Tag: Consequentialism

Anything that’s peaceful

Libertarians spend a non-trivial amount of time arguing for the obvious. At best, such arguments are redundant because there is no widespread believe that violence or threats of violence are a good thing. At worst, these debates hurt the prospects for a society with less violence because theories about the existence of  “natural rights” are rightly a source of  ridicule. The idea that “rights” just exist out there in the world without actual individuals engaging in contracts to establish rights is not going to persuade anyone with a sober mind.  In that sense, Ayn Rand, Murray Rothbard and the (early) Robert Nozick did not do the renaissance of classical liberalism a favor.

A similar problem is encountered with terms like “liberty” and “freedom.” There have been extensive debates about the meaning of liberty as if there is a God-given “real” meaning of the word that just lies out there waiting to be discovered. Many libertarians would argue that we should seek a free society. But as Anthony de Jasay has noted, “The question of whether freedom is valuable or a free society is good ought not to enter at all into a properly thought-out political doctrine, liberal or other. It should be resolutely ignored. Whichever way the question were answered would, it seems to me, inevitably steer us in a teleological direction, and undermine the foundations on which the society that we could consider free might stand and survive. ”

“Consequentialist” libertarians have rejected the emphasis of “moralist” libertarians on (absolute) rights and liberty and have argued for evaluating public policies in light of their consequences. Liberty founder R.W. Bradford (1947-2005) repeatedly held the moralist libertarians responsible for the poor acceptance of libertarianism.  But it is hard to see why conventional consequentialist libertarianism would do much better. Most people do not come into this world seeking to optimize some kind of social welfare function or overall efficiency. In this sense consequentialist libertarianism is even further removed from reality – a point that has been well recognized by former utilitarians like Jan Narveson.

A small minority of libertarians have hopes of reconciling egoism and libertarianism. These authors often spend considerable time making the case for ethical egoism. For people who tend to look at such questions from the perspective of empiricism and modern science such investigations are rather excessive. The interesting question is not so much whether there are objective moral truths but what happens when people who have left such beliefs behind interact.  This question can be approached from a Hobbesian perspective or from an evolutionary perspective. But what often is discovered is a general desire to discourage and prohibit violence.

It is not likely that Ayn Rand and Murray Rothbard will be remembered for their breakthroughs in moral philosophy but what these authors have in common is their identification of classical liberalism with non-aggression. This re-conceptualization of classical liberalism has been an important breakthrough because it enables to see things like “regulation” and “public policy” in fairly non-ambiguous physical terms. If one strips away all the rhetoric about “rights” and “democracy” one is left with a State that mostly engages in violence and threats of violence against peaceful people. One of the major contributions of modern libertarians has been to show this is the case – even when the State only claims a  “monopoly on violence” to solve public goods problems.

Contra libertarians such as R.W. Bradford, the desire for peace is neither outdated nor ineffective. People may differ on the importance of “negative” or “positive” liberty or growing “the economy” but few people go out in public  speaking out in favor of violence against the innocent. The main task of libertarians is not to look for “justifications” or “foundations” but the demystifying of the State and the defense of anything that’s peaceful.

Neo-liberalism’s dead end street blues

The legal scholar Frank van Dun has written an insightful essay in Libertarian Papers about the unfortunate identification of liberalism with utilitarian-pragmatic policy making. His analysis is helpful for explaining why some liberal ideas became popular and others remained ignored.  Van Dun touches upon the heart of the matter when he writes that politicians like

Margaret Thatcher in the U.K. and Ronald Reagan in the U.S.A., adopted the free-market rhetoric to gain power on the promise of renewed economic growth.

In the late 1970s the effects of the post-war interventionist policies had become unpopular with so many people that selective use of classical-liberal rhetoric could actually benefit a person running for power. This is not to say that  these politicians did not actually believe in these ideas, but that some liberal modification of the prevailing social democratic orthodoxy  had simply become necessary  in order to prevent modern western countries joining the third world in terms of productivity and welfare.

Selling policy illusions to the government proved a lucrative business for the neo-liberals. Chastened by the experience of stagflation, governments and the interests that thrived on their support were willing to try new ways of maintaining their positions and achieving their objectives that were supposedly more effective and more efficient than the failed Keynesian policies….From the point of view of the ruling politicians, the neo-liberals were excellent team players, always ready to make the existing system more efficient, never eager to question its raison d’être or its self-assigned legal privileges and immunities.

The new neo-liberal opinion makers and the orthodox establishment remained united in their teleological interpretation of “the economy” as a tool to achieve specific policy outcomes.  The objective of a depoliticized society that is at the heart of classical liberalism was ignored in favor of specific public policy proposals to stimulate “growth.” It should not be surprising, then, that the pendulum of history would be swinging back to the older ideas  again when the monetarist orthodoxy would be deemed inadequate to explain and address contemporary economic events.

In every dead end street there is a point where one can only go from left to right and back and then right again, and so on and on. It is hardly helpful to call this the inevitable swing of the pendulum of history. It is going round in circles. The obvious solution is to recognize that the street is a dead end street and to abandon the illusions one had when entering it. Until the utilitarian-pragmatic cult loses its grip on education, the media, and the economics profession in particular, politics, but little else, will continue to thrive on the illusion that it can control the uncontrollable. Not equipped with the divine attribute of prescience, no government can predict, let alone determine, how over time multitudes of other people will react to its policies, exploit the opportunities they create and learn to avoid their burdens.

The problem with political  consequentialism is not that it does not necessarily lead to libertarian conclusions but that every single policy can be justified in a consequentialist framework, depending on the values of the public policy maker in question.  There are no consequences that “speak for themselves.” This does not mean that critics of political consequentialism agree on what should take its place. Natural rights philosophy does not offer better prospects. Attributing any kind of goal to society, whether it is maximization of a social welfare function or enforcement of natural rights, prevents careful thinking about human interaction.

Anthony de Jasay on the financial crisis

In his recent columns on the 2008 financial crisis, the economist and political philosopher Anthony de Jasay discusses a number of topics including the uninformed, sensational and self-fulfilling reporting of the mainstream media about the current economic climate, the non-trivial contribution of government regulation to the financial crisis, and the consequentialist thinking about the economy that is at the root of calls for government intervention.

Most, if not all, government policies involve economics. This fact alone explains the prominent place economics has in news reporting and the intense politicization of the science of economics. But this not does necessarily make the general public and politicians more informed about economics: “Complex questions of biochemistry are usually discussed by biochemists and those in civil engineering by civil engineers…Media men need not know much, but they know that good news is no news,” writes de Jasay. And, as has been documented by the economist Bryan Caplan, rationally irrational voters hold systematically biased beliefs about economics, whose views are again reflected by the politicians they elect for office.

De Jasay further writes:

It is barely thinkable, to put it mildly, that either the discount rate, or the sum of probability-weighted future profits, or their time pattern between fat and lean years, or all three together, should change sufficiently in less than a year to cut the value of all European companies by a half. Can we all be out of our minds?

Maybe we are, as the elasticity of expectations is greater than 1, fueled by a climate of media and politics-induced panic, which produces public policy responses that produce more panic and uncertainty, leading to even greater elasticity, etc.

One of the saddest and most depressing aspects of the 2007-2008 financial breakdowns is that panic was generated without sufficient objective grounds for it and without the intention to do so. The American mortgage default problem caused a loss to the lenders, mostly banks, estimated at just under 1 trillion dollars. This was in major part also zero-sum, for there was no destruction of real wealth and no loss of current production of goods and services; the mortgaged homes were still standing and were lived in by the original borrowers or could be rented out if foreclosed. The trillion-dollar loss was really a redistribution of existing wealth, painful but not catastrophic, nor really large in relation to a 14 trillion dollar American economy. – Trials and Tribulations of a Hybrid System

Is it possible that the panic mode was not so much induced by the state of the economy but was triggered by the redistribution of existing wealth that followed the meltdown of the housing and financial markets? The politics  surrounding the government bailout plans (“too big to fail”), seem to indicate this was a contributing factor. There is an urgent need for some insightful public choice analysis of the financial meltdown and the government’s response.

De Jasay reviews a number of the factors that contributed to the financial crisis such as low interests rates (although de Jasay does not single out the Fed), the pressure to issues mortgages to households that could not afford them,  Basel II and mark-to-market-accounting regulations, saying about the latter two:

The interaction of the two rules generated a vicious circle that reinforced itself with every turn. The whole scenario illustrates the potential of hybrid systems, such as the actual set of liberal elements mixed with dirigiste ones, for making a moderately bad initial disequilibrium into something very much worse…In a “pure” liberal system, durable success and profit maximization depend on gaining and retaining the confidence of depositors and other creditors. In a “pure” dirigiste system, it is not the customers that must be satisfied, but the regulators. In any hybrid system between the two, it may not be possible to satisfy either the customers or the regulators.

In his column Trudging Down the Third Way, de Jasay ultimately lays the blame at the crass consequentialist thinking that is dominating public debate about the financial crisis. Instead of respecting contract and property, “the economy” is perceived as a tool that needs to be manipulated to produce specific political goals such as  economic growth and redistribution of income.  It should not be a surprise, then, that a (perceived) crisis in the economy produces panic in politicians. The renewed calls for more regulation is often accompanied with statements that laissez faire capitalism has failed. How the heavily regulated economies of contemporary Western countries can be perceived as anything else than mixed economies ruled by pressure group interests and economic populism remains a mystery.