AIER: Government, Govern Thyself

Michael Munger is a Professor of Political Science, Economics, and Public Policy at Duke University and Senior Fellow of the American Institute for Economic Research. In the article Government, Govern Thyself, he argues that the state is always either too weak to do what we want, or so strong it can do whatever it wants.

leviathan

In January 2014 then-President Barack Obama made a speech in Washington, D.C. In that informal speech, just before a cabinet meeting, he explained he found it necessary to ignore the U.S. Constitution and unilaterally impose his vision of the good society on the nation:

We’re not just going to be waiting for legislation in order to make sure that we’re providing Americans the kind of help they need. I’ve got a pen and I’ve got a phone…

And I can use that pen to sign executive orders and take executive actions and administrative actions that move the ball forward in helping to make sure our kids are getting the best education possible, making sure that our businesses are getting the kind of support and help they need to grow and advance, to make sure that people are getting the skills that they need to get those jobs that our businesses are creating.

Many people on the right complained (I thought correctly) that this was Presidential overreach. To be fair, even the New York Times called the overzealous suppression of information and prosecution of whistleblowers “a stain on Obama’s legacy.”

Now, of course, all my friends on the left are appalled by the actions of the overreach of the Republican administration. Many who were fine with Obama ordering states around on the environment have recently taken a strong interest in the 10th Amendment, worrying about immigration enforcement and sending federal police to Portland and other cities. Understand: this is no partisan disagreement, but an irredeemable flaw in the nature of the state. The modern state is either too weak to do what we want, or so strong it can do whatever it wants.

The problem is often stated recursively. In Luke 4:23, Jesus mocked his skeptical listeners, “Physician, heal thyself.” The audience doubted Jesus’ claim that he was the messiah, because “Is not this Joseph’s son?” Just some local kid putting on airs and getting above his raisin’. Jesus’ taunting response was, in effect, “Nobody wants a sick physician, or a skinny cook, right?”

There are other observations in this vein; perhaps the most famous is that of the Roman satirist Juvenal. Around 100 C.E. he wrote about a problem of making sure someone does the right thing, even if the boss isn’t watching. His example (it was a satire) focused on ensuring the sexual fidelity of wives:

I know well the advice and warnings of my old friends: “Put on a lock and keep your wife indoors.” Yes, and who will ward the warders? They get paid in kind for holding their tongues as to their young lady’s escapades; participation seals their lips. The wily wife arranges accordingly, and begins with them…. (Satire #6)

Juvenal’s question, “Quis custodiet ipsos custodes?” (I’ve seen it translated “Who will ward the warders/guard the guardians?”), and Jesus’ parable, both illustrate the problem with the dual nature of the state. The usual social contract myth endows the state with the duty to enforce all agreements. But who then is to enforce the agreement between citizens and the state? Can the state be both enforcer and a party in the dispute? Physician, heal thyself.

There is of course a long history of just this kind of critique among libertarians, particularly those of us with some anarchist sympathies. One of the most interesting, important, but (to my mind) underrated of these was the late Anthony de Jasay. The origins of government are supposed by our inability to enforce contracts. So we create an entity that specializes in violence, to force everyone to obey their contracts. In Hobbes’ terms, “Covenants, without the sword, are but words.” Of course, once “we” “consent” to this universal contract enforcer, we have some problems. Who is this “we?” It all happened a long time ago. And very few people actually “consented;” all that happened is that we didn’t leave the country. And who will enforce our contract with the violent contract enforcer? Somehow, the government has to govern itself.

According to Jasay, there are two fatal flaws with the “social contract” idea. The first is the “enforceable contracts” justification, and the second is the “limiting Leviathan” problem of self-governance.

If contracts are unenforceable, then who governs the government? If we can’t enforce contracts with equals, how can we trust Leviathan? Jasay compares this magical thinking to “jumping over your own shadow.” As he puts it, “[I]t takes courage to affirm that rational people could unanimously wish to have a sovereign contract enforcer [itself] bound by no contract.” And by “courage” he intends no encomium. Either (1) those who make this claim are contradicting themselves: since we can’t have contracts, we’ll use a contract to solve the problem; or (2) the argument is simply circular: cooperation requires enforceable contracts, but these require a norm of cooperation that makes the state obey the contract. Of course, if there is a norm of cooperation then other contracts are enforceable without the state.

We are on the horns of a dilemma: either the former claim—contracts cannot be enforced—is true, and we cannot conjure enforceable contracts out of a shadow; or the latter claim—people naturally cooperate on their own—is true, and then no state was necessary in the first place. Robert Nozick (1974) put it well: “Tacit consent isn’t worth the paper it’s not written on.”

The second problem highlighted by Jasay is “limiting Leviathan.” Let’s assume the best: state officials genuinely intend to do good. We might make the standard Public Choice claim that officials use power to benefit themselves, but let us put that aside; instead, suppose officials genuinely want to improve the lives of their citizens.

That still means a minarchist state is not sustainable.

Officials, thinking of the society as a collective rather than as individuals with inviolable rights, will immediately discover opportunities to raise taxes, create new programs and new powers that benefit those who, in the minds of the officials, need help. In fact, it is precisely the failure of the Public Choice assumptions of narrow self-interest that ensure this outcome. It might be possible in principle to design a principal-agent system of bureaucratic contract that constrains selfish officials. But if state power attracts those who are willing to sacrifice welfare, even their own welfare, for the “greater good” then the constitutional dams of minarchy are quickly overtopped, and Leviathan floods the land.

I should hasten to add that it need not be true, for Jasay’s claim to go through, that the concept of “greater good” has any empirical content. It is enough that (some) people believe. The true believers will brandish “the greater good” like a truncheon, smashing rules and laws designed to restrain the expansion of state power. No one who wants to do good will pass up a chance to do good, even if it means changing the rules. This process is much like that described by Hayek in “Why the Worst Get on Top,” or Bertrand de Jouvenal’s On Power.

So, the argument has the same structure, creating a logical dilemma or contradiction. Either

  1. Minarchy is not possible, because it is overwhelmed by the desire to “do good,” which cannot be controlled by the state because it would require officials to limit themselves for moral, not legal reasons, or
  2. No state, minarchist or otherwise, is necessary because people can limit their actions on their own, without the state’s use of coercion.

Jasay is especially scornful of those who would invoke constitutions and “parchment barriers” to protect a minarchist arrangement. A formal state and a constitution are either unnecessary (if people are self-governing) or ineffective (if they are not). Leviathan either cannot survive because everyone opposes it, or else it is illimitable because no one can resist it.

Most people seem to think that the problem with government power is that the wrong people are in office. That’s not right; the problem is that we want to rely on a physician who suffers an illness that cannot be cured.

AIER: Fear, Tyranny, and the Fairy Tale of Our Times

Dr. Caroline Breashears at the American Institute for Economic Research has an enjoyable article on metaphor and  evil elites with Fear, Tyranny, and the Fairy Tale of Our Times.

malficent

Fairy tales often get a bad rap. Among politicians and activists, “fairy tale” connotes “fantasy,” as in Greta Thunberg’s rant at the U.N. Climate Action Summit: “We are in the beginning of a mass extinction, and all you can talk about is money and fairy tales of eternal economic growth.”

Yet fairy tales not only promise the hope that Thunberg rejects: they register each culture’s sociopolitical concerns, offering moral and practical solutions.

Consider Charles Perrault’s 1697 tale of “Little Thumbling,” which depicts the poverty of French peasants, the greed of the rising moneyed class (the ogre), and the corruption of the court. For the little man, only cunning can save the day.

Or recall Jacob and Wilhelm Grimm, who collected and reshaped fairy tales during the Napoleonic wars, defiantly presenting a German tradition (take that, Boney). And in the twentieth century, the Nazis revised the Grimms’ classics to spread their own propaganda. In one chilling film, Little Red is saved from the wolf by an SS officer.

Which brings us to one of Disney’s latest releases: Maleficent: Mistress of Evil (2019). As critics have observed, it seems overloaded with themes and subplots, from genocide to environmentalism to the history of the dark fey.

Technically, it is not a great film.

Yet Maleficent: Mistress of Evil performs an essential service by reflecting our time: it foregrounds how fake news promotes our national divisions, and it models how to reject bias in favor of facts, moral judgment, and the prosperity brought by peace.

Spinning Stories: #MaleficentIsEvil

Disney is of course an expert at updating and promoting scripts. Maleficent (2014) retells its own Sleeping Beauty (1959), itself based on the Grimms’ variant, though Disney identified Perrault’s version as its source text. No need to remind viewers of the Germans so soon after World War II.

Maleficent then recuperates the villain as the victim of a man who literally stole her fairy wings. In retaliation, Maleficent cursed his daughter, Princess Aurora, to be poisoned by a spindle, but then redeemed herself by growing to love the child. That film ended with Maleficent, not Prince Phillip, awakening Aurora with “true love’s kiss.”

So why is the sequel’s subtitle Mistress of Evil? It is a puzzle that the narrator foregrounds at the start, noting that Maleficent’s love for Aurora “was somehow mysteriously forgotten. For as the tale was told over and again throughout the kingdom, Maleficent became the villain once more.”

To paraphrase one politician, everybody says so.

The mystery is solved near the film’s end, when Prince Phillip’s mother, Queen Ingrith, tells Aurora that it was she who spread the lies:

Do you know what makes a great leader, Aurora? The ability to instill fear in your subjects and then use that fear against your enemies. So I spread this story of the evil witch and the princess she cursed. It didn’t matter who woke Sleeping Beauty. They were all terrified. And the story became legend.

To be fair, Ingrith believes that fairies like Maleficent threaten humanity. She claims that when she was young, the crops in her father’s kingdom died, leading the people to suffer. Meanwhile, the magical fey of the Moors continued to thrive.

“My brother and I believed we should take what we needed,” Ingrith states, echoing modern rationales for the redistribution of wealth. Why create when one can simply take? Did the fairies really deserve what they had? But her father, the king, disagreed, sending Ingrith’s brother to ask the fey’s help. He never returned.

In this context, Queen Ingrith’s tales about Maleficent and other fairies may be factually incorrect, but she believes them to be morally true, which is apparently the new standard in journalism. And so she spins her stories with an effectiveness that even Walter Duranty would envy.

To solidify her narrative, Queen Ingrith stages a family dinner for the newly engaged Aurora and Phillip. First she antagonizes Maleficent, working her into a rage. Then Ingrith poisons her own husband with the iconic spindle and frames Maleficent for it. Even Aurora falls for the lie. The people, terrified, are primed for war.

Pick Your Poison

As Maleficent leaves Queen Ingrith’s castle, she is shot with a poisoned bullet by one of Ingrith’s servants, Gerda. Fortuitously, a mysterious fairy rescues her and takes her to a remote location to heal. When Maleficent awakens, she discovers a world of Dark Fey who have been exiled from their lands by humans.

As Maleficent navigates this new realm, she is pulled in different directions by two fairies. One, the warrior Borra, is motivated by resentment: they must kill the humans and reclaim their lands. Another fairy, the peaceful Conall, points a different way: Maleficent, the descendant of the Phoenix, possesses great powers that could be used to heal, not destroy, if she can forgive Aurora.

The characters’ options mirror our own. Do we focus on the past and continue the resentments? Do we, like one prominent activist, threaten that if demands are not met, “we will burn down this system and replace it?” Or do we unite to move forward?

The question involves not only politics but moral judgment. As Adam Smith observes in The Theory of Moral Sentiments, “The real, revered, and impartial spectator . . . is upon no occasion, at a greater distance than amidst the violence and rage of contending parties. . . . Of all the corrupters of moral sentiments, therefore, faction and fanaticism have always been by far the greatest.”

Even as Maleficent struggles with judgment, Aurora, now at the palace for her wedding, comes to suspect that she has condemned Maleficent unfairly. She finally realizes that Ingrith plans to exterminate the fey. She warns Prince Phillip and saves a group of fairies being exterminated by Gerda.

Waking Up

In the end, it comes down to individual choice. Borra and Ingrith, driven by revenge, choose to lead their armies into battle. Ingrith warns Phillip, “These creatures stand between us and everything we need to survive.” Her solution is to destroy.

Phillip rejects her logic, telling Borra, “My mother wanted a fight, and you’re giving it to her. I won’t allow her hatred to ruin my kingdom or yours.” His argument leads Borra to awaken from his own hatred to consider who is driving the war and why.

Maleficent goes a step further. She dies to save Aurora when Ingrith shoots her with a poisonous bolt. Her love trumps race, politics, and resentment for past wrongs. And because Maleficent is a descendant of the Phoenix, she regenerates.

At first glance, the Phoenix motif seems like a sadly artificial solution, but it follows a tradition of fairy tales depicting symbolic rebirth to capture a character’s growth in wisdom. Snow White is “reborn” after her time in the coffin; Little Red is “reborn” after her time in the wolf’s belly; and Maleficent is “reborn” after her sacrifice.

The result is hope that what was imperfect—a person, a relationship, a country—can be made better. The film ends with humans and fairies celebrating the marriage of Philip and Aurora. While negotiations are surely ahead, the first step has been taken toward peace and the prosperity brought by mutual exchange.

Ultimately, Maleficent: Mistress of Evil is a fairy tale of our time. Reflecting the national divisions that have only escalated since its release, it illustrates how false stories spread to infect hearts and minds as fatally as a virus. The solution is to reject these fictions and judge for ourselves. As Conall tells Maleficent, “I’ve made my choice. Now make yours.”

AIER: Why Didn’t the Constitution Stop This?

Robert Wright at the American Institute for Economic Research writes about Constitutional issues surrounding the pandemic and lockdown orders in Why Didn’t the Constitution Stop This?

constitution

The genius of the U.S. Constitution is that the Framers, especially James Madison and Alexander Hamilton, saw it as a constraint on bad policymaking. Given the number of really bad policies that various US governments and officials, from school boards to POTUS, have implemented, especially recently, it is high time to restore weakened or lost Constitutional restraints against arbitrary rule.

Five forces threaten Americans with destruction: 1) nature; 2) foreign powers; 3) the national government; 4) state and local governments; 5) themselves. The threat from 3, 4, and 5 is double-edged, meaning that Americans can be harmed by the actions of those forces as well as by their inaction.

The national government, for example, can harm Americans by being insufficiently prepared for natural catastrophes and foreign incursions, as with Hurricanes Katrina and Rita and the 9/11 attacks. It can also harm Americans, though, by doing too much, as with the invasion of Iraq and the way-too-long occupation of Afghanistan. (Relying too much on FEMA instead of states or private initiatives may be another example, but less clear cut than the needless wars.)

The national and state governments are supposed to check each other’s power, so that if one overreaches, the other can thwart it. We usually think about this in terms of “states’ rights” but in fact federalism, as the concept is sometimes called, runs both ways: the states should check the national government when necessary but the national government should also check the power of the states when they overreach, as they sometimes do.

Advocates of states’ rights often cite the Tenth Amendment, which reads in its entirety “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” Because the word “expressly” does not occur before “delegated” in the ratified version of the amendment, however, it is among the weakest parts of the Constitution.

Traditionally, though, the states retained primary control of so-called “police powers,” the powers that form the legal basis for the economic lockdowns that have imprisoned most Americans for over a month now. Books have been written about this stuff so obviously I cannot relate all the details and nuances involved but ultimately they matter little in the present case. The key point is that police powers, national, state, or local, do not provide carte blanche to governments. Specifically, the Constitution constrains state police powers in numerous ways.

Importantly, courts see Constitutional rights as tradeoffs between conflicting interests. So while the Constitution says that the national and state governments cannot infringe individual speech rights, they can pass laws that make it illegal for an individual, for example, to falsely yell “fire” in a crowded theater. The notion is that the property and natural rights of the theatergoers trump the free speech rights of the liar.

Similar restrictions apply to the right of assembly. All Americans have the right to assemble with other Americans for any lawful purpose but state police powers, the positive duty of states to protect the physical safety of assemblers and non-assemblers, mean that governments may restrict assemblies through permit systems.

Similar arguments are made to defend the pistol permit systems common in many states. They are bogus but show how far courts go to balance one person’s rights with those of others. If you believe that gun control laws should be followed because they are laws passed by democratically elected representatives you have missed the point of the Constitution, which, again, is to constrain policymakers, to protect individual Americans from the national and state governments and also other Americans.

Just because a majority wants some policy doesn’t mean that that policy is a good idea, after all. I imagine at one point in March 2020 a majority of Americans might have thought it a good idea to deport, tax, infect, or maybe even kill Chinese-Americans in order to make “them” pay for what “they” did to “us.” (I don’t want to link to evidence of that … just look at your social media feeds if you need evidence.) That is a typically ugly human reaction to trauma but one that would have been proven empirically wrong as well as morally bankrupt and economically inane (sunk costs). Thankfully, the Constitution remained strong enough to prevent that horror.

It did not, however, prove strong enough to prevent state governments from taking their police powers too far. They engaged in fancy word play to hide the fact that they acted without a shred of precedent. What they imposed is not a quarantine, which constrains the movement of sick people, nor a cordon sanitaire, which locks people into an afflicted area, nor a protective sequestration, which locks people out of an unafflicted area. Instead, they have implemented partial martial law (military rule essentially) by imprisoning Americans in their own homes without due process of law and stolen their property by shuttering their businesses. (Some recompense has been attempted but of course only bluntly and at a cost to all taxpayers, including those in states that did not shutter most businesses.)

Remember, just because a state has general police powers doesn’t mean it can do whatever it wants, whenever it wants, simply because its actions are popular, or passed into law, or urged by some scientist. Imagine, for example, if some executive thought everyone ought to drink bleach, crazy as that seems, and actually mandated it. Would you do it? (Hint: Don’t do it! Even if some guy in a suit or lab coat tells you that you must.) What if some leader believed that the coronavirus is spread primarily by clothing and mandated that we all go naked in public, except for our masks and gloves of course? Or if one thought an EMP (electromagnetic pulse) would solve the problem (and destroy all computers in the process)?

Any promulgation that violates the Constitution, in any way, shape, or form, is null and void. A federal judge has the authority to declare any state law or executive order unconstitutional and demand that it be revoked. Judges generally give governments broad leeway to protect “public health” but the policies must be rational and they must weigh the rights of all involved parties. Historically, many government epidemic responses never got litigated because the crises passed before suits could be brought and because quarantines, cordons, and sequestrations can make rational sense in specific situations. But, again, state governments for some reason have tried to combat the novel coronavirus with novel policies that come with huge negative side effects for everyone — workers, consumers, and taxpayers — and that have and will continue to cause deaths, minimization of which is the ostensible goal of lockdown policies.

Why draconian lockdown rules have not yet been deemed unconstitutional I still do not know, but the fact that a former federal judge who teaches at Harvard apparently does not know the difference between a quarantine and a lockdown might provide a clue…(continues)

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AIER: How Liberalism Can Survive Left-Right Polarization

This article from the American Institute for Economic Research looks into the rise of political extremity, both left and right, in the US, and what we need to do to affirm dedication to liberty while rejecting the vengeful appeal of authoritarianism.

The rise of political extremes in America, both left and right, poses a particular challenge for those of us who prefer liberty over government control. It’s not only in the US; the same grows in the UK, Europe, Latin America, and Brazil. As the old managerial elite in all countries loses credibility and power, socialist and nationalist forms of statism are vying to take their place, while relegating liberalism to the political margins.

To survive and thrive, we will need to gain greater confidence in who we are and what we believe about the social order, clarifying and focusing on what liberty looks like and what precisely we are going for, while avoiding partisan traps along the way. In particular, we need to avoid being lumped in with movements – rightly or wrongly, by expedient or intellectual error – that are contrary to our tradition and philosophical longings.

In case you haven’t heard, for example, many academic and media observers are on a hunt to discover the origin of the nationalist resurgence, and particularly its most bizarre and violent segment of the alt-right. To the horror of many dedicated intellectuals and activists in the liberty space, some academics and journalists have tried to link this movement backward in time to the libertarian political movement as it developed over the last two decades, and, by extension, the rise of the Trump-controlled Republican Party.

It should be obvious that, in theory and contrary to what the socialist left has long claimed, there is no connection whatsoever between what we call libertarianism and any species of rightist ideology. One negates the other. As Leonard Read wrote in 1956, “Liberty has no horizontal relationship to authoritarianism. Libertarianism’s relationship to authoritarianism is vertical; it is up from the muck of men enslaving man…”

And yet today, there does indeed appear, at least superficially, to have been a social, institutional, and even intellectual connection, and migration, between what is called the liberty movement and the emergence of nationalism, right-wing identitarianism, and the politics of authoritarianism. Some of the most prominent alt-right voices in the 2017 Charlottesville marches once identified as libertarians. This fact has been widely covered. It’s a fair question to ask: did these individuals ever really believe in a liberal worldview? Were they trolling all along? Were they just deeply confused?

I’ve been interviewed many times on these questions. How did this come to be? The answer is complex. It was more than six years ago that my article “Against Libertarian Brutalism” raised a conjecture: a libertarianism, rendered simply as nothing more than a “leave me alone” outlook, with no larger aspiration for the good life, and no interest in the subject of social cooperation, could find itself divorced from a historical conception of what the advent of liberty has meant to human life and society as a whole. Without that, we fail to develop good instincts for interpreting the world around us. We are even reduced to syllogistic slogans and memes which can be deeply misleading and feed even illiberal bias.

And where does this bias end up? Where are the limits? I see them daily online. In the name of fighting the left, many have turned in the other direction to embrace an alternative form of identitarianism, restrictions on trade and migration, curbs on essential civil liberties, and even toyed with the freedom of the press and the rights of private enterprise, all in the name of humiliating and eliminating the enemy. Some go further to celebrate anything they believe the left hates, including even odious causes from the authoritarian past.

The rhetoric at the extremes approaches nihilism. The press isn’t really free so why not impose restrictions, censorship, and litigated punishments? The borders aren’t private so why not prohibit all entry? Some speech doesn’t support freedom so why permit it the rights that freedom entails? Social media companies aren’t really private enterprises, so why not force them to carry and promote some accounts that I like? That large company has a government contract so why not bust it up with antitrust?

The gradual evolution of language has unleashed all kinds of confusion. Activists denounce “the establishment” without a clear distinction between government and influential media voices. They will decry “globalism” without bothering to distinguish the World Bank from an importer of Chinese fireworks. They promote identitarianism and racial collectivism without the slightest understanding of the illiberal origins and uses of these ideologies in 20th-century history. After all, they say, there is nothing “inherently un-libertarian” about casting down an entire people, religion, gender, language, or race, so long as you don’t directly use violence.

It takes a special kind of circuitous sophistry to justify, in the name of liberty, collectivistic animus and state violence against voluntary association. But the history of politics shows people are capable of making huge mental leaps in service of ideological goals. All it takes is small steps, little excuses, tweaks of principle here and there, seemingly minor compromises, some element of confirmation bias, and you are good to go, ready to make as much sense as the old communist slogan that you have to break eggs to make omelets…

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AIER: The Stakes of Politics are Far Too High

This piece by economics professor Alexander Salter at the American Institute for Economic Research dwells on the idea that growth in federal government and expansion of federal power are at odds with maintaining liberty, thus The Stakes of Politics are Far Too High.

Despite the comedy of errors that was the Iowa Democratic Caucus, not to mention the ambiguity of New Hampshire, the national fervor grows. Bernie Sanders’ strong performance makes him the Democratic frontrunner: his odds of winning the nomination stand at 33%, with Michael Bloomberg at a surprising 27%.

Sanders’ campaign is notable because he is explicit about his radical vision for the U.S. economy. An advocate of the Green New Deal, Sanders has promised to reengineer the American economy from the top-down, at a cost of more than $10 trillion over the next decade.

On the Republican side, President Trump never leaves campaign mode. His proposed budget, released on Monday, will not balance for at least 15 years, suggesting he is more than happy to bestow gifts on the electorate without paying for them. Overall, the national debt has grown by $3 trillion since Trump took office. Now it seems trillion-dollar deficits are the new normal.  This suggests Republicans have made their peace with a government empowered to direct more and more of our lives.

In short, Democrats are close to going “all-in” on democratic socialism, or at least a hardcore form of social democracy that entails a large degree of federal dirigisme. And Republican policy (which differs greatly from Republican rhetoric) is heading towards the same.  Using new programs and new spending to secure electoral support is nothing new. But given the dire fiscal situation of the United States, as well as the ominous growth federal power, we have a very good reason to worry that the political clash that will culminate in November will end poorly for everyone, regardless of who wins the White House.

Plenty of op-eds have been written on the economics of deficits and the growth of the national debt. We know our fiscal trajectory is unsustainable. Less well known are the political consequences.  Those consequences can only be understood by first refamiliarizing ourselves with the purpose of our Constitutional system.

Why do we have a Constitution that fragments political power and divides it among many organizations? The typical answer is to prevent tyranny, which is true. But it is incomplete. Our Constitution has so many procedural safeguards in place because the Founders understood the first need of a durable government at the federal level was to lower the stakes of politics. Because it is difficult to enact sweeping changes at the national level, control over the national government is not perceived by any political faction to be an existential threat.

That is how it is supposed to work. In fact, we have deviated significantly from the politics of prudence and restraint envisioned by the Founders. Congress increasingly authorizes greater and greater spending, upon which the well-being of millions has come to depend.

The Executive increasingly governs by fiat, selectively enforcing laws and allocating significant fiscal resources of its own. In this world, the game of politics has necessarily become high-stakes: the benefits of controlling the government are enormous, and as a result, efforts to secure this control have become a matter of life or death. Bloated budgets and perpetual deficits are a sure sign we are moving towards winner-takes-all politics.

The political philosopher Thomas Hobbes, in justifying the state, wrote that rational individuals willingly cede political power to a central arbiter and enforcer so that they may escape the “war of all against all.” Unfortunately, our fiscal scenario has reignited this war.

The first axiom of sound governance is to lessen the dangers caused by differences in principles and worldviews among citizens. But when the state becomes an all-encompassing institution—when everything and anything is political—disagreements become existential threats.

“When you play the game of thrones, you win or you die.” This quote by a fictional Machiavellian monarch aptly describes our situation. Unless we commit to lowering the stakes of politics, once again embracing moderation and humility, we doom ourselves to a never-ending cycle of reciprocal political domination. This is the death of liberty under law, and of democratic self-governance itself.

AIER: Paul Krugman Is Wrong on Gov Debt

The American Institute for Economic Research has up an article on why economist Paul Krugman is wrong when he says that government “debt is money we owe to ourselves” and therefore not anything to worry about.

Krugman’s Zombie Idea: We Owe It to Ourselves

Paul Krugman coined the term “zombie ideas” to describe “policy ideas that keep getting killed by evidence, but nonetheless shamble relentless forward, essentially because they suit a political agenda.”

Krugman has revived one of his favorite zombies: the notion that high government deficits aren’t dangerous in the way that an individual incurring heavy debt is because the national debt is “money we owe to ourselves.” He doubled down on his claims in response to an article comparing the dangers the debt poses to future generations to climate change.

Krugman has repeatedly written on this topic at his blog (see here and here). It was a common refrain of his during the Eurozone crisis and in the aftermath of the Great Recession when there was a bipartisan push to cut future deficits to prevent future Greek-style debt crises.

As with most myths, there is a grain of truth to the claim. National debt does differ from the debt individuals and households incur in a few notable ways. Individuals have a finite lifetime to incur and repay their debts. Governments don’t; they can pass debt onto future generations. So long as people are willing to lend it money and the government can service debt as it comes due, government debt can persist in perpetuity. And to the extent that the debt is owned by domestic citizens, the money that is used to repay the debt needn’t leave the economy.

That said, this grain of truth doesn’t eliminate the ocean of evidence against Krugman’s claim that worrying about the burden the national debt might impose on future generations is nonsensical. Here are some reasons why this argument is fundamentally flawed.

A large share of the national debt is owed to foreigners

For starters, it’s not the case that the national debt is entirely owed to “ourselves” (i.e., that it is exclusively owned by US citizens). Nearly one-third of the US debt ($6.636 trillion of the $22 trillion in debt) is owned by foreign governments and international investors.

This isn’t necessarily a bad thing. The willingness of foreigners to lend to the U.S. government has helped keep Treasury rates at historical lows, making it cheaper for future taxpayers to repay the interest on the national debt. If the US government is running deficits to finance justifiable initiatives (say, fighting World War II) and spending programs that will boost future growth, we should welcome funds from investors regardless of their nationality.

Nevertheless, it undercuts Krugman’s case that repaying the debt won’t burden future taxpayers and the future economy on net because the money will “stay in the U.S. economy.”

The fallacy of “we” and the reality that future taxpayers really do “foot the bill”

A bigger problem is that Krugman commits what Don Boudreaux calls the “Fallacy of Us, We, and Our.” Even if the entire national debt is owned by US citizens, there is no real sense in which “we” owe the debt to “ourselves.” The individuals incurring and benefitting from the debt are entirely different from the individuals who must bear the burden of repaying that debt.

Once we move past the intellectual sleight of hand of using collective pronouns like “we” and “ourselves” to describe all Americans across time, we get a much clearer picture of who gains and loses from the national debt.

Current taxpayers and citizens clearly benefit; they receive the benefit of increased government spending without incurring the full cost of those expenditures. Future taxpayers and citizens, who will have to repay the debt as it comes due, are clearly hurt. They have to pay higher taxes to repay the debt incurred and owned by the prior generation.

This insight remains true even if the older generation sells them its bonds before they pass. As James Buchanan astutely noted decades ago, future generations first have to buy these bonds from the prior generations. And, in order to buy them, they must first reduce their consumption. It is that reduced consumption — not the higher taxes they’ll have to pay when the debt is retired (since, by assumption, that money will flow right back to them as bondholders) — that is the true cost imposed on future generations from government debt.

Government debt “crowd outs” private investment and creates deadweight loss

The “we owe it to ourselves” argument also glosses over two of the most important arguments for why deficit spending is not a free lunch for taxpayers or the future economy.

First, deficit spending crowds out private investment…

Click here to continue reading at AIER.org.

AIER: The Obama Film “American Factory” Backfires

The American Institute for Economic Research has up a short article discussing the film American Factory which was perhaps meant to be about workplace culture clashes or the diminishment of wages and benefits when there workers are not unionized. The AIER contents that it is instead a “damning snapshot of American labor entitlement.”

Higher Ground, the production company founded by Michelle and Barack Obama, has released the first of a planned seven-film series on Friday. American Factory chronicles the opening of a Chinese factory near Dayton, Ohio, where a GM plant closed in 2008. It’s reasonable to suppose that the point was to alarm us about the wiles of global capitalism. Oddly, the film might have the opposite effect on many viewers. It certainly did for me.

The documentary opens with a prayer on the day the plant closes as tearful workers see the last vehicle come off of the production line. A few years later, Fuyao Glass announced its intent to open a glass-production facility in the shuttered facility. One of our first glimpses is of a question and answer as American employees of the Chinese firm speak about the goals of the firm to prospective employees: they plan to employ several thousand people in all capacities, but mostly blue-collar work of the type that disappeared when the local GM plant shut down. One prospect asks if this will be a union shop. No, he is told. The plan is to be non-union…

nitially, the woman who has been living in her sister’s basement has moved into an apartment. She extols her reacquired independence. Other employees bemoan their non-union pay and conditions but seem contented; they or friends and family have lost houses, have seen communities torn apart, and know firsthand the double impact of the so-called Great Recession and increasing competition from China. But even that wears off over time.

The work is sometimes dangerous, and the pay is lower than many of the workers have previously received, and before long thankfulness is replaced by myopia. Despite the company’s warnings, there are rumblings about unionization, and a United Automobile Workers agitator is caught walking through the private workspace with a “Union Yes” sign held aloft. The ineffectiveness of American managers to quash the unionization efforts leads to their sudden termination, and the Chinese CEO threatens to close the plant if it continues.

The same workers who, a short time before, were deeply appreciative of their unlikely bounty then begin to badmouth the company. Some are meeting secretly with union officials. Ultimately employees hold a vote, and the result is somewhat surprising.

There are two particularly telling moments in the film. In one, a Chinese manager teaches a class on how to deal with Americans, whom the Chinese line employees are training. Americans, he explains, need constant encouragement. It’s a hilarious and somewhat cringeworthy section…

 

Click here to read the entire article at AIER.

 

AIER: The Real Problem Is the Politicization of Everything

Kai Weiss at the American Institute for Economic Research has a nice, short article on the problems of over-politicization and the solution thereto – The Real Problem Is the Politicization of Everything. Unfortunately, at least one of the sides will reject the idea of a less-intrusive state.

…This is a problem the great C.S. Lewis also saw when he mused that we should focus on “a household laughing together over a meal, or two friends talking over a pint of beer, or a man alone reading a book that interests him.” Meanwhile, “economies, politics, law, armies, and institutions, save insofar as they prolong and multiply such scenes, are a mere ploughing the sand and sowing the ocean, a meaningless vanity and vexation of the spirit. Collective activities are, of course, necessary, but this is the end to which they are necessary.”

So what is a possible way out of this conundrum? A multitude of proposals have been made to detoxicate today’s climate, and it would frankly be pretentious for me to claim to know the solution. Nonetheless, one surefire way, as friends of liberty will quickly point out, is to get politics out of our lives. As Kristian Niemietz notes, “The most obvious antidote to a dysfunctional, adversarial political culture is just to do less politics.”

What does that require? It necessitates a dramatic reduction in the size and scope of the state, the building of a wall between the state (so long as it exists) and the rest of our lives, and the restoration of the conviction that society works best when it is left alone. In other words, we need desperately to resurrect the vision of classical liberalism and draw lessons from its modern heirs in the libertarian tradition…

To regain civility in human interactions and finally treat other human beings as human beings again, we would do well to get politics out of human affairs.

Click here to read the entire article at AIER.org.