Ideas Matter

The Economic Way of Thinking and Politics Without Romance

Okay, now that you've watched this video, ask yourself: what if you apply the economic way of thinking to political action? In other words, even though we don't need politicians to get the "good orders" we see around us, we nevertheless have to live with these characters. So what do actions, interactions and consequences have to do with the results we see in the public sphere (that we're so often troubled by)?

Rules of Power Politics - Machiavelli Meets Tullock

This video is not just an outline for aspiring politicians. Bruce Bueno de Mesquita actually describes, however indirectly, the architecture of power. I can't wait to read his book. It sounds to me like what you get when you marry Machiavelli with Buchanan and Tullock (public choice theory). So what do we mean by the architecture of power?

Libertarianism: Two-Step or Coherence?

Jeffrey Miron discusses two basic types of libertarianism -- rights-based libertarianism and a more utilitarian form. As an economist who is good at using cost-benefit analysis, Miron seems to fall more into the latter camp.

But neither rights-based utilitarianism or the utilitarian form works well as a starting point. That is, there are problems starting with rights as a fundamental principle. And there are problems starting with the "greatest social good" as a fundamental principle.

Warning: we're going a little deep today, so hang on...

No Cronies 2: Meme Picking up Steam

Finally. Public choice economics makes it into the public consciousness. Of course, it took a couple of major scandals and a major recession to find a suitable name -- a name that was always there: crony capitalism. Readers of this blog may be a little weary of the theme. "I get it, I get it," you may be thinking.

But perhaps you or your neighbors don't appreciate the full extent of the problem or the nature of the beast. If that is the case, I hope you'll peruse these great resource for understanding these issues in greater depth. For this is a systemic problem -- one that is eating our Republic like a cancer.

Walter Williams and James Buchanan: "A Nation of Thieves"

Have we become a nation of thieves? If it's legal to steal, why not? Frederic Bastiat in his great pamphlet, The Law (pdf), warned against the state's legitimating theft, which he called "legal plunder." In this conversation between Nobel laureate James Buchanan and Professor Walter Williams taken at George Mason University, the two assume we've reached that stage in our Republic. State transfers among interest groups are widespread. The system of legal plunder is firmly in place.

Buchanan and Williams want to know how you change the incentives of the existing system -- that is, how do you curb political incentives to execute transfers (legal plunder) and get politicians to do more things in the "public interest" than based on their narrow desire to get re-elected?

Robert Nozick: Answering a Critique (Tamar Gendler)

In this Big Think video, Tama Gendler explains the basics of Nozick's entitlement theory, then makes a critical point near the end -- one that seems reasonable on its face. She suggests that without "theft" (taxation and redistribution), rich people will be able to buy the system that is meant to protect everyone's rights equally. It appears she is willing to accept the paradox of rights violation to prevent corruption and unequal access to justice. But there is a lot that is problematic about Gendler's point. Allow me to enumerate some of those problems below the fold:

Pennington on Public Choice Theory

Men are no angels. Nor are they omniscient. It doesn't matter whether they're acting in the market or acting in government. These facts about people simply get dropped when we urge government to correct so-called "market failures." It is as if when human beings become public servants -- whether in elective office or in bureaucratic appointments -- they undergo a kind of baptism. Out of this baptism arises a noumenal self that is free of self-interest, one that is capable of bringing about the public good (whatever that is). But this would be to assume they are suddenly free of their own humanity.

Walter Williams and James Buchanan - Wealth must first be created

How do you neutralize the zero-sum fallacy? How do you explain to people that prosperity comes from people working and often cooperating to serve others? You have two award-winning economists - one with a Nobel Prize - and neither can figure out how to communicate effectively to the layman that wealth must be created through productive activity and exchange. Well, it's not so much that they can't communicate it effectively, it's that the message doesn't seem to get very far. 

This is an uphill battle, one requiring constant attention. And in many respects it's is the sort of thing that is supposed to be our job here at Free To Choose Network. But dispelling the zero-sum fallacy is not easy. Not only are you going against people's intuitions on the matter, but against pervasive campaigns to perpetuate the fallacy. And while each new generation must learn it anew, they're getting very little of the truth. So the job is Sisyphean. 

Williams, for example points to the horrible slogan "give back," often employed by CEOs and corporate types in public relations campaigns. Such slogans feed into the notion that something had been taken in the first place. Of course, Buchanan -- as a father of public choice theory -- knows that wealth is sometimes taken in the form of rent-seeking. But, by and large, entrepreneurs are people who became wealthy by producing something, and then improving the situation of others via exchange. Indeed that is how wealth is created.

So back to the drawing board. We'll have to tell stories, make analogies, use metaphors and appeal to people's reason. And we'll have to do it over and over again. It may be one of the most important lessons civilization has to learn and very few people are teaching it -- much less teaching it effectively.

Walter Williams and James Buchanan - Democracy is Overrated

I shake my head when I hear the term "market fundamentalism." Why? I look around. And when I do, I see a world that -- when it is not authoritarian and poor -- is prostrate before the golden calf of democracy. Not free markets. As James Buchanan reminds us, majority rule means "the minority is going to get screwed." And that's if the majority can even get its way. Often it cannot.

What fewer people realize is that while the minority is getting screwed, the majority is getting screwed too. Buchanan shares a tradition with Mancur Olsen who figured out the problem of concentrated benefits, dispersed costs. That is, small interests groups are nimble, vocal constituencies with direct interests in the outcome of this legislation or that. The rest of us stand to lose fractions on the dollar, pound, kroner or yen. So we have little incentive to advocate vociferously for this bill or that -- much less pay attention to its passage. But all these dispersed costs add up over time in the form of economic malaise. And the special interests win -- at least in the medium term.

Walter Williams says "there is nothing sacrosanct about majority rule." It can, indeed, be tyranny. And the tyranny is compounded when moneyed interests are involved. When the state and business get in bed together, citizens lose. Democracy becomes but a holy shroud that obscures the dissolution of freedom and prosperity.

Richard Rorty: The End of Inquiry (for Classical Liberals?)

What is the "end of inquiry"? Richard Rorty doesn't even know what it would be like to reach such an end. To explain, Rorty draws a rather stark divide between Platonists and Pragmatists. Platonists are committed to truths and essences that can stand outside of time and context. Pragmatists think it's all about a continuous exchange of beliefs among fallible people in an uncertain world.

I think we can draw an analogy to similar positions in the classical liberal tradition:

• Platonist classical liberals are committed to: objective truth, moral certainty, natural rights.
• Pragmatist classical liberals are committed to: subjective valuation, civil evolution, institutions.

CL Platonists - as we have defined them - include:  Murray Rothbard, Ayn Rand (though she'd deny this) and John Locke. CL Pragmatists include: Friedrich Hayek, Ludwig von Mises and James Madison. These two very different approaches to arriving at classical liberal doctrine don't mean there isn't room for significant overlap. But the methodologies used by each to arrive at his or her commitments help to carve out their places in the tradition.