Cato Institute

Links 2018-07-09

My new series focusing on policy summaries made me realize that while the political world and Twittersphere may not discuss policy much, there are groups of people who research policy professionally and have probably covered some of what I want to do with my “Policies in 500 Words or Less” series. So after looking around, I found that the Cato Institute has an excellent page called the Cato Handbook for Policymakers. It contains a ridiculous 80 entries of policy discussions including a top agenda of important items, a focus on legal and government reforms, fiscal, health, entitlement, regulation, and foreign policies. I will definitely be pulling some ideas from that page for future policy summaries.

I recently found the YouTube channel of Isaac Arthur, who makes high quality, well researched, and lengthy videos on futurism topics, including space exploration. I’d like to take a moment to highlight the benefits of a free and decentralized market in the internet age. Adam Smith’s division of labor is incredibly specialized with the extent of our market. Arthur has a successful Patreon with weekly videos on bizarre and niche topics that regularly get hundreds of thousands of views (24 million total for his channel), and they are available completely free, no studio backing necessary. Such an informative career could not have existed even 10 years ago.

The 80000 Hours Podcast, which was recently mentioned in our top podcasts post, had Dr. Anders Sandberg on (broken into two episodes) to discuss a variety of related topics: existential risk, solutions to the Fermi Paradox, and how to colonize the galaxy. Sandberg is a very interesting person and I found the discussion enlightening, even if it didn’t focus much on how to change your career to have large impacts, like 80000 Hours usually does.

Reason magazine’s July issue is titled “Burn After Reading”. It contains various discussions and instructional articles on how to do things that are on the border between legal and illegal, such as how to build a handgun or how to make good pot brownies or how to hack your own DNA with CRISPR kits. It’s an impressive demonstration of the power of free speech, but also important to the cyberpunk ideal that information is powerful and can’t be contained.

George Will writes in support of Bill Weld’s apparent aim to become the 2020 Libertarian Party nominee. I admit I wasn’t hugely impressed with Weld’s libertarian bona fide’s when he was running in 2016, but I thought his campaigning and demeanor was easily better than Gary Johnson’s, who was already the LP’s best candidate in years, maybe ever. I think a better libertarian basis paired with Weld’s political skills would be an excellent presidential candidate for the LP.

Related: last week was the 2018 Libertarian Party National Convention. I don’t know if it’s worth discussing or whether it’s actually going to matter, but I have seen some good coverage from Matt Welch at Reason and Shawn Levasseur.

I read this very long piece by Democratic Senator (and likely Presidential hopeful) Cory Booker at Brookings. It was a pretty sad look at current issues of employment, worker treatment, and stagnant wages. There was a compelling case that firms are getting better at figuring out ways to force labor to compete through sub-contracting out labor to avoid paying employee benefits. This leads to monopsony labor purchasing by large firms, squeezing workers who don’t have the same amount of market bargaining power. He also mentions non-compete clauses and growing differences between CEO pay and average pay for workers. I don’t have good answers to these points, although his suggestion of a federal jobs guarantee seems very expensive and likely wasteful. His proposed rules about stock buybacks also seem to miss the point. Maybe stricter reviews of mergers would work, but perhaps larger firms are more efficient in today’s high tech economy, it’s hard to know. Definitely a solid piece from a source I disagree with, which is always valuable.

Somewhat related: Scott Alexander’s post from a couple months ago on why a jobs guarantee isn’t that great, especially compared to a basic income guarantee. Also worth reading, Scott’s fictional post on the Gattaca sequels.

Uber might have suspended testing of self driving automobiles, but Waymo is going full steam ahead. They recently ordered over 80,000 new cars to outfit with their autonomous driving equipment, in preparation for rolling out a taxi service in Phoenix. Timothy B. Lee at Ars Technica has a very interesting piece, arguing the setbacks for autonomous vehicles only exist if you ignore the strides Waymo has made.

Augur, a decentralized prediction market platform similar to Paul Sztorc’s Hivemind (which I’ve discussed before), is launching on the Ethereum mainnet today. Ethereum has its own scaling problems, although I’d hope at some point sharding will actually be a real thing. But for now, transactions on Augur may be pretty expensive, and complex prediction markets may remain illiquid. That may mean the only competitive advantage Augur will offer is the ability to create markets of questionable legality. Exactly what that will be remains to be seen, but this is an exciting development in the continuing development of prediction markets.

Rawls and Consequentialism

I.

Are things getting better?

The Cato Institute’s HumanProgress.org promotes the wonders of the modern world as a general cheerleader of liberal capitalist democracy. It highlights that the Human Development Index is up around the world over the last 30 years, and worker earnings can purchase higher quality and cheaper goods than they could 40 years ago. However, not everything is peachy. Inequality is up, US labor force participation is down, and healthcare and education spending have increased faster than inflation for some time now. Technological breakthroughs seem to be about how best to spy on you to sell you targeted advertising instead of flying cars. I favor the idea that things have indeed gotten better, but perhaps it’s not as straightforward as I would like.

Let’s revisit an idea I wrote about two years ago.

John Rawls proposed the Veil of Ignorance as a thought experiment to help imagine a just society derived from first principles. Designing a world, people should imagine themselves having no knowledge of their natural abilities or social standing. In order for society to be just, it must be one that everyone would agree to behind this veil of ignorance (this is a big simplification, you can read more here).

Robert Nozick famously responded to Rawls’ A Theory of Justice, with Anarchy, State, and Utopia, and part of his critique of Rawls was that even a society that fit Rawls’ criteria of “just” would quickly become less equal since people do have unequal natural talents. Voluntary transactions between citizens would quickly reward those with natural abilities for in-demand skills, and thus society would quickly fail to meet Rawls’ “just” criteria despite starting from a state of justice and undergoing nothing but voluntary transactions.

Of course, I’m more interested in policy than political philosophy today. I should be clear that Rawls wrote this as a philosophy thought experiment, not a political goal, but that hasn’t stopped it from being used to encourage certain policy outcomes; economist Dan Ariely polled people, asking them to create a wealth distribution for a society they would willingly enter in a random place, and they overwhelmingly chose extremely equal societies.

There are a few fronts I’d like to push back on this. The first is that those polled severely underestimated the current level of inequality. This means they imagine society should be more equal than what they think it is, meaning they believe society is flawed today and perhaps could be fixed. Yet the problem is much “worse” than they imagine, and they didn’t seem aware today. Perhaps people overestimate the impact of wealth inequality on their lives. In fact there is some debate among economists on the extent to which inequality impacts economic growth (although most agree severely lopsided wealth disparities in developing nations indicate poor economic institutions and thus poor growth). Secondly, average people don’t have a great understanding of economic principles; a recent survey found only 57% of Americans thought free trade was good for the country, and this was one of the highest percentages ever recorded. This is despite the fact that economists overwhelmingly believe free trade benefits all societies. Thus, even if people did know the extent to which this was a problem, it’s unlikely they could provide a great argument balancing trade offs inherent in economic policy calculations.

The final, and most important point is that it would take significant policy interventions, economic and otherwise, to change the layout of society to match that which Rawls’ derives from first principles, and certainly which people surveyed want. These interventions could not be undertaken without massively changing the incentives for people in society. If high earnings are taxed at a massive rate, people may be significantly less interested in being productive, or they may choose to start businesses in other countries where productivity is not as punished by the tax system. Additionally, public choice theory tells us that government having control over a larger budget will become the target of rent-seeking and special interests who will prevent the more philosophical policy goals of redistribution from being carried out. American policy today is somewhat re-distributive. Transfer payments make up a vast amount of the federal budget, yet with annual budget deficits hovering around $1 trillion, there doesn’t seem much political will to increase taxes.

Given the political and economic realities we face, it’s worth investigating what options really appear in front of us. As I wrote two years ago, we can hijack an aspect of the veil of ignorance to actually promote an unequal society. Placing yourself behind the veil of ignorance, would you rather be in the more equal society of 1968 America or the more unequal society of 2018 America? In 2018 you have more expensive healthcare, it’s true, but you also have significantly more treatments available to you. You have more food choices generally, and certainly more healthy food choices for cheap. You have incredible communications and entertainment improvements for extraordinarily cheap. A gallon of gasoline costs almost the same in inflation adjusted dollars from 1975, yet it gets you several times as many miles in cars that are safer, more comfortable, and more reliable.

II.

So it does seem intuitively that things are better despite today’s society being arguable less fulfilling of Rawlsian justice. If society is improving in ways that Rawls’ political philosophy can’t capture, we should be careful about referring back to it as justification for policy. Nonetheless, Rawls did ultimately endorse specific economic institutions, and did so 30 years after his original publication in his revised book, Justice as Fairness: A Restatement.

Rawls rejected utilitarian approaches to political philosophy, believing that his system would be rationally selected over utilitarian ideas, yet even if rational actors would choose a Rawlsian setup of society, we have no way to get from here to there in the real world. Government is subject to political pressures and it cannot carry out idealized philosophical implementations. Thus, it’s true that we could propose policies that might create a better society, perhaps even one that better approximates a “liberal political conception of justice” as Rawls states it. Yet those policies have to be grounded in the political reality of our world, and there may be tradeoffs.

Modern political philosophy, and Rawls in particular, seems to be ungrounded from real world political policies. Chris Freiman, author of Unequivocal Justice, agrees. Rawls’ chosen economic systems have never worked. Does democratic socialism exist? If it does, is Venezuela the height of liberalism? If it doesn’t, then maybe we should stick with working on welfare state capitalism, while political philosophy goes back to the drawing board with the knowledge that governments are subject to biases and interest group politics. Rawls’ other endorsement, “property owning democracies”, is an economic system that I had never heard of before, but again doesn’t seem to exist, and I’m not sure it has even been tried. Freiman goes further, pointing out that if a perfect state could exist, we wouldn’t need the state at all, as people would just voluntarily give their extra wealth to create the perfect society. The assumption that is the basis for needing a state to redistribute is the same assumption that shows why states cannot redistribute wealth perfectly.

I enjoy speculating about fundamental changes in society. But there’s something deeply fatalistic about creating an entire political philosophy, defining liberalism and the ultimate way to craft the good society, and then declaring that the only method of realizing it is through political and economic systems that have been abject failures, or, in the best arguable case, have never existed. This is not an argument for libertarian economic policy or a libertarian society. That would tend to run into the exact same problem. Instead, this is a fundamental argument for a consequentialist philosophy. At the very least, idealized utopian fantasizing cannot be used to justify real world policy goals unless it’s built upon real world assumptions. Consequentialism is an excellent way to ground philosophy in the real world. This is also an argument for humility. There are very few economists who suggest state control of the economy would work without issues. It feels obvious that Rawls would have known this, so perhaps this is simply the best you can do with a current political philosophy knowledge, and perhaps technology will make these types of societies easier to achieve in the future.

Again though, this concedes that Rawls’ philosophy is only useful if it is completely separated from the real world. At the nicest, that seems risky to spend all your efforts on a philosophy that rests on fundamental assumptions of idealized government that is widely known to be false. Consequentialism focuses our work and discussion on the real world and demands empirical data to support policies.

Finally, don’t take this essay as a end-all critique of Rawlsian Contractarian Liberalism; instead, take it as a first step approach to why consequentialist utilitarianism is a helpful philosophy in policy discussion.

Book Review: The Libertarian Mind

The full title of this book is The Libertarian Mind: A Manifesto for Freedom, written by David Boaz, Executive Vice President at the Cato Institute. This is actually the second edition of Libertarianism: A Primer, published in the late 90s by Boaz.

So why did I read an introductory book on libertarianism? Well, it had been a while since I’d really looked at a libertarian book, especially critically. As discussed in What is Postlibertarianism? v2.0, I’ve strayed a bit from a libertarian absolutist, and that post in an attempt to carve out a space independent from both the Right and Left, but also perhaps libertarianism itself. It seemed this might be a good time to revisit some of the basics to see if I had forgotten what had made libertarianism so appealing in the first place. David Boaz’s introduction to the political philosophy seems to be a good way to do that.

Intro and Libertarian History

The book is a solid introduction to libertarianism. Boaz discusses important libertarian talking points like the fact that the two-party political system in the US doesn’t necessarily hold all the answers. He also does a fair job tracing the history of liberalism in political philosophy, culminating in modern libertarian thinkers. That’s one of the better chapters of the book, and similarly, perhaps the most useful segment is Boaz’s recommended reading list on various libertarian topics, located in the final pages. There are literally hundreds of libertarian readings and authors mentioned, and I plan on adding a few to my future reading list.

I have never been as familiar with the pedigree of American conservatives and American progressives, and I would be curious to see what their similar reading lists or genealogy would look like. Libertarianism included routes through Locke, Mill, Mises, Friedman, Nozick and many more. It was clearest here that while I may not agree entirely with the label of “libertarian” today, there is a broader liberal tradition, wide and powerful in scope, and it is squarely within that tradition that I find myself.

Obviously then, I had broad strokes of agreement with this book in many areas, but I wanted to point out a few areas that I thought did a good job of applying libertarian critiques or approaches.

Positives

Boaz talks a lot about rights and rights-based approaches, which I’m not quite as excited about as I used to be (see Rules and Heuristics). Nonetheless, he makes a strong case for the consequentialist benefits of property rights: they reduce the amount of issues that must be political. Application of property rights settles disputes, allowing individuals to make choices about who they interact with and how. Alternatively, if the state is dictating policy, e.g. education policy, all education is determined by politics. Political losses then have greater effect on individual lives, since it’s often harder to opt-out of state policies you dislike.

Relatedly, the chapter on pluralism and tolerance was excellent. Also well stated was the chapter on the rule of law. This is a nebulous concept, and I think Boaz does a good job discussing the many aspects, including constitutional law, the importance of judicial activism (would have been surprising to me 8 years ago) to protect individuals from government, general warrants, regulatory loopholes for specific companies, and overcriminalization. Each of these are fairly disparate parts of law, but they are all important breaches of a uniform rule of law, and contribute to delegitimatize the state and democracy.

The chapter on public choice theory resonated, and I especially liked the terminology of a “package deal” to refer to political candidates, and how that could be so limiting. And as you would expect from a libertarian, the discussion of free markets, price theory, opportunity costs, and free trade were pretty straightforward. One highlight included the importance of entrepreneurial profits and the value of entrepreneurs seeing value missing in the economy, taking risks, and profiting by fulfilling needs. Another was the argument that the “balance of trade” wasn’t a useful measure since it doesn’t acknowledge that by definition, goods are traded by individuals. Individuals benefit from trade because they wouldn’t take part in it otherwise. Trade balances don’t take into account international supply chains routed all over the world, simplifying imports to two countries, when value added can come from dozens.

Negatives

Now for things that didn’t quite work. The book acknowledges the fact that several of the founding fathers were slave owners. Nonetheless, since the book doesn’t spend much time on anything, it only lends a couple pages to the issue of slavery. That isn’t going to convince anyone from the social justice movement. This is a recurring issue. Many times I did object to a point the book brought up, but there’s no time for any in-depth discussion, so most of the time I remained unconvinced.

For example, in the rule of law chapter, Boaz attacks the concept of unaccountable bureaucracy, demonstrating how bureaucratic rules can be authoritarian with no accountability. Nonetheless, elitist independent agencies could make more sense than democratic Congressional loudmouths; the alternative to bureaucracy isn’t necessarily that the government doesn’t perform that job, but that it is left to unrestrained democratic pressures.

The book also spends some time arguing not just that welfare is expensive, but that it’s actively harmful. I’m not sure how much I agree, but welfare for the poor never seems like it should be the first priority of spending cuts; the top federal budget items are Medicare, Social Security, and Defense spending. I actually thought the discussion of mutual aid societies was intriguing although I’m not sure how well they’d work now. It was one of the better answers I’d heard of for the critique that bad things will happen if we get rid of the welfare state. Another related point: the book doesn’t state what a “good” tax level would be, just that we have high taxes now. It’s not wrong, but I found it a bit of a cop-out.

Finally, the book isn’t too concerned about inequality, like you’d expect. However, the claim was that innovative markets would constantly challenge and undermine those at the top, with new products and markets catapulting new successful entrepreneurs at the expense of the old. Again, this could be true, but there wasn’t enough time to really dig into it; certainly the Forbes top 400 richest people in the world would constantly change as markets shift over time, but would the richest 1% really be in much danger? Is it ok if they are not? Libertarians would probably also argue that market innovation and technological progress are more important than inequality (a poor person in 2018 has much more material wealth than a rich person in 1968), but are there political risks to allowing for large inequality? The book doesn’t have time to answer these critiques.

For my takeaways: the book did a bit better than I expected on pointing out that I still generally agree with the bulk of classical liberalism/libertarianism, and my critiques are more like policy tweaks than philosophical deal-breakers. However, it’s only an introductory book, and due to my knowledge in these areas, specific issues I have with libertarian orthodoxy weren’t well addressed, nor was they really meant to be. I will definitely be looking at the extensive “For Further Reading” list for some libertarian writings on specific topics I’m concerned about. I would also state that this is a pretty good introductory book if you want 350+ pages from a representative libertarian. If you have already studied a lot of libertarian thought, I doubt you’ll find too much new here.

Links 2016-9-7

Living in the Age of Outrage. Maybe we’ve surpassed the point at which additional connectivity and interaction will continue to benefit the human brain.

The NSA spying on us is now officially putting us all at risk. Written by Bruce Schneier whose blog you can find in the sidebar.

Cool post on taking back the word “neoliberal”. More from a British perspective than American, but same idea I think as this blog and neoclassical liberalism.

Duke Professor Michael Munger (blog linked in the sidebar) gave a short talk about different healthcare systems, and some of the problems in the American set up.

An interesting healthcare idea mentioned in the last link, and discussed at length in this Cato paper. An idea I had previously thought about what having insurance cover increasing progressive percentages of healthcare costs as your costs went up. This is essentially like a high deductible plan, but perhaps you pay for 100% of your first $1000 healthcare costs, 50% of your second $1000, 25% of the next $2000, and so on. However, high deductibles don’t really work for low income individuals. Instead, this paper proposes that for very expensive procedures, the insurance company would pay the patient an amount to forego the procedure. If it’s just something they are considering, they will just take the money. If it’s really required, they’ll go through with it. It’s true that more low income individuals will forego the procedure, but if we argue that shouldn’t be allowed, we are arguing they shouldn’t be allowed to get free money. Not very ethical.

Paid parental leave isn’t a free lunch. Author is a blogger at EconLog, linked in the sidebar.

Interesting point by Bryan Caplan on a “reverse Animal Farm” situation. In the Soviet Union, Pravda would talk about how much better things were while things were actually awful; today, the media focuses on how terrible things are despite us being in an unparalleled era of peace and prosperity. Weirder still, Pravda was a propaganda outlet, but our media is competitive meaning that they are spouting what we want to hear. Of course, that also explains lots of overly emotional happy stories of dogs being rescued or clickbait listicles, so it’s not all doom and gloom as Caplan says.

The reasonableness of radicalism. An good read from Libertarianism.org that makes you think about the historical context of various beliefs. By historical standards people today are radical democrats, radical egalitarians, and radical libertarians. Therefore, we can justify beliefs thought radical today by asserting future societies would find those beliefs obvious. Of course, the author largely ignores that we could guess the wrong direction the world moves in; many left-wing intellectuals (and others) in the early 20th century thought it was obvious that communism or at least socialism was the future. They believed their support of overthrowing the bourgeoisie was the right way to approach things. Communists today are a bit wacky. Perhaps it would be safer to just argue for incremental changes in the right direction.

When you change the world and no one notices. Apparently it took about five years for the anyone to notice the Wright Brothers had already invented fixed-wing flight. Someone even predicated flight was a long way off a year after the Wright Brothers had flown at Kitty Hawk.

Last week had an excellent episode of The Fifth Column (podcast website). I recommend skipping the first 20 minutes unless you’re really interested in the Colin Kaepernick debate. Michael Moynihan makes a great point which is that Donald Trump is a pussy. He did talk about the border wall with Mexico’s president, but when asked about it, he said they didn’t discuss it. Then later when he was safely back in Arizona, then he said Mexico would definitely pay for the wall. But when actually in Mexico, he chickened out and avoided the subject. It’s remarkably politician-like and unpresidential. The whole rest of the episode though is great.

In the quest to get more people to know about Gary Johnson, BalancedRebellion.com has an amazing video from “dead Abe Lincoln” to let people know they can use the website to find another voter who would otherwise vote for the “other candidate”, and together they can both vote for Gary Johnson like they want to without the risk of accidentally helping to elect the person they hate more.

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