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Analytical Table of Contents for

The Dog Ate My Manifesto:
Reflections on Moderate Libertarianism

Peter A. Taylor
October, 2002

This is the short version. Please read this version before attempting to wade through the long version (link below).

Here is the really short version. This is the framework I'm advocating for making political decisions.

Part 1: Laissez Faire

1. Introduction

I am writing this (1) to defend my moderate libertarian (classical liberal) views against my "liberal" (social democrat) friends, (2) to give moderates with the Libertarian Party (LP) more ammunition to use against the radical wing, and (3) to organize my own thoughts. I describe five different types of "libertarian." I am only interested in defending the most moderate of the five.

2. The Prisoners' Dilemma

I discuss several different versions of the Prisoners' Dilemma, an important game theory paradigm. I also discuss "The Tragedy of the Commons."

3. Objection 1: Judging Criteria

I use bargaining theory to argue that utilitarianism (maximizing average happiness) is usually (but not always) as good a criterion for judging outcomes of government policy as any.

4. Objection 2: Distribution of Benefits

Economists talk of "allocation" (baking the biggest pie possible) and "distribution" (how the pie is cut). A situation that is attractive from a utilitarian standpoint has to be a good compromise between "efficient" allocation and good distribution (and this must include both tangible wealth and intangibles). There is no particular reason for expecting free markets to produce attractive distributional outcomes.

5. Objection 3: Knowledge Problems

There is, however, a simple textbook argument for expecting free markets to produce "efficient" solutions to allocation problems. Unfortunately there are a lot of things that can go wrong with this argument, many of which involve irrationality, lack of information (including self-knowledge), and bad information.

6. Objection 4: Insecure Boundaries

"Efficient" markets (good allocation) depend on "property" rights being defined well, easily enforced, and easily transferred. Since people care about things that are not normally thought of as "property," I have tried to make this as general as possible by talking about "boundaries" rather than "property." Lots of things can go wrong due to lack of workable property rights.

7. Objection 5: Imperfect Competition

Monopolies are usually bad for both allocation and distribution.

8. Objection 6: Free Rider Problems

"Public goods," things like military protection and flood control dams benefit people whether those people help pay for them or not. Consequently, people have little incentive to help bear the cost of producing them. Markets therefore don't produce public goods efficiently (bad allocation).

9. Welfare Economics

Market failures can be addressed in many ways. Governments provide military protection directly. Pollution can best be addressed with effluent taxes or tradable permits rather than "command and control" regulation. The "public good" problems associated with military protection make anarchism unworkable. Workable property rights need to be good compromises that allow people who are seriously adversely affected by someone else's behavior to block that behavior, but which also allow people to go about their lives without unreasonable obstruction (such good compromises are not always possible). Real-world arguments typically overlap several of my categories of objections to laissez faire, and the associated assumptions are never completely true or false, but only true and false to varying degrees, which puts us in the mathematical realm of "multivalent" or "fuzzy" logic. Free trade should theoretically be good from both a distribution and an allocation standpoint, but I discuss some "communitarian" counter-arguments.

10. Interpersonal Utility Comparisons

I discuss what "economic efficiency" is, and the textbook "efficiency proof" for why free markets are efficient, barring objections 3 through 6. (Garbage in, garbage out!) This "efficiency" is much more abstract than it sounds. To associate "efficiency" with utilitarianism without considering distributional issues is a huge leap of faith, which I am unwilling to take. However, I believe my list of valid objections to laissez faire, while awkward and abstract, is complete.

Part 2: Democracy

11. Public Choice Theory

In order to make an apples-to-apples comparison between laissez faire and democratic politics, the assumptions I make in analyzing government need to be consistent with the ones I make in analyzing markets. The branch of economics that tries to analyze government in this way is called "public choice." I see laissez faire "capitalism" and democracy as processes, not as sets of values, and the possibility that either of these processes may have long term implications for changing people's values is something that can be considered only after the processes have been defined and their near term workings understood. If you define something as evil, then it becomes impossible to carry on an intelligent dialogue about it with people who don't agree with you. I discuss the median voter model, the Condorcet paradox, whether logrolling produces "efficient" outcomes, and differences between Westminster and proportional representation types of legislatures.

12. Parallelism Between Laissez Faire and Democracy

Because public choice theory is so similar to regular economics, we have an analogous "efficiency" proof, and the same six categories of objections to this line of reasoning. Garbage in, garbage out, all over again. However, under democracy, there is little difference between the process of supporting a change and the process of opposing one. Property rights are supposed to act like a ratchet mechanism, that only allows things to move in one direction (towards efficiency), but democracy is more like a tug-of-war.

13. Rational Ignorance

One way to relax the assumption of perfect information in analyzing markets or politics is to retreat to a meta-assumption, that people may start out without some important pieces of technical information, but that they tend to make good decisions about when it's worth their while to invest time and money in acquiring that information. Sometimes it isn't worth it, and people are then said to be in a state of "rational ignorance." This tends to be a bigger problem under voting institutions than under property institutions, partly because of public good problems (good government is a public good), and partly because of the vanishingly low probability of a major election coming down to one vote.

14. Rent Seeking

More problems have to do with insecure boundaries (lack of good property rights). I discuss fugitive resources, non-price competition, crime, and "rent seeking." Political lobbying by special interests typically shows up in public choice literature under the unfortunate heading of "rent seeking." David Friedman discusses this in The Machinery of Freedom as being analogous to burglary. I discuss 8 simple analogies that try to describe how lobbying might work, and how much of the value of the resources being competed over is wasted in the competitive process. The 2 simplest models suggest it might be close to 100%. This is scary because, as Mueller puts it in Public Choice II, "The entire federal budget can be viewed as a gigantic rent up for grabs by those who can exert the most political muscle." Rent seeking tends to be a bigger problem under voting institutions than under property institutions for reasons suggested by my "ratchet" and "tug-of-war" analogies. Mueller says, "We are back to the need for fairly fundamental constitutional reforms to attack rent seeking seriously."

15. Sensitivity Comparison

The "garbage in, garbage out" law works equally well for both the argument in defense of laissez faire and in defense of democratic politics. If we make the "textbook" assumptions to argue that one is attractive, we have shown that the other is, too. Thus a useful comparison requires us to make a sensitivity comparison: relax the idealizing assumptions and see which process goes to Hell faster. I discuss again my six categories of objections to both laissez faire and democracy. I conclude that while government is necessary, we shouldn't expect much from it, and even the most reliably democratic of governments carries high risks of playing negative sum games. Some means for controlling those risks seems in order.

16. Problems with Public Choice Theory

The assumptions that go into these efficiency proofs are sufficient but not necessary. Altruism apparently causes many real-world democracies to work considerably better than public choice arguments would lead us to expect. A major embarrassment to public choice theory is the fact that people vote in fairly large numbers despite the fact that good government is a public good. I argue that knowing if someone's motives are altruistic or not is more important under voting institutions than under property institutions in judging whether his behavior is beneficial to society or not. I discuss some psychological aspects of voting in terms of soccer hooliganism, role playing games, and "the rationality of irrationality". The oligarchical nature of political parties also makes public choice analysis difficult. The motives of party activists, like voters, also often defy rational analysis. It is not even clear whether logrolling, a central part of the public choice efficiency argument, is a good thing or not. On most issues, most of the voters either know very little (the "mass public") or have a professional involvement ("special interests"). Democracy depends on the exceptions to this rule, the "attentive voters." Because information about a public good is a public good, voters mainly acquire information out of curiosity or as a side effect of something else. The news media are fundamentally part of the entertainment industry. Successful welfare programs provide tangible improvements to distributive justice, but provide intangible public goods. Altruism appears to be a scarce resource.

17. A Closer Look at Intangibles

It is not always easy for Congressmen to know what their constituents want. I discuss the motives of political activists in terms of theater and religion. The role played by campaign money is hard to analyze. Political parties tend to reduce the importance of money. The uneven distribution of power within Congress is important and hard to analyze. I discuss why Congress appears to go against popular opinion on some issues such as medical marijuana, and discuss "wedge" issues in general. Because of the sensitivity of democracy to voter psychology, how well democracy works depends more on culture than does how well markets work. I discuss religion and goodwill. It is hard to relate "efficiency" to gross national product. I say more on the need for fuzzy logic in understanding distributive justice. I explain why I tend to take economic explanations more seriously than psychological or sociological ones. In some cases, social norms and myths are more important than technical points of law. Government may be necessary, but it seems dangerous and unpredictable.

18. The Malleability of Values

I discuss how economic arrangements might affect people's values. Welfare programs are often attacked from the right wing on this basis, but I focus on attacks on property institutions from the left. I reject the "strong" claim that property institutions are always or almost always worse than voting institutions, in promoting greed rather than altruism. A "weaker" claim is that property institutions discourage altruism in some cases, relative to comparable voting institutions, but not as a general rule. A "very weak" claim is that property institutions may not cause bad social norms to develop, but they are inconsistent with needed government efforts to change certain perverse social norms (ie. Southern white supremacist norms in the 1960's). I'm skeptical of the "weaker" claim, but do not dismiss it entirely. I find the "very weak" claim convincing, at least in some cases (regional, overt white supremacism). I remain skeptical of the government's ability to deal with more subtle or more widely prevalent problems with social norms.

Part 3: Libertarianism as a Coping Strategy

19. Coping Strategies

So which functions of society belong in the private sector, and which should be actively controlled by government? It would be nice to have a heuristic, an easy to use rule that gives a reasonable answer most of the time. We also need some doctrines about what to do when we suspect our heuristic is leading us astray. I think of libertarian "morality" as such a heuristic. My discussion of "morality" is closely analogous to Mill's discussion of "justice" in Utilitarianism. I also discuss Kohlberg's stages of moral development. It's important not to get too attached to a heuristic. I discuss conflicts between liberty and justice; alternate usages of the word, "morality;" and "common sense" as an assortment of alternate heuristics.

20. Flavors of Libertarianism

I discuss a number of reasons why someone might be attracted to libertarianism. Several of these are obviously bad reasons, which have little interest for me. Candidate good reasons I consider are: (1) Laissez faire is simply a good heuristic. (2) Even if laissez faire isn't such a good heuristic by itself, it's good in conjunction with "common sense" ideas that tend to err in the opposite direction. (3) Libertarianism, in addition to being a good heuristic, is a proposed "peace treaty" to stop people from playing negative sum games. Power changes hands, and libertarianism is a proposed treaty between those in power now and those who will be tomorrow. (4) A variation on the "social contract" idea is that libertarianism is attractive not so much for being a good heuristic in the short term as for being a "Schelling point," a stable, unambiguous (verifiable) position that is viewed as an alternative to endless negotiations. Perhaps politics is like a potato sack race, where it is more important to get everyone to run in the same direction than it is to take the shortest route to the finish line. (5) Libertarianism is a response to the "frog boil" problem, where the frog becomes desensitized to a gradually growing danger until it is too late. As government grows, our ability to judge whether our problems are the result of "market failures" or "policy failures" becomes progressively impaired.

21. Possible Reasons for Rigidity

Members of the Libertarian Party (LP) are notorious for being reluctant to compromise. I try to explain this in terms of my five "potentially good" reasons for being attracted to libertarianism from Chapter 20. I think reasons 1, 4, and 5 make some sense, especially 1, but only 4 and 5 have the potential to provide any justification for being reluctant to compromise, and they don't provide very much justification. I conclude that the degree of reluctance to compromise that I see even among "moderates" in the LP reflects badly on them and calls for a psychological explanation.

Part 4: My Position

22. The Four Directions

Serious political candidates need to be willing, where appropriate, to regulate and nationalize as well as deregulate and privatize. Further, if they take seriously the idea that property rights can often be redefined to ameliorate market failures (as they should!), so they should, in principle if not in current practice, also take seriously the idea of reinventing government to ameliorate policy failures. I specifically call for radical electoral system reforms, such as Instant Runoff Voting (IRV), that would increase the number of viable political parties.

23. Indefensible Positions

I discuss a number of basic political facts of life, mostly cribbed from Bernard Crick's In Defence of Politics. I criticize the argument that the welfare state and "corporate welfare" are a package deal (and that the poor would be better off if we reject the package). I discuss privatization of roads, deed restrictions vs. zoning, the defining characteristics of government and what it means to be pro-liberty, children's rights, the right to bear arms, hate crimes, term limits, corporate limited liability, the income tax, immigration, the Environmental Protection Agency (EPA), and criteria for judging changes in tax laws. Crick mentions an old Whig saying, "No constitution is better than the character of the men who work it."

24. Decision Tree

I present a decision tree (a glorified checklist) for deciding what functions (and methods) to put in the hands of government. Step 1 is to check the arguments for and against government intervention against the six classes of objections in Chapters 3-8. Step 2 is to do a reality check by considering some political and economic paradigms discussed earlier: the Prisoners' Dilemma, the "broken window" fallacy, rent seeking, rational ignorance, crowded agendas, and the attentive voter. Step 3 is to look at whether some "tripwires" are being crossed, and assess whether the risks involved are necessary and justified. These tripwires include (i) stereotypical libertarianism, (ii) creating win-win situations and keeping things simple, (iii) avoiding creating monopolies and working by consensus, (iv) "common sense" principles of justice (ie. following precedent), and (v) sharing power (conciliation and compromise), what Crick calls "politics." I elaborate on "culture wars" and free speech. Your milage may vary.

25. Conclusions

I'm satisfied with my defense of libertarianism as a heuristic, and I have made great progress in clarifying my own thinking, but in the process of doing so, I've changed my mind about some things. I started out thinking that there was an underlying wisdom to the reluctance of even moderate libertarians to compromise, at least to some extent, but not now. I am also disappointed at being able to say so little about distributive justice, other than that it's important. I thought I was defending libertarianism, but this essay may be more of an extension of libertarianism than a defense of it. I end by presenting moderate libertarians with six challenges: (i) Show me my errors, (ii) Support electoral reform, (iii) Embrace compromise, (iv) Be humble about distributional justice, (v) Distance yourselves from the anarchists, and (vi) Think seriously about how to run a government.

26. Appendix A: The Ethics of Logrolling

I argue that the stigma associated with logrolling (legislative vote trading) is misplaced and is counterproductive. The alternatives to logrolling are tyranny or gridlock, and the main effect of the stigma against logrolling is a loss of "transparency" in the way representative government works.

27. Appendix B: Education Vouchers

The government's role in education is usually justified in terms of public goods. I argue that distributive justice makes much better sense as an explanation for why government ought to be involved. However, in order to argue against educational vouchers, I claim that one pretty much has to assume widespread irrationality on the part of the parents. I reject this, and argue in favor of education vouchers (competitive outsourcing).

28. Appendix C: Foreign Policy

Go read Eric Raymond's Anti-Idiotarian Manifesto (AIM).

29. Appendix D: Rational Irrationality

Go read my review of Bryan Caplan's book, The Myth of the Rational Voter: Why Democracies Choose Bad Policies. Caplan's arguments supercede much of the material in my chapters 13 and 16. ("Modern politics is just as you should expect it to be when votes are cast by ignorant people taking advantage of a low-cost source of emotional gratification." -- Jamie Whyte)

30. Appendix E: Health Care Reform

The US health care system is inefficient and lacks transparency largely as a result of the shenanigans that the government engages in in order to hide the costs of its actions. Routine health care, insurance to cover catastrophic risks, and charity for the poor are three different problems that need to be addressed separately.

31. Appendix F: Minimum-Wage Laws

Minimum-wage laws raise the wages of some workers at the expense of causing unemployment among less-skilled workers. Most economists think these laws do more harm than good. The Earned Income Credit is a superior alternative.

32. Appendix G: Border Control and Immigration

Libertarianism makes sense only within the context of some basic level of trust in both the sovereignty of the government and in the government's commitment to protect some reasonably-defined set of its citizens' rights. The open border policies advocated by many libertarians tend to undermine this context.

Here is the long version (about 535 k).

Carol Phillips' writings
Peter Taylor's writings
Carol and Peter's home page