Monday, June 27, 2005

Practical Libertarianism -- A Summary

I have posted "Practical Libertarianism -- A Summary" at Liberty Corner II. That post completes and summarizes the series of essays entitled "Practical Libertarianism for Americans." Supporting details and links to additional sources can be found in the preceding posts of the series.

Some of my favorite bits:
My focus is on American libertarianism because the Constitution of the United States of America holds the promise of liberty. Building on that promise, Americans can strive to perfect liberty in the United States. But the rest of the world isn't bound by our Constitution, and it is foolish to think that the rest of the world prizes America's liberty. America's sovereignty and strength is the shield of America's liberty, imperfect as it may be.

What is libertarianism, and why should you embrace it? Here is a formal definition of libertarianism...:
Libertarianism is a political philosophy which advocates individual rights and a limited government. Libertarians believe that individuals should be free to do anything they want, so long as they do not infringe upon what they believe to be the equal rights of others. In this respect they agree with many other modern political ideologies. The difference arises from the definition of "rights". For libertarians, there are no "positive rights" (such as to food, shelter, or health care), only "negative rights" (such as to not be assaulted, abused or robbed). Libertarians further believe that the only legitimate use of force, whether public or private, is to protect these rights.
Here's my rendition:
If you are doing no harm to anyone, no one should harm you physically, coerce you, defraud or deceive you, steal from you, or tell you how to live your life. "No one" includes government, except to the extent that government is empowered -- by the people -- to defend life, liberty, and property through the circumscribed use of police, courts, and armed forces....
Fundamentalist libertarians argue that the only right is liberty, and that it is a natural right with which human beings are endowed a priori. In one rendition, liberty is immanent -- something that simply is in human nature, perhaps as a gift from God. In another rendition, humans are endowed with liberty as a logical necessity, because humans own themselves.

But appeals to immanence and self-ownership are no more meaningful than appeals to faith. Such appeals fail because they take liberty as a first principle. Liberty, which is a condition of existence, cannot be a first principle, it can only serve the first principle of existence, which is self-interest....

Rights -- though they can exist without the sanction of government and the protection of a state -- are political. That is, although rights may arise from human nature, they have no essence until they are recognized through interpersonal bargaining (politics), in the service of self-interest. It is bargaining that determines whether we recognize only the negative right of liberty, or the positive right of privilege as well. The preference of human beings -- revealed over eons of coexistence -- is to recognize both liberty (usually constrained to some degree) and privilege (which necessitates constraints on liberty).

The problem for libertarians, therefore, is to convince the body politic of two complementary truths: Self-interest dictates that liberty should be the paramount right. The recognition of privilege as a co-equal right undermines the benefits that flow from liberty....

The logical incompatibility of liberty and privilege doesn't keep most people from wanting both. People want to be left alone, but it seems that almost everyone also yearns for some version of the welfare-regulatory state. People seem to believe that government does things that are more valuable than the freedom of action they forego because government does things. Most Americans simply don't understand the true costs and illusory benefits of the welfare-regulatory state.

Absent the welfare-regulatory state, most of the poor would be rich, by today's standards. And those who remain relatively poor or otherwise incapable of meeting their own needs -- because of age, infirmity, and so on -- would reap voluntary charity from their affluent compatriots....

[T]he bottom line:
  • Real GDP (in year 2000 dollars) was about $10.7 trillion in 2004.
  • If government had grown no more meddlesome after 1906, real GDP might have been $18.7 trillion (from the chart entitled "Real GDP: 1870-1906, 1907-2004").
  • That is, real GDP per American would have been about $63,000 (in year 2000 dollars) instead of $36,000.
  • That's a deadweight loss to the average American of more than 40 percent of the income he or she might have enjoyed, absent the regulatory-welfare state.
  • That loss is in addition to the 40-50 percent of current output which government drains from the productive sectors of the economy.
  • Moreover, the stocks of corporations in the S&P 500 are currently undervalued by one-third because of the depradations of the regulatory-welfare state, which have lowered investors' expectations for future earnings. (The effect of those lowered expectations is shown in the chart entitled "Real S&P Index vs. Real GDP.") And that's only the portion of wealth that's represented in the S&P 500. Think of all the other forms in which wealth is stored: stocks not included in the S&P 500, corporate bonds, mortgages, home equity, and so on.
That is the measurable price of privilege -- of ceding liberty piecemeal in the mistaken belief that one more government program, a bit more income redistribution, or yet another regulation will do little harm to the general welfare, and might even increase it....

When people are deprived of incentives through taxation, regulation, and welfare, they are less able and willing to strive for themselves. And it is self-striving that leads people to do things that are valued by others. Regulation and welfare (the "free lunch") impose costs (bureaucratic overhead), where there otherwise would be no costs, and distort the free-market signals that tell people how they can do better for themselves by doing better for others....

If liberty is so bounteous, why don't we enjoy it in full? Why are our lives so heavily regulated and legislated by so many federal, State, and local agencies at such a high cost? What happened to the promise of liberty given in the Declaration of Independence and Constitution? The answers to those questions are bound up in human nature and the nature of governance in a democracy....

It is easy to endorse liberty in principle and yet be its enemy in practice. Our need for control and our baser instincts lead many of us to become politicians and cause most of us to succumb to political rhetoric. Most of us simply lack the requisite temperament, or vision, for libertarianism.

Thomas Sowell, in A Conflict of Visions: Ideological Origins of Political Struggles, posits two opposing visions: the unconstrained vision (I would call it the idealistic vision) and the constrained vision (which I would call the realistic vision)....

In sum, it's all about trust and its opposite: control. You can trust others to do the right thing because it's to their benefit to do so, as it is in free markets and free societies. Or you can control others, economically and socially, through a morass of statutes, regulations, and judge-made law.

Trust doesn't mean an absence of rules, but the rules have only to be minimal, socially evolved rules of acceptable conduct, such as the Golden Rule or the last six of the Ten Commandments. The clearer and more intuitive the rules, the more likely they are to be enforced by self-interest, by fear of social opprobrium, and by pride in reputation -- with swift, sure, and hard justice as a backup.

But none of that goes down well with those who think that the road to happiness must be paved with hard-and-fast rules for everything and everyone. Otherwise, how would people know what to do?

The demand for control is fed by economic illiteracy, the prevalent failure to grasp such simple principles as these:
  • Incentives matter. Taxation, redistribution, and regulation result in the reduction and misdirection of economic activity and social trust.
  • There's no free lunch. Government can't provide something for nothing. It never could, it never will. Every governmental action has an opportunity cost: that which the private sector could do with the same resources. There's no such thing as "federal money" or "government money"; there's only "our money."
  • Government doesn't add value. At best it protects what we value, by defending us at home and abroad.
  • The economy isn't a zero-sum game. Bill Gates is immensely wealthy because he has created things that are of value to others. When Indian computer geeks man call centers for lower salaries than those of American computer geeks, it makes both Indians and Americans better off.
  • There's no such thing as "market failure." Rather, there is only failure of the market to provide what some people think it should provide. Even defense and justice (both classic examples of a "public good") could be provided by the market, as anarcho-capitalists aver, but minarchists (as I am) fear the consequences (warlord rivalry) and reluctantly trust in the state for those essential underpinnings of a free society.
Most people simply don't understand the consequences of the rules that they so fervently seek to impose on others. They have little idea of the measurable costs of intervention -- the 40-to-50 percent of GDP that goes into government programs, for instance -- and they have no idea of the hidden costs of that intervention -- the additionale of an additonal 40 percent of income and untold amounts of wealth. They simply cannot comprehend the indivisibility of economic and social liberty (though the Supreme Court's recent decisions in Raich and Kelo may open some eyes).

Control-seeking politicians -- most of whom also suffer from economic illiteracy -- are able to draw power from the masses by appealing to the insecurity and economic illiteracy of the masses. Once having drawn that power, they seek always to aggrandize it. What happens, then, is a ratcheting of government power, in response to never-ending demands for government to "do something" -- because government's previous efforts to "do something" have inevitably failed to achieve nirvana.

Thus we have been following a piecemeal route to serfdom -- adding link to link and chain to chain -- in spite of the Framers' best intentions and careful drafting. Why? Because the governed -- or dominant coalitions of them -- have donned willingly the chains that they have implored their governors to forge. Their bondage is voluntary, though certainly not informed. But their bondage is everyone's bondage....

Unchecked democracy undermines liberty and its blessings. Unchecked democracy imposes on everyone the mistakes and mistaken beliefs of the controlling faction. It defeats learning. It undoes the social fabric that underlies civility. It defeats the sublime rationality of free markets, which enable independent individuals to benefit each other through the pursuit of self-interest. As "anonymous" says, with brutal accuracy, "Democracy is two wolves and a lamb voting on lunch."...

[A] not-so-funny thing has happened on the way to the state of liberty foreseen by Madison and the other Framers: Human nature has overcame constitutional obstacles. The governed and their governors have conspired to undermine the Constitution's checks and balances. People, given their mistrustful and ignorant nature, have turned to government for "solutions" to their "problems." Government, in its turn, has seized whatever power is necessary to go through the motions of providing "solutions." For rare is the legislator who doesn't want to legislate, the executive who doesn't want to act, and the judge who doesn't want to exercise his judgment by interpreting the law rather than simply apply it....

[T]he "checks and balances" in the Constitution are there to limit the federal government's ability to act, even within its sphere of authority. In the legislative branch neither the House of Representatives nor the Senate can pass a law unilaterally. In his sole constitutional role -- as head of the executive branch -- the President of the United States must sign acts of Congress before they become law, and may veto acts of Congress -- which may, in turn, override his vetoes. From its position atop the judicial branch, the Supreme Court is supposed to decide cases "arising under" (within the scope of) the Constitution, not to change the Constitution without benefit of convention or amendment.

The Constitution itself defines the sphere of authority of the federal government and balances that authority against the authority of the States and the rights of citizens. Although the Constitution specifies certain powers of the federal executive and judiciary (e.g., commanding the armed forces and judging cases arising under the Constitution), federal power rests squarely and solely upon the legislative authority of Congress, as defined in Article I, Sections 8, 9, and 10. The intentionally limited scope of federal authority is underscored by Amendments IX and X.

In spite of all that, we now have myriad statutes, regulations, and court rulings through which the federal government -- acting at the people's behest and in their name -- has arrogated unconstitutional power to itself (and sometimes to the States). And the people suffer....

At this moment in history, federalism seems the most promising option because the Left is now beginning to understand that the power of the federal government may be used not only to advance its agenda but also to thwart that agenda. Leftists, like conservatives and pragmatic libertarians, may be willing to settle for a "good" solution rather than hold out for the "best" of all possible worlds. But, as I will explain, the way to federalism isn't through a collaboration between Left and Right....

In summary, the Left's vision of federalism is to devolve the central government's acquired anti-libertarian powers to somewhat less remote commissars at the State and local level. The Left simply isn't to be trusted as a partner in the shaping of a new federalism. A pro-libertarian federalism would not only limit the power of the central government but would also limit the power of State and local governments to advance the Left's anti-libertarian agenda.

The only way to advance pro-libertarian federalism is to ensure that the Left neither controls the central government nor has little influence over its policies. This is especially true of the U.S. Supreme Court. For the surest way to return to a form of federalism that, in the main, advances liberty and prosperity is through Court rulings of the kind so feared by publius and his ilk: "the overruling of the post-New Deal regulatory state."

Something resembling pro-libertarian federalism will come about only if a Republican president, aided by a strongly Republican Senate, is able to stock the courts with judges who are committed to the restraint of government power -- at all levels of government. (Janice Rogers Brown is that kind of judge.)

Certainly not all decisions by all Republican appointees to the bench will satisfy all libertarians, many of whom seem to focus on narrowly tailored "rights," such as abortion and gay marriage. But by siding with the Left on such issues, libertarians effectively abjure more basic rights -- rights that broadly affect the ability of most Americans to pursue happiness -- such as freedom of speech, freedom of association, and freedom of contract.

In the real world there are real choices. The real choice for libertarians is between what seems "best" for a few and what is actually "better" for the many. I choose the latter, without hesitation.

Pro-libertarian federalism is the best practical way to redeem the promise of liberty. The surest route to pro-libertarian federalism, it seems to me, can be found through the Republican Party. The GOP may not be reliably anti-statist, but it is less statist than the Left. And it is more likely to defend our basic rights -- in the courts, in the streets, and in foreign fields.