We’re All State Capacity Libertarians Now

Tyler Cowen kicked off this year with a heavily discussed blog post defining what he calls “State Capacity Libertarianism“.

I didn’t get it.

Cowen described a moderate libertarianism while adding the nebulous concept of “state capacity”, in particular noting that a capable or powerful state was different from a tyrannical state. I read the words, but I assumed he was describing a “left libertarianism“, where a typical position might be to push for the government to collect efficient taxes, and then distribute those to everyone via a basic income, and avoid otherwise messing in the economy. I’m open to engaging with something like that, but I didn’t grok how Cowen’s take was different or what this view offered.

And then there was the worst pandemic we’ve seen in the 21st century. Huge swaths of the American economy have been shut down, and this disease is still likely to kill the equivalent of an entire year’s worth of influenza fatalities in a single month. Pandemics are an obvious market failure scenario, with difficult to control externalities, and thus we have state institutions to deal with this and pick up the slack. They failed.

Policy Failures

I looked up my first tweet about COVID-19 (back then it was just novel coronavirus or nCoV). It was on January 30 in a reply to Robert Wiblin. My first standalone tweet was a few days later:

Now, I wasn’t warning people that this would be bad or telling people to start prepping. But it was certainly something occupying my mind, as I tweeted about it a dozen times in February. I did start mildly stockpiling food and household items starting in mid-February. Ultimately, I consider my actions to be a failure. I didn’t short the market (although I didn’t buy any index funds either), I didn’t warn enough of my close friends and family to start gathering supplies, and I didn’t advocate loudly for changes in government policy. I was partially concerned about looking alarmist, which in retrospect was a really silly thing to be concerned about.

Nonetheless, this blog is a hobby. I have a day job which isn’t concerned about government policy. My question is about the people whose day job is pandemic preparedness. If an anonymous blogger with a few hundred twitter followers can be concerned about a possible pandemic, then where were the people who are paid specifically to deal with this eventuality?

Why didn’t the CDC and FDA start a program to quickly approve new COVID testing in mid-February instead of mid-March? In an exponential growth situation, that is a long time. Why didn’t they start pushing hospitals to create new isolation wards in February? Why didn’t the CDC start putting together lists of events it strongly urged local governments to cancel when the first case appeared at local hospitals? Why did the NBA have to unilaterally suspend its season only after a player was diagnosed in March? Why was there confusion between who was in charge and what steps should be taken?

Beyond lack of distancing and lockdowns, there were several other failures. Firstly, the CDC created their own test which differed from previously used ones in the world. It was shipped to public labs around the country and…didn’t work. The FDA compounded the problem, disallowing any tests except the one the CDC had created. The University of Washington virology lab was able to create their own test and applied to the FDA for approval. The FDA said it couldn’t approve the test until the lab had demonstrated it wouldn’t return false positives for other dangerous coronaviruses. Perhaps this would be a good idea in more normal circumstances, but it was an asinine requirement if you were trying to head off a pandemic where every day saw exponential growth in a virus spreading across the country. The lab started using the test through a research loophole, but the story gets crazier:

Still, Greninger complied. He called the CDC to inquire about getting some genetic material from a sample of SARS. The CDC, Greninger says, politely turned him down: the genetic material of the extremely contagious and deadly SARS virus was highly restricted.

“That’s when I thought, ‘Huh, maybe the FDA and the CDC haven’t talked about this at all,’” […] “I realized, Oh, wow, this is going to take a while, it’s going to take several weeks.”

By this point, there were already over 50 confirmed cases of COVID-19 in the United States and still, nobody but the CDC was permitted to conduct testing.

It was on February 28th, a full 8 days after the UW virology lab had applied for their test to the FDA, that the agency finally allowed other tests besides the CDC’s. Of course, most other labs hadn’t started making a test yet. What a disaster.

What’s interesting to me about the testing fiasco was its independence from President Trump. I think Trump is a bad leader, incompetent, unintelligent, a bad judge of character, and has terrible policies, but ultimately the point of a capable bureaucracy would be to have experts on hand with the proper plans in place to implement them regardless of political leaders. We shouldn’t have to recreate all the accumulated knowledge of the government every time there is a new president. Here, Congress had created agencies to oversee health and pandemic responses, the scenario arose…and then those agencies actively made things worse.

Of course, we can’t allow President Trump off the hook. He decided to dismantle the NSC pandemic response team which Susan Rice had set up, combining it into a single directorate with arms control, weapons of mass destruction terrorism, and global health. The president is entitled to manage the National Security Council bureaucracy as he wants, as it’s part of the EOP. It was claimed that there was too much bloat leftover from Obama’s NSC, and so this should have streamlined communication, which may have sounded reasonable. Nonetheless, whatever changes Trump implemented were a colossal failure. Managing the CDC, FDA, FEMA, and National Institute of Allergy and Infectious Diseases to coordinate in a pandemic is crucial, and it did not occur until weeks after it should have. We should ask if the NSC, which varies from president to president, should even have this coordination power or if Congress should implement a more permanent response hierarchy.

Moreover, the president himself downplayed concerns about the virus the entire month of February, and even promised that 15 cases would soon be down to “close to zero”. This is an idiotic statement but is not unexpected. Trump has long ignored expert advice, lied to the public, and spoken erratically about how his administration will execute at his direction. The difference is that while the first 3 years of his presidency had few crises that weren’t self created, a pandemic actually requires decision making and policy implementation. Trump claimed that he would surround himself with good managers, and yet his White House has been plagued with scandals, including one that resulted in his impeachment. Ultimately, Trump is responsible for the leaders of the agencies that failed so spectacularly to manage this crisis. When asked about the testing fiasco, Trump said “I don’t take responsibility at all”.

Finally, the Obama administration had even created a “pandemic playbook”, a 69 page document you can review at this link which details decision making rubrics, key agencies that need to be consulted, and which questions need to be asked. It’s apparently unclear if senior leaders at government agencies even knew the playbook existed.

“State Capacity”

The typical consequentialist libertarian critique runs something like “the government doing things is bad because the state has poor incentives”. However, with this pandemic, we have instances where the state did too much, like where the FDA got in the way of scaling life-saving testing, but also where the state did too little, like coordinating responses of expert state agencies, or providing guidelines to local governments. A consequentialist libertarian critique would have a hard time dealing with these two failure types, and as somewhat of a consequentialist libertarian, I didn’t understand Cowen’s “state capacity libertarianism” until I was faced with these current government failures.

In a pandemic, every individual and company wants to continue working and consuming as much as possible, but each action also endangers non-parties to the transaction (e.g. other grocery shoppers or attendees at a basketball game). Here was a role for government to play, and yet it completely failed in that role. While a more typical libertarianism might treat the state as a necessary evil from which helpful action is capricious and rare, state capacity libertarianism suggests there is an expected duty for the state to play where there are negative externalities like the spread of a pandemic. The government’s failure here should thus be taken more seriously under state capacity libertarianism.

This also opens up a discussion about “state management” that previously I have often avoided. For example, it’s quite onerous to file taxes in the United States. Some libertarians argue that this is actually a good thing, and in fact making these state interactions difficult helps to convey to citizens how useless the state is, and they will thus be supportive in making the state smaller. Other libertarians might argue that added difficulty in the form of coerced taxation is adding additional rights violations on top of an already immoral action. A state capacity libertarian approach wouldn’t have this confusion; in this view, taxes ought to be collected in the most economically efficient way possible (land value tax or Pigouvian externality taxes would be a good start), and that method should be carried out competently and easily by the state. The IRS would just calculate your Pigouvian externality tax and send you a bill without requiring each citizen to compile their own information, spend hundreds on tax advice and then be punished when the amount is incorrect.

Relatedly, the management ability of electoral candidates sometimes comes up, and I think I may have even argued in the past that if congress or the president are less capable, then they would pass fewer laws. If most laws are net negative, then perhaps this incompetence would be good. However, elected officials do not just pass laws, they impact how government services are carried out. When a high risk, externality-laden scenario arises, like a pandemic, the management aspect of governance rises in importance.

Many presidents, especially Trump, have campaigned on the idea that they are good managers. Until now, I mostly shrugged at these claims, since governing is most often about policy and posturing than actual management. Yet the rare scenarios where management is required have outsized impacts; having fire insurance doesn’t matter until you actually have a fire, but then it matters a great deal. If we are concerned about catastrophic risk, then government management is a vital skill to be evaluated. State capacity libertarianism strongly favors evaluating this skill.

Libertarian Critiques Remain

Finally, we should quickly cover that a strong libertarian critique of government intervention into markets remains. Private property based markets with competition have much better incentives for rapid development and innovation. The FDA’s intervention to thwart testing probably killed thousands, especially compared to an alternate world where additional testing kits were explicitly allowed beginning in mid-February. Libertarians have been criticizing FDA policy on slow drug approval for decades though, and COVID patients will not be the FDA’s only victims this year.

And that’s not the only place where the state is dangerous: the War on Drugs, for example, has resulted in the deaths of hundreds of thousands as prohibition empowers organized crime, makes drugs more dangerous, incarcerates people for non-violent crimes, creates more violent interactions between citizens and police forces, and on and on. U.S. government policy has also resulted in long-lasting deadly wars in the Middle East with little to no concrete benefits for the U.S. globally, and I’m sure your local libertarian could continue on with a very long list.

This pandemic places into stark realization that government both needs to get out of the way in some areas to save lives, and also competently carry out the tasks only it can do. A Cowenian marriage of state capacity and libertarianism is the way forward.

Policies in 500 Words or Less

This is the next post in the “Policies We Should Be Talking About” series. For more information see the introduction (and other policies) here, but briefly, this series is about explaining policies that might be unpopular, unknown, or simply undeveloped that could still have large positive impacts. Some face specific political obstacles, and some may be too radical to gain enough momentum in the near term, but all deserve to have their signal boosted.

Approval Voting

The United States and many other nations use the worst voting system in the world: First Past the Post or FPTP. This forces voters to think strategically, voting for candidates they think will win rather than candidates they actually like. Combined with the “package deal” problem we’ve discussed before, voters have at best tangential input into the political system.  FPTP leads to a variety of bad outcomes, including static two party systems, wasted votes, ease of gerrymandering, minority rule, spoiler effects (where a third party causes the preferred major party to lose despite popularity, i.e. Nader voters preferred Gore, but didn’t vote for him and Bush won), and more.

The most common alternative discussed in the United States is Ranked Choice / Instant Runoff Voting, which is being used in Maine today. This allows voters to rank all candidates they like, supporting multiple candidates. If no candidate wins an initial majority, votes are redistributed from the least popular candidates based on voter rankings. The first candidate to accumulate a majority wins. However, this system still trends towards strategic voting and two parties, since voters’ second choices are only counted if their first choice is eliminated. If a smaller party is redistributed first, voters second and third choices may be ignored, with the winner being a candidate that fewer voters had as a second choice. There are other more mathematical objections, such as the lack of a Condorcet winner. It is nonetheless objectively better than FPTP.

An even better procedure is called Approval Voting. It is incredibly simple: voters vote for as many candidates as they like, and the candidate with the most votes wins. Voters can support the candidates they really like as well as the ones they think will win. In all likelihood, this will trend towards two parties, but the difference is that third parties can spring up and build support over time without voters fearing the spoiler effects. This incentivizes new parties with fresh ideas. Main parties may co-opt those ideas as they get popular, but that’s good news for voters anyways, as good ideas can bubble up outside of the two party system and nonetheless achieve mainstream success.

The main difficulty is that almost all politicians will not support a new electoral system if they know they have already won using the old system. To get around this, the Center for Election Science recommends ballot initiatives to bring this idea directly to popular vote rather than fighting politicians who want to stay in power. They are doing just that, starting small in Fargo, ND with a ballot measure this year. If successful, it can be pointed to as a real life implementation of a good idea and can be built upon in other polities.

Additional information:

Bail Reform

When someone is accused of a crime, they are charged and given a set of restrictions to ensure they show up for trial. In the United States, this usually includes a money bond that is deposited and then returned at trial. If the defendant does not show up, the property is forfeit. However, other common law nations, including Canada and the United Kingdom, usually do not require actual money, just restrictions on movement or activities (i.e. drinking).

In the US, this has given rise to bail bondsman, who will post your bail for a flat nonrefundable percentage of your bond, often 10-15%. If you fail to appear in court, they have authorization in most states to bring you to the court’s jurisdiction to recover their bond, which is known as bounty hunting, essentially legalized kidnapping. Even if bondsman were banned (and several states have done so) this system remains terrible. If you cannot afford the bail bond, you have a strong incentive to plead guilty. Sitting in jail until trial is not an option for someone in poverty who needs to be working and earning enough for their family. Combined with other criminal justice issues like overcriminalization and policing for profit, nonviolent poor offenders are trapped by a system where they never get a chance for a fair trial due to a lack of cash. Justice should be based on guilt or innocence, not wealth.

There are better ways; the Bronx Freedom Fund realized there was an excellent opportunity to help alleviate this problem. They bail out accused persons and help them make their court date, recovering a large percentage of their posted bonds. Poor defendants are thus able to contest their charges with a fair trial, and many charges are dismissed instead of forcing the accused to plead guilty or sit in jail unproductively. They’ve been so successful they are launching a nationwide project to establish charitable bail funds around the country. John Oliver has also talked about federal courts, where pretrial services assess if the accused is a flight risk. Many are not, and so are released without bail payment at all. Those who the services determine should be assessed a bond are never given one that cannot be paid by the defendant, and in fact in federal cases and the District of Colombia, there are virtually no people awaiting trial because they cannot afford bail, compared to the 450,000 state defendants.

What political challenges are there? The bondsman business has a strong interest in opposing any bail reform, and each state has to update their rules. There are good ideas though: Rand Paul and Kamala Harris introduced a bill that will provide federal grants to states who reform their bail system, although it will likely die in committee. It nonetheless lays the blueprint for how we might tackle this problem from a nationwide perspective in the future.

Additional information:

Organ Markets

Organ markets are extremely unlikely to be implemented soon. Nonetheless, organ market legalization would have by far the most concrete and immediate benefit to the world today, and black market organ markets already exist. Every year over 4000 people die awaiting a kidney in the US, and Medicare spends $89,000 per person on dialysis every year (that’s $34B/year for Medicare, $42B including private spending). The kidney supply is dwindling as cars get safer (many organs are donated by deceased car accident victims), but the vast majority of people do not need both kidneys while alive, and so could sell their kidney to another person with relatively low risk, given compensation. By far the most likely to sell their kidney would be people of lower income, and this is widely touted as a negative for this policy. It is not: blocking the poor from this avenue of income available to them, while simultaneously allowing people in need of kidney transplants to die, is morally wrong.

There is always concern when a transaction occurs between people of different wealth levels. Poor people may not be “forced” into the transaction, but if they have no good alternatives, it seems apparent there is a lack of choice. This is the difference between transactions that are “voluntary” and those that Michael Munger calls “euvoluntary“. Nonetheless, preventing the poor from participating in “voluntary” transactions that others would categorize as “exploitative” does not solve the poverty problem, and in fact makes it worse than letting them participate in the transaction.

Despite this argument, there is a simpler answer to legalizing organ markets: don’t legalize every possible transaction. Law can preclude people below a certain wealth level from selling their kidneys, enforce waiting periods for sellers, create delayed payments, or set prices via formula instead of the market. Yes, these restrictions will severely reduce the benefits that could accrue to the poor who want to sell their kidneys, but anything is better than the total ban we have now. Regulated organ markets could significantly increase the supply of kidneys available, while reducing demand on black markets.

On the demand side, regulation could leave in place the current waitlist structure and avoid rich people jumping the line entirely. This would require the compensation on the supply side to be fully government funded (would still likely save money given Medicare spending on dialysis). A market price on the demand side would have better systemwide benefits, as there would be incentives to improve the market, find efficiencies, etc. However, the potential gains are so large that even a heavily regulated market is worth creating, and relevant legislation already exists.

The political obstacles are clear. Organ markets could be exploitative, while transactions involving human body parts “diminish human dignity” according to the National Kidney Foundation (does death diminish human dignity?). Despite this opposition, there are significant gains to be had from an organ market that cannot be overlooked.

Additional information:

 


Leave a comment on the reddit.

Picture credit: Martin Falbisoner,  US Capitol at dusk as seen from the eastern side, licensed under CC BY-SA 3.0

Urbanization and Free Markets

I’m not an environmentalist. I find global warming problematic because it will likely make living on Earth more expensive for humans. Preservation of natural resources is not inherently important to me because I don’t find it morally wrong to consume these resources at high levels. Nonetheless, it could be valuable to preserve natural resources if there is a tragedy of the commons where resources are underpriced by the market and are thus being inefficiently overconsumed. I also think humans tend to enjoy at least visiting and observing pleasant natural land and seascapes, but it only makes sense to preserve them to the extent of which the value of observing these natural areas outweighs their economic value in improving human lives through development.

Unfortunately, I find a lot of the arguments for urbanization tend to emphasize the environmental benefits. These types of arguments will not do well in convincing libertarians that they should also promote urbanization. The goal of this post is to present an argument for libertarians, classical liberals, and free market economists on why they should be interested in urbanization and urban policy.

Cities

Cities are a vital part of human civilization due to specialization, economies of scale, and network effects. You can’t build a hospital with specialized departments and research facilities in a town of 100 people. You can’t make an engineering startup in a town without stores that sell specialized equipment. You can’t teach specific niche courses in cryptography if your city can’t support a university large enough to have advanced Math and Computer Science departments.

Cities also provide more for their inhabitants to consume due to economies of scale. Cities have more diverse food and cultural entertainment like museums, concerts, or festivals. These experiences are also in constant competition, spurring innovation. We think of cities as being more expensive than living in the country, but that’s somewhat misleading; diverse experiences are available in cities rather than rural areas because they can only be provided cheaply in cities. The selection of products is much narrower in less densely inhabited areas. In cities, supply chains can focus on getting tons of varied products to a single location where everyone lives, rather than transporting fewer standardized products across a giant area. The internet is a mitigating factor to some of this, but it’s also true that you can’t get continued technological innovation without concentrating innovators in cities!

There’s another important point about cities from a libertarian or postlibertarian perspective: they offer anonymity and individuality. Cities pack enough people into an area that you can make choices about your social interactions. Unlike a small town where your personal relationships are limited by geography to the few people in the town. It is far more likely you can meet with others that share your obscure interests in a large city rather than a small town. You’re not forced to conform to what your few neighbors believe are acceptable social behavior or beliefs. Diverse cities allow for varied cultural norms, and I’d argue increased tolerance.

The policies and discussions surrounding urbanization and urban planning have mostly been driven by those on the political left. Their political enemies, the Red Tribe (for more explanation, see section IV of I Can Tolerate Anyone Except the Outgroup), is often identified by its opposition to rich urban elites. Libertarians themselves have streaks of this disdain for progressive cities and yearning for an idealized Jeffersonian yeoman farmer nation, where everyone lives on their own separate plots of land and does as they please. But postlibertarians and the Grey Tribe should not cede urban policy to the left so easily; cities are largely vital for the economic reasons I’ve put forward. While today they are often bastions of progressive politics, cities are too important to be left to be governed by the ideas of a single political group.

Dense Cities

Since there are benefits to people who live in cities as described above, it seems to follow that denser cities might emphasize those benefits to a greater degree.

The economic argument seems to make sense here: if cities concentrate people, denser cities should concentrate logistical costs. That means less investment cost in infrastructure per person and less cost to deliver a larger amount of physical goods to the same people. There should be better economies of scale for transportation when cities are packed together. Another interesting benefit might be that with locations closer together, fewer people would use cars, so there would be less total hours wasted in traffic for a city of similar size but lower density. Perhaps this would be offset by longer total transportation time since walking is slower than driving. Certainly it seems that fewer people would die in car accidents at least.

Another benefit specifically for libertarians might actually be fewer road square footage per person. Roads are expensive, are often centrally managed by the city, and so don’t respond to price signalling. Optimal road work is thus not easily achievable, leading to poorly timed construction (overabundance of construction due to road opportunity cost not being priced) or not enough road repairs (too little construction due to no consumer payment for roads). Narrower streets specifically would essentially privatize space in a dense city, space that is highly valuable.

There is also a little bit of anecdotal evidence for cultural benefits of dense cities too. For example, we might expect denser cities to have more people from an odd subculture willing to meet than the population of the city might suggest (due to close proximity). As an example, let’s use Slate Star Codex’s series of local meetups earlier this year. If we expected SSC meetup populations to be based solely on total population, we’d see it match the US Census’ Core Based Statistical Area ranking: New York, Los Angeles, Chicago, Dallas, Houston, Philadelphia, Washington, Miami.

If we expected denser cities to show the social/cultural benefits to a greater extent than spread out cities, we should expect the SSC meetup populations to more closely match the population density of top cities. Unfortunately there’s no exact definition for a dense city. The simple way to define it is total population within a city’s political borders divided by the land area under that polity. However, cities usually extend beyond the political boundaries specifically because those municipal governments get in the way. If we go by this definition, the top US cities should be New York, San Francisco, Boston, Chicago, Philadelphia, and Miami. Now this actually matches the top SSC American cities pretty well, with the exception of Miami which didn’t meet the 10 person minimum despite being in the top seven cities in both total population and density. Another way we can represent density is through the number of high density areas in each metropolitan area. This yields in order: New York, Los Angeles, Philadelphia, Miami, Boston, Chicago, San Francisco.

There are obviously other factors at work in the SSC meetups including culture of the city (Silicon Valley/startup culture is probably the best predictor of SSC readers, as we see small Silicon Valley towns like Mountain View on the list) as well as a number of English speakers (explains why dense foreign cities are not high on the list), and college degrees. This last point is interesting. This article discusses how denser cities only seem to realize productivity gains in high human capital situations. Finance, technology, and other professional industries requiring higher education stand to gain from higher density cities. One question then is whether college graduates are attracted to dense urban cores or whether urbanization simply occurs around where college graduates tend to be (around universities?). To me it seems that cities clearly predate modern universities and college graduates. The establishment and growth of cities seems fairly organic, emergent, and spontaneous.

Too Dense?

This brings us to the next point: cities don’t require urban planning to exist. Humans are completely capable of decentralized self-organization of urban areas, and cities existed and continue to exist without strong municipal governments, zoning laws, building codes, etc. Nonetheless, with close quarters comes externalities, and so governments arguably have a lot of benefits to offer residents of cities over not having governments. Yet, as urban economist Issi Romem writes, American cities tend to expand outwards, and those cities that don’t expand geographically see large cost of living increases. Relatedly, as this Forbes piece points out, many of the highest density cities in the world (Dhaka, Delhi, Karachi, Mumbai)  are also relatively poor. Cities can be rich, but density doesn’t seem to be a requirement for being rich. In the U.S., most new housing comes from urban expansion, not density increases. This seems to beckon that it is not only cheaper to expand at the outside of cities than it is to expand the interior of cities, but more desirable to residents. Given the benefits of cities and density, how could this be?

One possibility is that it could be more expensive to bring goods into a city center than we thought. Maybe economies of scale don’t work as well due to increased traffic. I don’t have much evidence for that, but I guess it’s possible. This seems unintuitive though, as living in the suburbs means dealing with much more driving and traffic anyway.

However, some goods don’t need to be transported into the city…like housing. Once it’s there, it is consumed slowly over time. Yet rent is fairly correlated with density.  I don’t have good data on it, but I took at look at padmapper.com in a couple cities that I knew the general density of. I took the price slider and noted where the high priced places were compared to the low priced areas. It wasn’t a perfect correlation, but it did match my general feeling that more density was associated with higher prices. So if we assume that a housing market is in equilibrium, differences in price for dense and non-dense areas indicate on the demand side that there are plenty of people who would prefer to live in urban dense cores over suburbs given the same price.

Next, on the supply side, differences in price between dense and non-dense areas indicates higher marginal cost in dense areas compared to less dense areas. So what is driving that cost?

Certainly more complex tall structures are needed for dense living, although part of that cost is spread over many more inhabitants. Additionally, there is more reliance on public transportation infrastructure than is needed in the suburbs, which might lead to higher taxes to pay for it. However, other infrastructure costs are lower per person in the city than in the suburbs (lower fixed costs to build water, sewage, electrical, internet, and roads because they scale largely with horizontal distance, which is minimized in a city). Additionally, if cities are supposed to help make people more productive then we might hope similar tax rates would bring higher revenue in dense cities than suburbs.  It’s hard to know then whether tax burdens should be higher in cities, but it seems colloquial wisdom believes they are (high density cities don’t seem like low tax areas). I did find this 2005 paper from Harvard indicating that multi-family buildings (apartments) had a higher tax incidence than individual family homes. Moreover, as Stephen Smith at Market Urbanism pointed out, much of that local tax money goes to roads and schools, things denser urban dwellers likely use at lower rates than suburbanites. Finally, the federal mortgage interest tax credit further makes housing cheaper for suburbanites over urban core residents.

Free Market Perspectives

So while it’s possible to say that it simply costs more to live in a dense city, it’s also true that government seems to cost a lot in cities. Perhaps that’s a necessary part of living in cities, but if we leave urban policy as the sole domain of the Left, there will be no counterbalancing philosophy that understands market forces. Without that check, government will cost more than its benefits.

Moreover, raising tax revenue and providing services are not the only functions of municipal governments: they also create regulations, which are another way they contribute directly to the cost of living in cities. Here it seems there is little nuance to be had: most high productivity cities have far too restrictive housing regulations. This has reduced the ability of labor to relocate to more productive areas of the economy, and according to this NBER paper, has allowed for massive missed opportunities in economic growth. And this makes intuitive sense; over time, technology should allow us to build denser and denser cities more cheaply, yet new housing in some of the most productive cities has not kept pace with demand. The explanation must be regulatory hurdles on new housing.

Such an outcome squares well with the common opposition to urban development known among the urban policy community with the pejorative NIMBY (not in my backyard), and it applies not just to housing, but to any development in a city. Elected municipal governments are responsible to the people who live in the city at present, not to possible future citizens. While this may seem just, it is emphatically a net negative in a utilitarian calculation; improvements in human lives should not be discounted based on where that human lives. Policy that makes it harder for people to move to a city to make it denser, when those people want to move there, creates worse outcomes than we would otherwise have.

Finally, let’s take a step back: I’m not saying that people have to live in dense urban cores; people should live wherever and however they would like to. I’m saying that governments can mismanage urban policy in ways that prevent people from moving to where they would actually want to go. Bad policy changes the nature of cities and reduces the potential benefits they can bring. Because urban policy tends to rely significantly on some state intervention, I find that there is not a plethora of free market urbanists. Nonetheless, cities are an important part of the modern human experience and they will continue to be in the future. Libertarian perspectives have much to offer urban policy and it would be a shame to abandon it to the left.

 


Comment on the official reddit thread.

Metacontrarian contributed to this post.

Everyone’s A Rent-Seeker, Taxicab Edition

A year ago I wrote about the crazy, over-regulated New York City taxicab industry. Well, things are getting even crazier.

There’s a new rush of start-up competition, led by Uber, whose high-tech mobile app lets riders request luxury rides on demand instead of frantically trying to wave down a passing cab. It costs more than a cab, but the convenient experience seems to be immensely popular, and Uber has been slowly expanding to more and more cities.

Of course, the existing taxicab industries, already used to protective regulations in many cases, don’t like the competition, and there have been varying volleys and setbacks in recent months as established players have tried to put up, er, roadblocks to keep the new kids out.

Continue reading Everyone’s A Rent-Seeker, Taxicab Edition

Fuel Efficiency Standards and a Hyperactive Government

Yesterday Obama announced new fuel efficiency standards that “mandate an average fuel economy of 54.5 miles per gallon” by 2025. This is the sort of arbitrary government intervention that hits all the libertarian buttons – distorting the market, deceiving consumers, enhancing the corrupt link between big businesses and big government – although I have to admit it’s likely that it won’t make things worse and may even make them better. However, the mandate does illustrate how the government is so hyperactively involved in so many things these days that an attempt to fix something with one hand may break something it’s already fixing with another hand.

Continue reading Fuel Efficiency Standards and a Hyperactive Government

Nanny Nudger Strikes Again!

Just a couple months after banishing 32-ounce sodas from select establishments in New York City, the Nanny Nudger – aka Mayor Michael Bloomberg – is at it again. This time the man wants to nudge mothers into breastfeeding their newborns at the hospital by hiding bottles and scolding women who ask for them.

After all, science agrees that breastfeeding is best! Besides, they’re not really banning the bottles for mothers that need or really want them… they’re just making them harder to get. This will make more women breastfeed and lead to healthier children!

Of course, these results will come at a slight cost to personal freedom and responsibility. Mayor Bloomberg seems intent on proving old libertarian rhetoric about health care: the more the government pays your medical bills, the more the government will try to get you to do things to lower those bills. There are three problems with this.

Continue reading Nanny Nudger Strikes Again!

The Right To Drink Unhealthy Soda

New York City mayor Michael Bloomberg wants to ban soda. Well, except for sizes 16 ounces and smaller. And all sizes in grocery stores. And diet sodas and fruit juices. But if you’re a cup of 32 ounces of Coke in a movie theater, Bloomberg wants to get rid of you.

“Nanny Bloomberg” has already done things like ban smoking in parks and restaurants and ban “artificial trans fat in restaurant food,” but apparently those haven’t done enough to increase the health of the city, where over half of the citizens are allegedly obese or overweight.

You might think it would be smarter for Bloomberg to go the California route and increase taxes on soda to at least make some money while they’re making people healthier. Actually, he already tried to get a state tax on soda, but it was rejected. So he came up with this new plan that conveniently just has to be approved by a board of people who were all appointed by him! (Brilliant system of checks and balances you got there, NYC.)

Continue reading The Right To Drink Unhealthy Soda

The Right To Work On A Farm

An article from The Daily Caller has been storming the Internets this week. The Obama administration’s Department of Labor was reportedly planning to “prevent children from doing farm chores” by applying child labor laws to children working on family farms, prompting lots of outrage from lots of people. (I’m glad I waited my self-imposed 48 hours before commenting on new controversy, as it now seems that the administration “withdrew” the proposed rule after the outcry. The reversal happened almost as fast as last year’s Christmas tree tax.)

Was Obama trying to lose the rural vote? Heaven forbid children have the opportunity to learn responsibility and work ethic – they might learn they can get by without the federal government guiding their every step! Maybe the government doesn’t want kids helping out on the farm because that’s not taxable! What kind of country are we living in where parents increasingly allow their children to do irresponsible things while the government is actively clamping down on responsible options?

Continue reading The Right To Work On A Farm

Taxes and the Slow War on Law-Abiding Citizens

I finished my taxes last week. By “finished,” I mean I completed the steps on the H&R Block website and accurately checked boxes and filled inputs to the best of my ability based on my understanding of the terms presented. But it sure is complicated, especially now that there’s a house involved; good thing vehicle property taxes don’t start for us until next year.

But it’s not just getting worse for me as I get older; it’s getting worse for everyone. This graphic about the length of federal tax law was going around the Internet the other day:

Federal Tax Law PagesThat’s a stunning growth rate (even with the inconsistent Y-axis), and every year around this time we hear calls for tax reform. Fareed Zakaria had a good post on CNN the other day:

Continue reading Taxes and the Slow War on Law-Abiding Citizens

I Am Altering the Contraception Deal

I am altering the contraception deal. Pray I don't alter it any further.

RECAP: The words “Obama” and “birth” have been in the headlines again, but this time it has nothing to do with that silly certificate. If you missed all the action, a couple weeks ago Kathleen Sebelius, head of Health and Human Services under the Obama administration, announced that employers who provide insurance to their employees would be required to include birth control in those plans, at “no extra cost” (in quotes because the cost always gets spread out somewhere). This contraception mandate included an exemption for religious organizations like churches, but not religious organizations with non-religious services – like Catholic hospitals. Well, that really ticked off the Catholic Church, which officially denounces birth control even though evidence suggests that most of their members use it anyway. Conservatives got riled up about Obama’s attack on religious freedoms, and even some Democrats started defecting. Then yesterday Obama announced that they were tweaking the mandate to honor religious freedoms by way of a technicality where the religious organization doesn’t have to provide the service to its employees but the insurance provider has to contact the employees directly to offer it – at “no extra cost.” Or something like that.

It’s been rather dismaying for me to read the comments in the news articles about this, as most people just attack the Catholic Church and/or general conservatives for being hypocritical or hating women or being against birth control. But those attacks completely miss the broader points, which some conservatives have been dutifully trying to explain. Ross Douthat wrote about the false liberal assumption that government is the only thing we “choose to do together” and how this mandate is an example of government trying to crowd out voluntary community efforts: “It is Catholics hospitals today; it will be someone else tomorrow.” Douthat also gave a smack-down to Kevin Drum’s assertion that it’s OK because it’s “a matter of conscience only for a tiny number of men in the formal hierarchy of the Catholic church.” John Cochrane says “Insurance is a bad idea for small, regular and predictable expenses.” Sonic Charmer says BYOFS: “Buy Your Own Freaking Stuff.” Tim Carney has been leading the charge on Twitter: “Hey, I’ve got my own compromise: We don’t prohibit you from buying contraception, and you don’t prohibit us from NOT buying it!”

Continue reading I Am Altering the Contraception Deal