this description of Japan.  (And about every 15 minutes my wife said something reminded her of China.)

1.  Lots of pay toilets.

2.  No free museums.

3.  Admission to some parks.

4.  More toll roads than America.

5.  You pay for rolls at restaurants.  Ditto for water.

6.  Use of beach chairs at resorts cost money.

7.  Many churches charge admission.

Now some of these apply to the US as well–most of our museums charge admission.  But many don’t, and some are voluntary.

Both Italy and Japan are much more statist than the US, by almost any ranking.  This made me wonder whether “charging for stuff that should be free” was actually an attribute of libertarianism.  Perhaps it’s a reflection of income–both Japan and Italy are poorer than the US.  I recall that the US had pay toilets when I was a kid (when were about as rich as Japan and Italy are now.)

Perhaps resorts in Hawaii don’t charge for use of beach chairs because we are so rich, and pay so much for hotel use, that it isn’t worth the bother of trying to prevent non-hotel residents from using the chairs.

Consider the shopping mall, a quintessentially American invention, and also a quite libertarian model of the “town square.”  Unlike in an Italian shopping street, when you are thirsty you don’t have to buy a 2 euro bottle of water, you can just use the drinking fountain.  In a mall restaurant they’ll bring you water and rolls without asking.  If you are tired the shopping mall will provide a bench to sit on for free.  You don’t have to pay to use the toilets in shopping malls.  You can park for free.  It seems like “the market” tells developers of big real estate projects that Americans don’t want to be constantly fishing out money for every little thing.  Disney uses the same procedure–you pay to get in, and then everything is free.  I’ve seen new planned towns in Texas that come with bike lanes, benches, parks, etc.

I’m not saying Noah is completely wrong.  I favor toll roads and congestion pricing, at least in a few limited cases.  I am sure that a libertarian society would charge for at least a few things that are currently free.  But I think it’s wrong to jump to the conclusion that you know exactly what a libertarian society would look like.  Libertarianism is about letting the market discover optimal financing arrangements.

An idealistic defense of pragmatism

Conservatives often ask me how I can in good conscience defend the Federal Reserve System.  Why don’t I advocate letting markets set interest rates, letting markets set the money supply.  Why not advocate free banking.  Etc., etc.

I would argue that I am doing this, and more.  You just aren’t paying close enough attention.  Milton Friedman wanted to show that tight money caused the Great Depression in order to get better monetary policy.  But an even bigger reason was to show that capitalism worked and that socialism wasn’t needed.

I’m trying to get the Fed to target NGDP so that we can have a more capitalistic economy, without feeling that if we don’t bail out GM, the unemployment rate might rise.  My hope is that if we do this, eventually we’ll see the obvious need for a NGDP futures market.  And that will lead us to see the obvious need to target NGDP futures prices, and let the market determine the money supply and the interest rate.  And then we’ll abolish TBTF, as we’ll no longer fear that big bank failures will lead to recessions.  And then we’ll abolish FDIC.  And then we’ll allow free banking; after all, even if a few wildcat banks fail it won’t affect the macroeconomy.  But it matters how you do this.  Go to wildcat banking without first getting rid of deposit insurance and you end up like Iceland.

If I was a politician I wouldn’t advocate 100% libertarianism, even if I believed in 100% pure libertarianism (which I don’t).  I’d advocate removing the worst abuses of government, the ones that are easiest to see.  I’d doing this knowing that many of the other problems in our society are produced as the side effect of well-meaning regulation (as when FDIC and TBTF led to excessive risk taking.)  Each time we peel back one layer of government, society begins to restructure in a more effective way, and people will start to see how other layers of government are causing problems.  Then they can be peeled back.

A recent Bryan Caplan post triggered this post:

Tyler often insists that, appearances notwithstanding, he’s constantly popularizing free-market ideas.  People just have to read him carefully and in the proper frame of mind.

I habitually insist that this isn’t good enough.  Either you popularize your point bluntly and clearly, or you fail to popularize.

I’d say both Cowen and Caplan are valuable, but in different ways.  Caplan keeps expanding the argument for libertarianism.  Defending the seeming indefensible with surprisingly persuasive arguments.  Cowen’s value is much less obvious, but arguably just as important.  He shows that someone who is extremely bright, seemingly open-minded, and often willing to take on the dogmatic libertarians, can still end up with a preference for small government.  One could argue that the best argument for libertarianism is that someone like Tyler Cowen could be even a moderate libertarian, just as the best argument for progressivism is that someone like Matt Yglesias could be a progressive.  It’s easy for me to dismiss 99.9% of progressives, as I see right through their biases, their lapses in logic, their lack of understanding of economic principles, their shameless misuse of statistics.  It’s not so easy to do that with Matt Yglesias.  I’d guess many progressives feel that way about Tyler Cowen.  If there were no Tyler Cowens we could easily be dismissed as a bunch of moonies.  With him, it’s not so easy.

PS.  It’s possible that Bryan’s post was about style, and this post is about substance.  So I may not actually be addressing the point raised in Bryan’s post.  I’ll let you guys decide.

PPS.  Another way to make this distinction is that in a world full of government intervention, where some policies may be defended on “second best” grounds, there’s a big difference between starting one’s analysis with the premise that libertarianism is TRUE, and that we just need to work out the implications for policy, and starting one’s analysis with no assumptions about libertarianism (or perhaps just a mild preference based on past experience) and then using the tool kit of modern economics in whatever direction it takes us.

PPPS.  I do agree with Bryan on one point.  Tyler is too vague about how the Great Stagnation costs jobs.  I can sort of see how there might be some indirect effects (minimum wages, UI, SSDI, etc), but I think those need to be spelled out much more clearly.  It’s not enough to say we’ve lost jobs in declining industries–we always lose lots of jobs, even in boom years.  I suspect I might even agree with Tyler to some extent, but I also suspect the mechanism isn’t what a lot of readers would assume.

PPPPS.  I agree with Bill Woolsey’s new post–central banking involves much less “central planning” that it might appear.

The marshmallow test

There are two kinds of people, those who eat one marshmallow, and those who eat two.  More specifically, The Economist reported:

FORTY years ago Walter Mischel, an American psychologist, conducted a famous experiment. He left a series of four-year-olds alone in a room with a marshmallow on the table. He told them that they could eat the marshmallow at once, or wait until he came back and get two marshmallows. Recreations of the experiment on YouTube show what happens next. Some eat the marshmallow immediately. Others try all kinds of strategies to leave the tempting treat alone.

Nothing surprising there. The astonishing part was the way that the four-year-olds’ ability to defer gratification was reflected over time in their lives. Those who waited longest scored higher in academic tests at school, were much less likely to drop out of university and earned substantially higher incomes than those who gobbled up the sweet straight away. Those who could not wait at all were far more likely, in later life, to have problems with drugs or alcohol.

I am a libertarian, but I am also a utilitarian, so I don’t really object to reasonable “nudge” policies like making the 401k plan the default option for new hires, or having banks warn people who rely too much on expensive overdrafts.

What bothers me is when I see attempts to redistribute wealth from the two marshmallow eaters to the one marshmallow eaters.  For instance, by the time I retire in 6 years I will have probably averaged about $80,000/year over my working life, which makes me comfortably upper middle class.  Because I am a two marshmallow personality, I’ve probably saved about half of that income.  So I’m doing fine.  Most Americans with similar incomes are one marshmallow types, and save something closer to 10% of their incomes.

What do we do if Social Security needs to be trimmed in order to balance the budget?  I hear lots of talk about cutting back on benefits for those who “don’t need it.”  That would be people like me.  Here’s why I don’t trust the Dems—I see them as the party of one marshmallow eaters.  They represent people who have less self-control.  I fear they will cut my benefits, but not cut the benefits of people who didn’t save for retirement.  I fear they will use “wealth” as the criterion to determine who is needy and who isn’t; not lifetime wage earnings.

In my view there is nothing egalitarian about redistributing income from two marshmallow eaters to one marshmallow eaters.  They’ve already had their fun when young, loading up their three car garages with all sorts of fun toys.  I’ve never even had a garage.

I’m not saying that the rich shouldn’t be the ones who accept cutbacks in Social Security to save the system, that is a defensible argument (although interestingly many progressives oppose the idea, hoping that Social Security doesn’t become seen as “welfare.”)  But if you are going to do means-testing, it should be on lifetime wage income, not wealth.  If they do that then I need not fear for my SS benefits, as most Americans who have averaged about $80,000 a year over their lifetime have not saved much, and would march on Washington if their SS benefits were cut back.

Update:  Commenter Edwin A pointed out that I shouldn’t have picked on the Dems.  I do think they are usually the one marshmallow party, but in this case many Dems oppose means-testing Social Security, and some conservatives support the idea.

Did OSHA save lives?

Matt Yglesias recently had this to say about the decline in workplace injuries since  OSHA:

All-in-all, though, it looks like an impressive achievement to me and one the hard-working folks at the National Institute for Occupational Safety and Health deserve some credit for, along with overall economic progress and structural shifts into safer occupational categories.

Update 3/20/11:  Matt pointed out in the comments that I didn’t read his post very carefully:

The agency I actually mentioned in my post is the National Institutes of Occupational Safety and Health (part of the CDC) not OSHA.

NIOSH is an agency dedicated to collecting and disseminating information about workplace industries. They do statistics, they do some of the “information brochures being distributed to workers” stuff you recommend, and they do some kind of training.

[So whatever value the rest of my post might or might not have, it shouldn’t be viewed as a comment on Yglesias.]

This reminded me of a graph I saw years ago in a paper by John Leeth and Tom Kniesner:

They look at a wide variety of evidence (much of which is in other papers, not this one) and conclude that OSHA should be cut back, or perhaps abolished.  Just so you don’t think they are mindless anti-government libertarians, they also argue that workplace compensation insurance is somewhat effective in reducing injuries.  They argue that compensating wage differentials (a market force) is the single most effective deterrent to injuries:

Alternatives to OSHA

In light of its ineffectiveness, giving OSHA more money, personnel, and power is not the way to cost-effective workplace safety. Most protection on the job comes from state workers’ compensation insurance programs and market-determined compensating wage differentials.

State-run workers’ compensation insurance programs are currently the most influential public attempt to promote workplace safety. Insurance premiums that take account of workplace safety encourage firms to establish safe and healthy work environments. As the frequency of claims rises, the price of workers’ compensation insurance increases, thereby penalizing firms for poor safety records. Michael Moore of Duke University and W. Kip Viscusi of Harvard University estimate that, without workers’ compensation insurance, the number of fatal accidents and diseases would be 48 percent higher in the United States.

BTW, there is no obvious “market failure” that would call for regulation.  (And please don’t drag out the tired old argument that companies know the risks, but workers don’t.  That’s not true, and if it were it would call for government information brochures being distributed to workers, not OSHA.)  I find a lot of safety regs to be very annoying.  When I was young I often worked up on ladders.  The newer Skilsaws required two hands to operate, presumably so you wouldn’t cut off some fingers.  That necessitated gripping the ladder with one’s knees.  Power mowers can no longer be operated without holding the handle–forcing contorted body positions when trying to clear debris in the mower’s path.

Matt Yglesias also has a very interesting post on the similarities between some “big government” models (such as the Nordic states) and some “small government” models, such as Singapore, Hong Kong and Chile.  He points out that Singapore’s mandatory savings plan, which has a 35.5% rate, is something like a tax, and the money is deposited in a government run investment fund. I don’t entirely agree with his post (he underestimates the difference between taxes and forced saving), but it’s hard to disagree with the general thrust of his argument .  There isn’t all that much difference between the Nordic economies and the economy cited by the Heritage Foundation as the second most economically free country in the world (and number one if one recalls that HK isn’t really a “country.”)  My initial reaction is to despair that the US is simply too big to adopt either model.  But maybe that’s giving up too easily.

Update:  Commenter Joe pointed to a Bryan Caplan post that cited a David Henderson encyclopedia entry that discussed some Kip Viscusi research on OSHA (did I miss anyone?)

Fun facts from Kip Viscusi‘s article on “Job Safety” in David Henderson’s encyclopedia:

Annual OSHA penalties for safety violations (2002): $149,000,000

Annual Workers Compensation Premiums (2001): $26,000,000,000

Estimated Annual Wage Premiums for Risky Activities (2004 dollars): $245,000,000,000

Bryan suggests that OSHA probably has little effect on injuries.