Tag Archives: Public goods

Open Borders and Club Goods

13 Saturday Jan 2018

Posted by in Immigration, Liberty

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The question of open borders divides libertarians as much as any. The arguments for open borders made by the likes of Bryan Caplan, Alex Tabarrok, Don Boudreaux and Sheldon Richman are in many ways quite appealing. Fewer borders means greater opportunities for gainful trade among individuals. For the U.S., the economic gains from in-migration have been unquestionable. From a pure libertarian perspective, governments should never interfere with the non-violent actions of free individuals, including freedom of movement. These great economists contend, in effect, that there is no real moral distinction between government actions that confine individuals within borders and those that keep people out, though our conciences are less burdened by the latter because the world abroad seems so large.

There is a gnawing contradiction in this viewpoint, however. It relates to the appropriate scope of “ownership”. At the link above, Caplan says:

“The only principled libertarian objection to this is that the citizens of each country are its rightful owners, so they’re entitled to regulate migration as they see fit. … But if you believe this, there is no principled libertarian objection to any act of government. Fortunately, the belief that citizens are countries’ rightful owners is crazy. The social contract is an utter myth. Contracts require unanimous consent, and no country has ever had unanimous consent.“

The Character of a Good

I contest Caplan’s assertion that any one act of government is like all others. Yes, there is always a danger of a majoritarian tyranny in any democracy. But there is also the question of sovereignty, for which borders of some kind are necessary. If policies governing those borders are established legislatively, they should be subject to checks and balances: executive consent as well as judicial review of disputes.

I also contest Caplan’s statement that ownership implies unanimous consent. In fact, there are many forms of property over which decisions do not imply unanimous consent of joint owners. One such form is the subject of what follows, and I believe that form of “ownership” is applicable to one’s citizenship or residency status.

To keep things simple, I’ll frame this discussion only in terms of citizenship. I therefore abstract from issues like green cards, visiting worker programs, and the presence of resident aliens in general. For a nation, the essence of barriers to immigration can be addressed by considering the simpler case of citizens versus non-resident non-citizens. For purposes of this discussion, if you are allowed to arrive on a nation’s shores, you will be a citizen.

If a country’s citizenship can be considered a good worth acquiring, what is its real character? It is privately possessed and not tradable, but not all goods are tradable. An important taxonomy of goods in the public finance literature is based on two dimensions: exclusivity and rivalrousness. The former is the degree to which other parties can be excluded from enjoyment or use of the good or resource.

Most goods have at least some degree of exclusivity: you can be denied admission to a concert, the use of an appliance or furniture, and even parks and port facilities. Pure public goods like national defense and the air we breath are completely non-exclusive, however. Broadcast television is non-exclusive as well, as long as you have the equipment to watch it.

Rivalrousness is the degree to which the use or enjoyment of a good precludes another’s use or enjoyment. My friend can’t eat the steak if I eat the steak. That’s rivalrous. But my friend and I can both enjoy the concert. That’s non-rivalrous. A private good is both exclusionary and rivalrous. A public good is neither.

Citizenship as a Good

Citizenship can be viewed as a bundle of attributes much as any good, but it is an extremely complex bundle: it includes the individual rights enshrined in a nation’s constitution (if any), the personal and economic opportunities available by virtue of access to in-country markets and resources, the culture(s), and any personal risk reduction provided collectively, i.e., a safety net via public support. How, then, would one classify citizenship, or its component attributes, in terms of exclusivity and rivalrousness?

First, the entire citizenship bundle has a high degree of exclusivity. A nation can decide on closed borders, or partially open borders, if it chooses to do so, just as a theme park limits its gate. That is the political decision at hand. The degree of exclusivity of individual components of the bundle matters little if the bundle itself is highly exclusive.

At a high level, citizenship itself is non-rivalrous. My citizenship does not preclude citizenship for anyone else. Therefore, at the level of the bundle, citizenship is exclusive but non-rivalrous, so it has the character of what economists call a “club good“. Citizens are already part of the club; to that extent they are joint “owners”. Like many clubs, decisions about new membership need not be unanimous.

Classification of citizenship attributes as goods is trickier. The exclusivity of citizenship makes the non-rivalrous public goods available to citizens into club goods. Once admitted, for example, you are free to engage in speech, practice a religion of your choice, own a weapon, and receive due process and habeas corpus without interfering with any other citizen’s ability to exercise the same rights. You get national defense and a judicial system. You have equality of opportunity to the extent that your pursuit of economic gain does not interfere directly with anyone else’s opportunities. On the other hand, the freedom of assembly is rivalrous to at least some extent, as we learned last year from events in Charlottesville, VA. In fact, there may be congestion limits to some of the other freedoms mentioned above. 

Access to a nation’s markets permits mutually beneficial trade to take place. An individual’s participation usually does not rule out participation by others, so it is essentially non-rivalrous. (In some markets the entry of new sellers may be limited and exclusionary.) Of course, a nation’s resources are scarce; exploiting them for gain or enjoyment necessarily prevents others from using the same resources. From the point of view of existing citizens, these resources are non-exclusive and rivalrous, and are therefore classified as “common resources”, subject to congestion effects, but they are still exclusive to those citizens. The key here is not whether there are gains from trade, but that there is some rivalrousness embedded in this citizenship attribute.

In addition to the basic rights mentioned earlier, the entire legal structure, regulatory apparatus, and the political process are complex attributes of citizenship. These bear on the limits of legal conduct: Can you buy or sell liquor on Sundays? Do businesses require licensure? Is abortion legal? And on and on. In a democracy, the ability to participate in the political process is non-rivalrous: it does not prevent others from participating. However, the range of possible outcomes of the process can also be viewed as an attribute, and these outcomes, as they are promulgated, are certainly rivalrous. If the “other” side gets extra votes, then the power of my vote is diminished. So the limits of legal conduct are exposed to political rivalry. In the case of open borders, a large number of citizens may not favor existing rules, regulations, and the allocation of public spending.

So the attributes of citizenship are mixed in terms of rivalrousness: Some are rivalrous but many are not. The citizenship bundle, at a more detailed level, is therefore a mix of club goods (exclusive but non-rvalrous) and some goods that are rivalrous. This is important, because under the classical description club goods are public goods provided privately; they are therefore under-provided from the perspective of social welfare and the Pareto criterion that a new citizens can be made better off without making any existing citizen worse off. That might not be the case in the presence of congestion effects.

Should a Club Good Be Unrestricted?

Citizenship has value at the margin to both existing citizens, who should be regarded as established club members, and non-citizens. The foregoing establishes that there are some private (exclusive and rivalrous) attributes attached to citizenship. Sometimes this is due to the impact of congestion on the provision of public goods. Patrick McNutt, in his survey of literature on “Public Goods and Club Goods“, summarizes some basic conditions under which public goods are provided by clubs:

“The public good is not a pure public good, but rather there is an element of congestion as individuals consume the good up to its capacity constraint. What arises then is some exclusion mechanism in order to charge consumers a price for the provision and use of the good. Brown and Jackson (1990, p. 80) had commented that the purpose of a club ‘is to exploit economies of scale, to share the costs of providing an indivisible commodity, to satisfy a taste for association with other individuals who have similar preference orderings’. For Buchanan and Ng the main club characteristic is membership or numbers of consumers and it is this variable that has to be optimised.“

Citizenship (or residency) is generally not price rationed, though there are certainly costs to the immigrant. I make no pretense here as to the determination of an optimal membership from a club or larger social perspective. My point is that rationing membership is a rational choice by club members, or citizens in this case.

Okay, I Like My Club

Tribal affiliations, and ultimately nation states, were a natural outgrowth of early competition for resources, especially when identifying threats from outsiders was a constant preoccupation. Territorialism was a byproduct, and with the establishment of agriculture, the peoples of these early societies probably identified strongly with their homelands.

Modern nation-states have evolved from those early patterns, and nations continue to differ in terms of language, culture, and governance. Successful nations are undoubtedly more liberal (in the classical sense) and open to trade and cross-border movement. Maybe one day all nations will be united under the principles of libertarianism… don’t count on it! For now, to one degree or another, a nation’s inhabitants have an interest in minimizing economic and political risks and retaining access to resources within their borders. I don’t believe that desire is irrational or immoral. If the inhabitants of a nation have a moral obligation to share their rights, wealth, and political process with all comers, then they must accept the possibility that their rights will be compromised, and possibly even complete upheaval. They suffer a loss of sovereignty and a loss in the expected value of their citizenship.

There is obviously no limiting principle to the open borders policy, as Tyler Cowen says. Existing citizens would be obligated to accommodate all those who land upon their shores, granting them the full rights and opportunities accorded to all other residents. Perhaps there would be economic gains in the short or long run, as most libertarians would predict. But perhaps there would be some losses along the way. Perhaps there would be political stability after a large influx of new residents, but perhaps not. And ultimately, perhaps changes in the political climate would feed back to the detriment of economic performance. One simply cannot say, a priori, how things would go. There are risks to the existing citizenry, and if they are obliged to accept those risks, those might well include having to feed, clothe and house new residents. There should be no absolute obligation to accept those risks. If the debate is about individual liberty, then surely imposing those risks via open borders would  abrogate the rights of existing citizens.

Addendum: A Note on the Goods Taxonomy

Given the two dimensions of goods discussed above, exclusivity and rivalrousness, goods are classified as follows:

  • Private goods: exclusive and rivalrous;
  • Public goods: non-exclusive and non-rivalrous;
  • Club goods: exclusive but non-rivalrous: e.g., a concert;
  • Common resources: non-exclusive but rivalrous: the air we breath; an aquifer;

Another category is sometimes defined: contestable goods, which have the character of public goods or even club goods when under light use, and are common resources when under heavy use. There is a difference between an empty park and a crowded park; or an empty road and a crowded road.

See ThoughtCo. for a good exposition on the taxonomy.

Private Incentives and Infrastructure

10 Tuesday Jan 2017

Posted by in infrastructure, Markets

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motorway-to-hell

 

 

 

 

 

 

 

Material infrastructure is fixed plant and equipment providing services considered basic to the functioning of society. That definition leaves plenty of room for interpretation, however. For example, it does not limit the meaning of “infrastructure” to facilities necessary for the provision of “public goods”, for which benefits are non-exclusive. And it encompasses facilities used by firms in certain competitive markets, such as some forms of telecommunication. The character of infrastructure tends to change over time, as new technologies lead to changes in our way of life (e.g., the cellular network). That’s even more evident when infrastructure is defined more broadly, as Walter Buhr does in “What Is Infrastructure?” His definition of material infrastructure encompasses all facilities enabling “the activation or mobilization of the economic agents’ potentialities.”

Infrastructure ≠ Government

There is a popular fallacy that infrastructure is the exclusive province of government. Infrastructure often does provide some public, non-exclusive benefits, but the willingness of users to pay is the key test of private benefits. As it happens, most infrastructure needs can be met privately and partly, if not fully, supported by user fees. That follows from the high degree of exclusivity of benefits yielded by the infrastructure. Today, privately-owned infrastructure includes communication networks, power generation and distribution, some water and sewer systems, toll roads, ports, and landfills. The presumed monopolistic nature of some infrastructural services probably encourages the notion that infrastructure must be public, but that view is largely unjustified: the services may be “monopolized” only to the extent that the relevant market is defined narrowly, such as road travel, rather than transportation. Indeed, certain kinds of infrastructure functions in markets that are fairly competitive (e.g., wireless networks).

The great thing about most private infrastructure is that owner-operators have an incentive to put it up and keep it up. So it kind of takes care of itself. I say “kind of” because there is always a degree of public involvement, from land use and environmental approval to construction permits, to licensing, to spectrum auctions, to rate regulation, and many other varieties of oversight. Aside from those considerations, if there is a need for infrastructure that is commercially-viable, the project is likely to be proposed by private interests. The funds necessary to pay for construction can be raised from private investors, rather than taxpayers. It’s not at all strange to say that private infrastructure is highly advantageous from a public finance perspective.

There are risks to private infrastructure developers, but those risks are too often borne publicly. A new facility, be it a water treatment plant or a road, might not prove to be profitable once a new revenue stream or reduction in operating costs is realized. Given those circumstances, private interests might seek additional incentives from public authorities to ensure profitbility. To the extent that the shortfall is due to an error in pricing administered by a public regulatory authority, it might be reasonable to make adjustments in the owner-operator’s favor. However, to the extent that demand falls short of the owner-operator’s expectations, it might be better to let the firm fail. That would allow the assets to be sold at a discount to a new operator who can make the cheaper investment profitable. No bailouts!

Trumpian Infrastructure Incentives

The coming Trump Administration is known to have certain steps in mind for encouraging infrastructure development. While the tax plan that has been discussed has a few questionable features, any policy that reduces corporate tax rates would increase the return to existing and prospective private infrastructure, and the profitability of private operation of public infrastructure. In addition, a proposal mentioned explicitly by Trump is a corporate tax credit for infrastructure development.

Here is where a more precise definition of infrastructure would be helpful. Would traditional categories of infrastructure investment by power, telecommunication, and water treatment companies qualify automatically? Moreover, the long timelines required in the planning and installation of most infrastructure might make it difficult to distinguish between new plans and those already in the works. Will the administration establish a bright line between infrastructure investment and run-of-the-mill corporate spending on new plant and equipment? Perhaps any form of corporate investment will qualify. These are questions that remain unanswered as we await Trump’s inauguration.

There is another public-finance dimension of the Trump infrastructure credit. Public infrastructure projects, such as roads, are frequently difficult for governments to fund because they face limits on the debt they can issue. This is emphasized by Randall O’Toole in a recent piece on the Trump credit. Instead of issuing its own debt, a government can take advantage of a large private road builder’s ability to raise funds in the capital market, agreeing to compensate the contractor over time. Thus, taxpayers will be obligated to pay-off the contractor’s debt. The term “Public-Private Partnership” has been invoked in this connection.

Private Incentives Or Central Planning?

I am never averse to reduced tax rates to the extent that taxation always distorts economic incentives. However, selective targeting of tax benefits at certain industries, specific forms of business organization (like corporations), or specific activities like capital investment is overt central planning. Overriding market incentives in this way is not desirable. (Neither are proposals to subsidize exporters and penalize importers. Tyler Cowen at the Marginal Revolution provides some salient quotes from Lawrence Summers on this point.) At this stage, Trump’s tax plan looks like central planning gone berserk.

Ideally, private investment and private infrastructure should be judged on its real merits, not on the prejudices of a central authority. To that end, I believe the Trump Administration’s intent to roll back regulatory distortions is commendable. A case in point is nuclear power generation. Despite the constant outcry against the burning of fossil fuels, there has been little emphasis on encouraging investment in new nuclear capacity. The lengthy approval process and costly regulatory requirements discourage this zero-carbon form of energy production relative to other forms of energy investment.

Users Are the Cost-Causers

I should note that O’Toole speaks favorably of “targeting” certain kinds of public infrastructure, but I think his point is that private operation of infrastructure, if not ownership, will allow markets to do the targeting more efficiently than government ever could. In particular, he notes that politicians tend to prefer new projects to the maintenance and repair of existing infrastructure, independent of the actual merit. Would relying on private operation and user fees encourage better maintenance?

“Unlike infrastructure paid for out of tax dollars, user-fee-funded projects tend to be well maintained because the agencies that manage them know they have to keep them in good shape to continue earning revenues.“

The cartoon above satirizes the consequences of providing free access to a costly facility. User fees encourage more rational patterns of use. For example, it is folly to think that projects like light rail can be financially viable when free alternatives exist. Specific highway routes under high demand must be priced in order for commuters to make rational decisions about the alternatives available to them, and for providers of transportation facilities, whether public or private, to rationally balance the resources dedicated to supporting various modes of travel.

Lower tax and regulatory burdens under the Trump infrastructure plan offer some encouragement for private development and operation of infrastructure projects. As a by-product, the plan might encourage greater reliance on user fees as a method of defraying the costs of infrastructure and promoting a more efficient allocation of resources toward infrastructure needs. However, there are unanswered questions about the details of the plan, and some of its heavy-handy features should be dispensed with.

Rainfall, Individualism and Income

23 Friday Sep 2016

Posted by in Capitalism, Collectivism

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dept-for-recording-rainfall

Highly variable rainfall in a country is associated with less individualistic attitudes, according to a provocative paper by economist Lewis Davis (HT: Marginal Revolution). He leverages this relationship to estimate a positive impact of individual responsibility on economic development. Both results are potentially important, if somewhat controversial. Davis admits that he confronted a number of measurement issues and methodological complexities.

Davis notes that the variability of rainfall creates agricultural risk. He posits that countries having to deal with such recurrent, exogenous risks tend to develop institutions that might allow risk to be shared more broadly. In other words, such uncontrollable events as droughts, destructive flooding and uneven agricultural output lead to a social tendency toward collectivism, which is also reflected in the attitudes of individual citizens. He first builds a mathematical economic model with that implication:

“… the model predicts the equilibrium level of collective responsibility will be greater where nature is more capricious.“

Davis finds that the relationship holds up empirically using cross-country data on rainfall and surveys of social attitudes. His real interest, however, is to exploit that relationship to obtain estimates of the impact of individual responsibility on economic development. The complication he grapples with is that more favorable survey ratings of individual responsibility are themselves a function of economic development, so causation runs both ways. To tackle this problem, he uses rainfall variability to create an empirical “instrument” based on survey measures of individual responsibility, and in turn uses the exogenous variation in the instrument to explain differences in per capita income. Controls are used in the fitted equations for other social and economic factors. Again, he finds that his instrument for individual responsibility is positively related to income.

Another way to summarize Davis’ results is that natural risks are associated with greater acceptance of collectivism, but collectivist attitudes are associated with lower income levels. The empirical finding of a preference for heavy reliance on the state to insure against common risks is fascinating and it comports with the theory that the government has a legitimate role in the provision of public goods, social risk mitigation being among them. One should not place too much faith in the state as a reliable problem solver, however, or as an engine of economic growth. After all, there is a good reason for the second result: an economy dominated by the public sector is doomed to long-term decline. Individual initiative and capitalism, on the other hand, are more reliable in producing long-term economic gains and ending poverty, even when the rain is spotty. General prosperity might be more difficult to achieve when the weather is fickle, but prosperity is a much better cushion against risk than government.

The Virtue of Libertarian Consistency

25 Wednesday Nov 2015

Posted by in Liberty

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Libertarians

Many on the Right of the political spectrum sincerely believe that they hold libertarian views. They might be close on some economic matters, but only some, and not on a host of social issues. Fewer on the Left make the same mistake, but it happens. Some uninformed lefties might imagine that the American Civil Liberties Union (ACLU) is representative of libertarianism, and occasionally the ACLU does take positions consistent with libertarian views. Many of these individuals, left and right, probably self-identify as libertarian only because they think it “sounds good”. After all, the root “liberty” might ring a compelling (if distant) bell, but perhaps I’m congratulating myself.

Jonah Goldberg, the conservative senior editor of National Review, wrote an interesting article a few weeks ago called “Fusionism, 60 Years Later“. In it, he describes the historical relationship between libertarianism and conservatism. Fusionism, Goldberg says, is the longstanding effort to find common ground between these two camps. He contends that most support for libertarian ideas comes from Conservatives:

“In other words, conservatives tend to be libertarian, but libertarians tend not to be conservative. …libertarians want to have their own identity, separate and distinct from that of conservatism. They’re a bit like the Canadians you meet abroad who go to almost obsessive lengths to show everyone that they aren’t American.“

I got a laugh out of that quote because it contains a grain of truth, but Goldberg knows all too well that there are substantive differences between Libertarians and Conservatives on the role of government. There are not-so-subtle departures on the basic role of government in regulating personal behavior. Libertarians, of course, believe that government almost never has a legitimate role in that area, with exceptions for the prevention and redress of various forms of aggression. Another difference is that Conservatives, like the political Left (not a typo), often favor government promotion of private business objectives, including protectionist anti-trade legislation, policies which Libertarians consistently oppose. And unlike Libertarians, Conservatives make a glaring exception to their avowed dedication to small government in their support for massive military outlays and foreign incursions in the name of protecting vital U.S. interests, which usually amount to safeguarding private economic interests abroad.

Nevertheless, Goldberg contends that Libertarians and Conservatives are all classical liberals, defined broadly:

“The Founding Fathers were all classical liberals, but … they were largely conservative in manners, morals, and faith. Their conservatism was not labeled as such because it suffused the culture and was simply taken for granted. …

Until the middle of the 20th century, the conservative side of the classical-liberal tradition in America was not cultivated the way the libertarian side was, in large part because no one thought it needed to be cultivated.“

That may be, but it does not diminish the differences that exist. Insofar as “conservatism” is about the preservation of certain institutions, such as private property, free speech, and other individual liberties, then there are areas of commonality between Conservatives and Libertarians, but full “fusion” is impossible if Conservatives cannot consistently recognize the appropriate limits of government. The power of government derives from its police power, or “legitimized” aggression to accomplish public objectives. That power must be restrained by adherence to the kinds of checks embodied in the U.S. Constitution.

Here is a quote from Goldberg’s piece giving just a bit too much relative credit to Conservatives on the subject of morality:

“… conservatives borrowed heavily from the libertarian tradition, but they also borrowed from the religious, patriotic, and moral arsenals of the Founders. That is why the libertarians have stood apart like Coptic Christians, who claim a lineage and authenticity that needs no sanction from the larger, more powerful, and more syncretic Catholic Church.“

The libertarian philosophy is grounded in two moral principles to which I’ve already referred: liberty and non-aggression (or non-coercion). The liberty of individuals is sacrosanct (as it was to the Founders) but does not extend to physically aggressive actions, including any form of theft. Liberty includes freedom of speech (the notion of “micro-aggression” is unlikely to carry much (if any) weight with most libertarians) and the freedom to defend oneself. Defined properly, aggression includes the imposition of external costs on others, such as unchecked pollution of the environment.

Ideally, “legitimized” aggression or coercion by the state extends only to preventing aggression by private parties or foreign aggressors, and to the revenue collection necessary to provide public goods desired by the polity. Defining strict limits on aggression by private and public parties provides a direct mapping to the broad extent of liberty. In other words, non-aggression itself implies liberty.

The libertarian philosophy provides a moral framework that exists comfortably alongside a wide range of religious beliefs as well as atheism. However, it cannot be denied that differing religious beliefs among libertarians often inform different positions when the rights of individuals stand in conflict.

There is no reason to assume that Libertarians lack patriotism, as Goldberg comes close to implying. However, patriotism should never be used to justify aggression, whether that involves limiting expression or unnecessarily entering into conflicts abroad. So Goldberg is stretching when he credits Conservatives with a better grip on moral or patriotic principles than Libertarians.

Goldberg ends his piece with misgivings about the potential for Donald Trump to hijack the conservative movement, and in this I am sympathetic. About Trump, he says:

“He makes little or no effort to celebrate conservatism as a defense of the American tradition of liberty. He never talks about the Constitution, nor plausibly about religion. He makes scant mention of freedom. Instead, he taps into deep reservoirs of resentment and a kind of nationalism that has little to do with patriotism rightly understood.“

Goldberg’s piece serves as a reminder of Friedrich Hayek’s great essay, “Why I Am Not a Conservative“. While not referencing this essay explicitly, Goldberg mentions that Hayek and other European political philosophers have known a different kind of conservatism than what we know in the U.S. In Europe, conservatives:

“... sought to conserve the absolute rule of Church and Throne. The American Founders sought to overthrow even the partial rule of Church and Throne. And therein lies all the difference. In Europe, conservatism was understood as the opposite of classical liberalism. The reverse was the case in America, as Friedrich Hayek observed: ‘What in Europe was called ‘liberalism’ was here the common tradition on which the American polity had been built: thus the defender of the American tradition was a liberal in the European sense.’“

Point well taken, and Hayek understood that difference all too well. His essay focuses on certain unflattering aspects of conservatism that ring true of the American version as well, including certain nationalistic and authoritarian tendencies, and a penchant for government involvement when it suits them:

“… neither moral nor religious ideals are proper objects of coercion, while both conservatives and socialists recognize no such limits. I sometimes feel that the most conspicuous attribute of [classical] liberalism that distinguishes it as much from conservatism as from socialism is the view that moral beliefs concerning matters of conduct which do not directly interfere with the protected sphere of other persons do not justify coercion.“

My attraction to libertarian philosophy has much to do with the simple appeal of liberty and the ugliness of aggression. However, I think my original attraction to libertarianism was strongly related to the superiority of market forces as a form of social organization. Market forces cannot operate very effectively without liberty, and the healthy maintenance of liberty is facilitated by the superior resource allocation made possible by market forces. What a beautiful symbiosis!

Must Support For “Family Planning” Be Compelled?

05 Monday Oct 2015

Posted by in Big Government, Liberty, Presumptive rights, Property Rights

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Fund Me

Where do Libertarians stand on the issue of federal funding of Planned Parenthood? What sort of balance should be struck between the rights of conscientiously-objecting taxpayers and the rights of women to use Planned Parenthood (PP) services? The correct answer has nothing to do with abortion, an issue on which Libertarians lack unanimity. However, the existence of moral objections by any segment of society, whether considered valid by a majority or not, is an important consideration.

Do Individual Freedoms Require Taxpayer Support?

Sheldon Richman discusses the funding question on his Free Association blog in “Planned Parenthood, Social Peace and  the Libertarian approach“. He first makes a basic point: “… no one’s freedom is violated by lack of access to taxpayer money.” I agree, but this statement requires some context. For Libertarians, the baseline is a society in which individual liberty is a presumption. That cannot be the case if taxes and transfers dominate our economic lives. If we’re all busy picking each other’s pockets, then perhaps anyone can lay claim to a dollop of public funds to pay for any damn thing they want. But in a society that explicitly limits the powers of coercive government, private individuals cannot, on the public dime, lay claim to whatever they wish to compel from others. What they desire, after all, is almost always available privately. Therefore, the denial of public funding for PP does not constitute a denial of anyone’s rights.

Individual’s are free to exercise their reproductive or non-reproductive rights as they see fit, and to pay for related services themselves or by seeking a benefactor. Nothing is deprived to that individual other than an invalid claim on the belongings of others.

“Individual rights ultimately boil down to the single right to be free from aggression, that is, to self-ownership. Rights would be defined out of existence if they could be ignored whenever doing so would make someone else’s objectives easier to accomplish. Such an approach to “rights” would turn rights theory on its head by making us a mere means to other people’s ends rather than ends in ourselves.“

Consistent Application of Property Rights

Richman asserts that the right of ownership of one’s body applies equally to the right of individuals to the income they produce:

“Ironically, the right to choose abortion is defended as an application of the right of women to their bodies, that is, as a property right (self-ownership). Another implication of the right to one’s own body is the right to control the fruits of one’s labor (income). No coherent theory of rights can permit a clash of the right to one’s body with the right to the fruits of one’s labor. Thus implicit in the pro-choice case is an argument against tax funding of Planned Parenthood (and anything else), that is, against taxation itself.“

Leftist elites say that a denial of public funding for PP is tantamount to a denial of service to low-income women. Richman asks the elites to put up or shut up: if they believe the services in question are critical, they are free support PP financially, but they much prefer to extract resources from taxpayers without regard to possible moral objections.

Protection of Religious and Moral Principles

Richman adds the following thoughts on public funding of Planned Parenthood near the end of his post:

“Reasonable people of all persuasions should see that it is simply unreasonable to force people to finance an organization they find morally offensive. Thomas Jefferson famously said, ‘To compel a man to furnish contributions of money for the propagation of opinions which he disbelieves is sinful and tyrannical.’ Compelling men and women to furnish contributions for the performance of services they deem immoral (whether or not they are) is worse.“

Supporters of public PP funding have sought to deflect morality-based opposition with the contention that abortions represent only 3% of PP’s services, but Slate debunked that claim over two years ago. It was based on a count of tests and procedures performed, not on revenue. PP also claims that tax funds never pay for abortion, but as Richman points out, once available, the revenue is fungible and may be used to cover the cost of any procedure. In short, the argument is specious.

The Public Good Argument Is Weak

One more elephant in the PP funding debate concerns the appropriate functions of government. Does PP provide a truly “public” good, one having benefits that are nonexclusive to the primary user? Health services are sometimes assumed to confer public benefits; that is an easy argument in the case of infectious diseases and to some extent for medical research, but not for most health services. The benefits of individual health services are largely private, providing little justification for government funding of PP from a public finance perspective.

Collective Action Needs Strict Limits

Collective action should be confined to the provision of public goods, but even then it can be fraught with conflicts, such as the difficulty of accommodating pacifists during wartime. A truly liberal society will do all it can to accommodate diverse beliefs by allowing objectors to opt out, if possible, or avoiding the funding of private activities, especially those over which there is significant dissent. Under no circumstances should one be compelled to pay for private services that they find to be morally objectionable.

Will ET Be a Socialist?

19 Wednesday Aug 2015

Posted by in Capitalism, Socialism, Space Travel

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If we are ever visited or contacted by agents from an extraterrestrial civilization, what kind of society will they come from? The issue is given scant attention, if any, in discussions of extraterrestrial life, at least according to this interesting piece in The Freeman by B.K. Marcus. The popular view, and that of many scientists, seems to be that the alien society will be dominated by an authoritarian central government. Must that be the case? Marcus notes the negative views taken by such scientific authorities as Neil deGrasse Tyson toward laissez faire capitalism, and even Carl Sagan “… could only imagine science funded by government.” Of course, Tyson and Sagan cannot be regarded as authorities on economic affairs. However, I admit that I have fallen into the same trap regarding extraterrestrial visitors: that they will come from a socialist society with strong central command. On reflection, like Marcus, I do not think this view is justified.

One explanation for the default view that extraterrestrial visitors will be socialists is that people uncritically accept the notion that an advanced society is a planned society.  This runs counter to mankind’s experience over the past few centuries: individual freedom, unfettered trade, capitalism and a spontaneous social order have created wealth and advancement beyond the wildest dreams of earlier monarchs. Anyone with a passing familiarity with data on world economic growth, or with F.A. Hayek, should know this, but it Is often overlooked. Central planners cannot know the infinitely detailed and dynamic information on technologies, resource availability, costs and preferences needed to plan a society with anything close to the success of one arranged through the voluntary cooperation of individual actors.

Many of us have a strong memory of government domination of space exploration, so we tend to think of such efforts as the natural province of government. Private contractors were heavily involved in those efforts, but the funding and high-level management of space missions (NASA in the U.S.) was dominated by government. Today, private space exploration is a growth industry, and it is likely that some of the greatest innovations and future space endeavors will originate in the private sector.

Another explanation for the popular view is the daunting social challenges that would be faced by crews in interstellar travel (IST). Given a relatively short life span, a colonizing mission would have to involve families and perhaps take multiple generations to reach its destination. There is a view that the mini-society on such a ship would require a command and control structure. Perhaps, but private property rights and a certain level of democratization would be advantageous. In any case, that carries no implication about the society on the home planet nor the eventual structure of a colony.

A better rationale for the default view of socialist ETs involves a public goods argument. The earth and mankind face infrequent but potentially catastrophic hazards, such as rogue asteroids and regions of strong radiation as the sun orbits the center of the Milky Way galaxy. These risks are shared, which implies that technological efforts to avert such hazards, or to perpetuate mankind by colonizing other worlds, are pure public goods. That means government has a classic role in providing for such efforts, as long as the expected benefits outweigh the costs. The standard production tradeoff discussed in introductory economics classes is “guns versus butter”, or national defense (a pure public good) versus private consumption. IST by an alien civilization could well require such a massive diversion of resources to the public sector that only an economically dominant central government could manage it. Or so it might seem.

As already noted, private entrepreneurs have debunked the presumed necessity that government must dominate space exploration. In fact, Elon Musk and his company SpaceX hope to colonize Mars. His motives sound altruistic, and in some sense the project sounds like the private provision of a public good. Here is an interpretation by Tim Urban quoted at the link (where I have inserted a substitute for the small time-scale analog used by the author):

“Now—if you owned a hard drive with an extraordinarily important Excel doc on it, and you knew that the hard drive pretty reliably tended to crash [from time to time] … what’s the very obvious thing you’d do?
You’d copy the document onto a second hard drive.
That’s why Elon Musk wants to put a million people on Mars.”

Musk has other incentives, however. The technology needed to colonize Mars will also pay handsome dividends in space mining applications. Moreover, if they are successful, there will come a time when Mars is a destination commanding a fare. Granted, this is not IST, but as technology advances through inter-planetary travel and colonization, there is a strong likelihood that future Elon Musks will be involved in the first steps outside of our solar system.

While SpaceX has raised its capital from private sources, it receives significant revenue from government contracts, so there is a level of dependence on public space initiatives. However, the argument made by Marcus at the first link above, that IST by ETs is less likely (or impossible) if they live under a socialist regime, is not based primarily on recent experience with private entrepreneurial efforts like Musk’s. Instead, it has to do with the inability of socialist regimes to generate wealth, especially the massive wealth necessary to accomplish IST.

Discussions of ETs (or the lack thereof) often center around a question known as the  Fermi Paradox, after the physicist Enrico Fermi. He basically asked: if the billions and billions of star systems, even in our own galaxy, are likely to harbor a respectable number of advanced civilizations, where are they? Why haven’t we heard from them? My friend John Crawford objects that this is no paradox at all, given the vastness of space and the difficulty and likely expense of IST. There may be advanced civilizations in the cosmos that simply have not been able to tackle the problem, at least beyond their own stellar neighborhood. No doubt about it, IST is hard!

I have argued to Crawford that there should be civilizations covering a wide range of development at any point in time. In only the past hundred years, humans have increased the speed at which they travel from less than 50 miles per hour (mph) to at least 9,600 mph. The speed of light is approximately 270,000 times faster that that! At our current top speed, it would take almost 50% longer to reach our nearest neighboring star, Alpha Centauri, than the entire span of human existence to-date. With that kind of limitation, there is no paradox at all! But I would not be surprised if, over the next 1,000 years, advances in propulsion technology bring our top speed to within one-tenth of the speed of light, and perhaps much more, making IST a more reasonable proposition, at least in our “neighborhood”. There may be civilizations that have already done so.

Answers to the Fermi Paradox often involve a concept called the Great Filter. This excellent HuffPo article by Tim Urban on the Fermi Paradox provides a good survey of theories on the Great Filter. The idea is that there are significant factors that prevent civilizations from advancing beyond certain points. Some of these are of natural origin, such as asteroids and radiation exposure. Others might be self-inflicted, such as a thermonuclear catastrophe or some other kind of technology gone bad. Some have suggested that the Large Hadron Collider in Switzerland could be a major hazard to our existence, though physicists insist otherwise. Another example is the singularity, when artificial intelligence overtakes human intelligence, creating a possibility that evil machines will do us in. The point of these examples is that some sudden or gradual development could prevent a civilization from surviving indefinitely. These kinds of filters provide an explanation for the Fermi Paradox.

More broadly, there could be less cataclysmic impediments to development that prevent a society from ever reaching an advanced stage. These would also qualify as filters of a sort. Perhaps the smart ETs lack, or failed to evolve, certain physical characteristics that are crucial for advancement or IST. Or their home planet might be light on certain kinds of resources. Or perhaps an inferior form of social organization has limited development, with inadequate wealth creation and technologies to transcend the physical limitations imposed by their world. On a smaller than planetary scale, we have witnessed such an impediment in action many times over: socialism. The inefficiencies of central planning place limits on economic growth, and while high authorities might dictate a massive dedication of resources toward science, technology and capital-intensive space initiatives, the shift away from personal consumption would come at a greater and greater cost. The end game may involve a collapse of production and a primitive existence. So the effort may be unsustainable and could lead to social upheaval; a more enlightened regime would attempt to move the society toward a more benign allocation of resources. Whether they can ever accomplish IST is at least contingent on their ability to create wealth.

Socialism is a filter on the advancement of societies. ETs capable of interstellar travel could not be spawned by a society dominated by socialism and central planning. While government might play a significant role in a successful ET civilization, one capable of IST, only a heavy reliance on free-market capitalism can improve the odds of advancing beyond a certain primitive state. Capitalism is a relatively easy ticket to the wealth required for an advanced and durable civilization, and conceivably to the reaches of the firmament.

Unfortunately, there is absolutely no guarantee that capitalistic ETs will be friendly  toward competing species, or that they will respect our property rights. They might be big, smart cats and find us mouse-like and quite tasty. Their children might make us perform circuses, like fleas. In any case, if ETs get this far, it’s probably because they want our world and our resources. My friend Crawford says that they won’t get here in any case. He believes that the difficulty of IST will force them to focus on their own neighborhood. Maybe, but on long enough time scales, who knows?

I would add a caveat to conclusions about the strength of the filters discussed above. A capitalistic society might reach a point at which it could send artificially intelligent, self-replicating machines into space to harvest resources. Those machines might well survive beyond the end of the civilization that created them. Conceivably, those machines could act autonomously or they could take coordinated action. But we haven’t heard from them either!

For a little more reading, here is SETI‘s description of the Fermi Paradox, and here is a post from io9 on the Great Filter.