Sheldon Richman

TGIF: Immigration and Liberty

by Sheldon Richman | Jun 2, 2023 | Economics, Featured Articles, Foreign Policy, Justice, Libertarianism, Politics, Sheldon Richman, TGIF

Forbidding freedom of movement to aspiring migrants strikes at the liberty not only of those individuals but also of citizens and legal residents of the United States. That’s the way it is with immigration. Indeed, that’s the way it is with freedom. The government can’t violate the freedom of some peaceful people without also violating the freedom of others.

Ilya Somin, who teaches law at George Mason University and is a constitutional scholar with the Cato Institute, makes this point in “Three Constitutional Issues Libertarians Should Make Their Own.” (The other two issues his title refers to are zoning and racial profiling.) Somin also wrote the book Free to Move: Foot Voting, Migration, and Political Freedom.

“Immigration restrictions,” he writes, “massively restrict liberty and degrade human welfare. By barring entry to hundreds of thousands of people who seek freedom and opportunity in the United States, the federal government massively restricts the liberty of would‐be immigrants and American citizens alike.”

The harm to aspiring migrants is obvious. People seeking to escape crushing poverty and/or oppression are denied the freedom to move to a safer and more productive place. They are condemned to deprivation, misery, and pain at the hands of the government and gangs. (The U.S. war on drug makers and merchants in Latin America is the big reason for this.) By what right are they condemned? “Legal” immigration is more of a theoretical fiction than a real thing. Somin writes:

In theory, they can join the “line” and wait to enter legally. But for most, that line is either decades‐long or nonexistent. And for the most part, these exclusions are based on arbitrary circumstances of parentage and place of birth, of a kind libertarians and others in the liberal political tradition consistently reject in other contexts.

He goes on: “Less widely appreciated, even by many libertarians, is the massive negative effect of immigration restrictions on the liberty of current American citizens.” We don’t usually think of immigration this way. (Political philosopher Chandran Kukathas does.) But every person represents an American’s opportunity for gains from trade, friendship, and more intimate relationships, all the things that promote flourishing. Immigration controls control Americans too. As Somin writes:

Immigration restrictions bar millions of Americans from engaging in economic and social transactions with potential immigrants. It closes off Americans from hiring immigrant workers, getting jobs at businesses founded by immigrants (who establish such enterprises at higher rates than native-born citizens), renting property to immigrants, and benefiting from scientific and economic innovations to which immigrants also contribute at higher rates than natives.

Those who lament the government-made mess at the border have never understood that constructive responses to the new potential employees, buyers, tenants, etc. would privately and spontaneously arise if border crossing was legal.

Somin adds that “No other current U.S. government policy restricts liberty more than immigration exclusion does—and that’s true even if we focus solely on the liberty of native‐born citizens, especially economic freedoms.”

The prevention of gains from trade has profound and negative consequences for the production of wealth. Somin: “Economists estimate that free migration throughout the world would double global domestic product. That’s an enormous chunk of lost wealth for immigrants and native‐born citizens alike.”

Think of the abundance of goods, the new things, and the low prices that we’re all missing out on! (See Bryan Caplan’s Open Borders for details.)

Somin also sees constitutional problems with the restrictions that he laments has been neglected by even most libertarian legal scholars (including himself), not to mention others, such as conservatives, who claim to be staunch constitutionalists. “It’s far from clear,” he writes, “that the original meaning of the Constitution even gives the federal government a general power to restrict immigration in the first place.”

Nothing in the text specifically grants Congress or the president such authority, and leading Founding Fathers—including James Madison—argued that no such power existed. It took more than a century for the Supreme Court to rule—in the 1889 Chinese Exclusion Case—that the federal government does in fact have this unenumerated power. And that decision is based on highly dubious reasoning and tinged with racism.

Somin does not foresee an imminent overturning of the ruling, but he would like to see assaults on “extensions of that ruling that have largely immunized immigration restrictions from constitutional constraints that apply to virtually every type of government policy.” For example:

Immigration detention and deportation proceed with far weaker due process protections than other severe deprivations of liberty. Due process is so lacking in the system that Immigration and Customs Enforcement and other agencies have detained and sometimes even deported thousands of American citizens before they figured out their error. Such detention with little or no due process would not be tolerated elsewhere.

But do “illegal” immigrants have rights supposedly protected by the Constitution? Somin replies: “A few constitutional rights are explicitly confined to U.S. citizens. But the vast majority are phrased as general constraints on government power, and protect citizens and noncitizens alike.” Thus, “[t]he exemption of immigration restrictions from many normal constitutional constraints on government power has no basis in the text or original meaning of the Constitution.”

So he wants an end to the many double standards. That “would curtail many of the worst abuses of the current migration regime, and perhaps set the stage for further progress. Even incremental improvement could make the difference between freedom and oppression for many thousands of people.”

Hear, hear!

TGIF: The Knowledge that Only Free Markets Disclose

by Sheldon Richman | May 26, 2023 | Economics, Featured Articles, Libertarianism, Sheldon Richman, TGIF

As a follow-up to my recent article about F. A. Hayek’s classic article “The Use of Knowledge in Society” (1945), I thought it worth extending Hayek’s exploration of this area of social theory. In 1968 the Nobel laureate-economist delivered a lecture in German known in English as “Competition as a Discovery Procedure.” It’s an alluring title, and anyone concerned with what makes for a good and prosperous society should be familiar with Hayek’s basic point.

Hayek gets right to it. He notes that standard macroeconomists are guilty of having “investigated competition primarily under assumptions which, if they were actually true, would make competition completely useless and uninteresting.” By that, he meant, “If anyone actually knew everything that economic theory designated as ‘data,’ competition would indeed be a highly wasteful method of securing adjustment to these facts.”

In other words, if all the “data” were actually accessible data, solving society’s scarcity problem would be a piece of cake, at least if the government’s computer was powerful enough. (I’m led to understand that, fortunately, many economists have advanced since he gave this lecture, probably in part because of his challenge.)

“Hence,” Hayek went on,

it is also not surprising that some authors have concluded that we can either completely renounce the market, or that its outcomes are to be considered at most a first step toward creating a social product that we can then manipulate, correct, or redistribute in any way we please.

Unfortunately, lots of such people are still around today.

Hayek (like his teacher Ludwig von Mises) knew that he needed to show that Adam Smith’s “system of natural liberty” performed a critical service to mankind that could not be otherwise performed: the production of knowledge that is needed in a changing world of scarcity in which each individual must make plans but also be ready to adjust his or her plans in light of what other free individuals are doing. And that’s what Hayek did, building on Mises and others. Hayek made contributions to the economic, or “practical,” case for freedom that have been woefully unappreciated. The Austrian school of economics that Hayek was part of needs to be discussed more than ever.

Just as any sort of contest would be pointless if we infallibly knew the outcome in advance, Hayek wrote, so would marketplace competition. He considered “competition systematically as a procedure for discovering facts which, if the procedure did not exist, would remain unknown or at least would not be used.” (Emphasis added.)

(Although, Hayek’s German title, Der Wettbewerb als Entdeckungsverfahrenh, has been translated as “competition as a discovery procedure.” I regard the word process as more appropriate because, unlike procedure, it suggests improvisation, spontaneity, and serendipity. Hayek’s work overflows with an understanding of what he called spontaneous, or unplanned, order.)

Hayek reiterated his theme from “The Use of Knowledge in Society” even as he extended it. He wanted to know how can we even identify goods apart from what the market discloses over time through free producer and consumer action.

Which goods are scarce, however, or which things are goods, or how scarce or valuable they are, is precisely one of the conditions that competition should discover: in each case it is the preliminary outcomes of the market process that inform individuals where it is worthwhile to search. Utilizing the widely diffused knowledge in a society with an advanced division of labor cannot be based on the condition that individuals know all the concrete uses that can be made of the objects in their environment. Their attention will be directed by the prices the market offers for various goods and services.

Bottom line: government administrators may be able to give orders, but they cannot benefit the population. The Soviet Union no doubt used up resources making things that few people wanted. Hayek went on:

This means, among other things, that each individual’s particular combination of skills and abilities—which in many regards is always unique—will not only (and not even primarily) be skills that the person in question can recite in detail or report to a government agency. Rather, the knowledge of which I am speaking consists to a great extent of the ability to detect certain conditions—an ability that individuals can use effectively only when the market tells them what kinds of goods and services are demanded, and how urgently.

It’s not magic that produces the knowledge that makes abundance possible for everyone. It’s freedom of action, contract, and private property in a legal-political environment in which people peacefully and cooperatively pursue their happiness. The discoveries Hayek was talking about can take place only when people can 1) freely produce and offer products and services to others and 2) freely buy or not buy according to their own judgment. This includes labor services. Without that freedom, which is limited if not precluded by central planning and less-comprehensive regulation, an economy cannot be expected to benefit a large population.

The full case for a free society obviously has a rights-based, or justice-based, component, We are reasoning social beings who seek happiness. And the also has an important epistemic component, which Mises, Hayek, and others have laid out. We want justice for all individuals, and we want them to flourish. In a world of scarcity and dispersed and tacit knowledge, the free market is required. The moral is also practical.

TGIF: No One Has a Right to Make Immigration Policy

by Sheldon Richman | May 19, 2023 | Economics, Featured Articles, Justice, Libertarianism, Politics, Sheldon Richman, TGIF

Florida Gov. Ron DeSantis says “no one has a right to immigrate” to the United States. “We determine as Americans,” he says, “what type of immigration system benefits our country. When you’re doing immigration, it’s not for their benefit as foreigners. It’s for your benefit as Americans. So if there’s legal immigration that’s harming America, we shouldn’t do that either.”

I’d turn that around and say that no one, including a state legislature, has a right to forbid or restrict immigration, the peaceful movement of individuals from outside to inside America. That doesn’t mean that landowners cannot set rules for who enters their own property. That is not immigration policy.

We’re talking about a political concept. You can see this in DeSantis’s words “We determine as Americans.” Apart from immigration, “we” do not “determine as Americans” who can and cannot come to my home. I do that as the owner. Normally I need no one’s permission to invite or exclude. (It’s more complicated in the business context, where association can be legally required rather than forbidden.) But if the person I wish to invite lacks the government’s permission to be in the country, then it’s a different story. That’s not a natural limitation on a normal and natural right. It’s the result of a decision by a group of politicians, a decision that may well conflict with what many people want to do. How dare the politicians interfere?

DeSantis says that a good immigration policy should benefit the country, or “Americans.” It’s hard to miss the conservative collectivism in theory and elitism in practice. The collectivism lies in what appears to be decision-making not by individuals, but by a purported entity, namely, the “country.” What about dissenters? They don’t matter. What counts, presumably, is the Rousseauian general will. Dissenters must be forced to be “free” by going along with the majority. In theory the majority rules.

But the elitism lies in the fact that majorities don’t really rule. They pick the officeholders (although not the bureaucrats), but what happens next can hardly be called rule by the majority because what the majority may want on a given issue must pass through a very thick filter before it becomes enacted. That filter is administered by special interests inside and outside of the government that typically have preferences that can differ vastly from the majority of voters. To keep the people in the dark about this, those interests not only lie and propagandize, but they also obfuscate and use other tactics to make it difficult for the people to know what the government is really doing or to change it if they find out. (Charlotte Twight’s Dependent on D.C.: The Rise of Federal Control over the Lives of Ordinary Americans spells out the theory and history of this.)

The upshot is that DeSantis’s position — which is widely shared on the right and left– is incoherent. “America” does not and could not make immigration policy. Democracy is a facade that blocks our view of reality.

But even if “America” could make the policy, it would be unjust, not to mention self-defeating, to block or restrict immigration. No one, not even a majority of congressmen backed by a president, has the right to tell individuals, wherever they were born, that they cannot consensually enter other people’s property to live, rent, buy, work, or otherwise associate peacefully. Even if a lot of people band together, they can have no right to block free exchanges between Americans and foreigners. A group cannot have any rights that its individual members do not have. Zero multiplied by any number is still zero. So “America” has no right to keep immigrants out. The right to move about while respecting other people’s rights is universal, and anyone is innocent until charged and proven guilty. The Declaration of Independence speaks of rights that precede government as belonging not only to Americans but to all people. Those rights include the right to life, liberty, and the pursuit of happiness. What’s so hard to understand about that?

The idea that the country ought to control immigration should disturb advocates of individual liberty. According to classical liberal principles, a country is not a country club with a membership committee. Rather, it’s a free association where individuals and their associates may live and prosper in peace. And they are left in peace unless they harm other people’s bodies or steal or damage their belongings. If one of them wants to sell to, rent to, employ, or befriend someone whom others regard as an outsider, no one has a right to interfere.

If anyone does interfere, he’s not only interfering with the “outsider”, he’s also interfering with “insiders.” It can’t be otherwise, as political scientist Chandran Kukathas points out. Kukathas “put[s] freedom at the centre of the immigration question. At stake are the liberty of citizens and other residents of the free society and therefore the free society itself. To put it simply, immigration controls are controls on people. and it is not possible to control some people without controlling others. More to the point, it is not possible to control outsiders (aliens, foreigners, would-be immigrants) without controlling insiders as well…. The conclusion … is that if we value freedom–as we should–we ought to be wary of immigration control.”

Going further, Kukathas challenges the view that society is “made up of members“ and that it’s “some kind of unit comprised largely of people who belong together in some way, and whose belonging entitles them to determine who may or may not become a part of that unit, or indeed even enter the geographic space or territory it occupies.”

“The thought running through this book [Immigration and Freedom],” he writes, “is that membership is an ideal that is not only overrated but also dangerous from the perspective of freedom. It is at odds with the idea of people living together freely, for it subordinates that freedom to an altogether different ideal–one that elevates conformity and control over other, freer, ways of being. If we are to live freely, we must be able to relate to one another not as members but as humans.”

Where there are members, there must be nonmembers — which licenses the politicians to do unlimited mischief. The young century has taught this lesson well.

DeSantis and all others who think “America” can forbid or restrict immigration without violating the natural rights of both foreigners and Americans, or without reducing all our own well-being, are knowingly or unknowingly mistaken. Once again we’re being ruled by presumptuous social engineers, cheered on by unreflective supporters.

TGIF: Ducking Hayek

by Sheldon Richman | May 12, 2023 | Economics, Featured Articles, Justice, Libertarianism, Politics, Sheldon Richman, TGIF

May 8 marked the 124th anniversary of the birth of F. A. Hayek, the 1974 Nobel-winning economist of the Austrian school. (He died in 1992.) That makes it a good time to acknowledge one of his many contributions, his epistemic case for the free and competitive market order. It’s well-suited to the information age.

One of Hayek’s best-known articles was published in 1945 in the American Economic Review: “The Use of Knowledge in Society” (reprinted in Individualism and Economic Order). He got right to the point:

What is the problem we wish to solve when we try to construct a rational economic order? On certain familiar assumptions the answer is simple enough. If we possess all the relevant information, if we can start out from a given system of preferences, and if we command complete knowledge of available means, the problem which remains is purely one of logic. That is, the answer to the question of what is the best use of the available means is implicit in our assumptions….

This, however, is emphatically not the economic problem which society faces…. The reason for this is that the “data” from which the economic calculus starts are never for the whole society “given” to a single mind … and can never be so given.

The peculiar character of the problem of a rational economic order is determined precisely by the fact that the knowledge of the circumstances of which we must make use never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess. The economic problem of society is … a problem of how to secure the best use of resources known to any of the members of society, for ends whose relative importance only these individuals know.

This is an important matter of course. In a world of scarcity and incomplete knowledge, where much vital information is not “data” at all but unarticulated “knowing how,” we don’t want resources and labor services used in just any old way. Rather, we want them put to the best use in the eyes of diverse and fickle consumers — and at the lowest cost possible so can we have more goods and more choices. We also want inevitable errors in production to be readily discovered and corrected. Finally, in a division of labor we want coordination to be as easy as possible.

Can we have all that? Fortunately a solution is available.

Thus Hayek wrote:

Fundamentally, in a system in which the knowledge of the relevant facts is dispersed among many people, prices can act to coördinate the separate actions of different people in the same way as subjective values help the individual to coördinate the parts of his plan….

We must look at the price system as such a mechanism for communicating information if we want to understand its real function…. The most significant fact about this system is the economy of knowledge with which it operates, or how little the individual participants need to know in order to be able to take the right action…. It is more than a metaphor to describe the price system as a kind of machinery for registering change, or a system of telecommunications which enables individual producers to watch merely the movement of a few pointers, as an engineer might watch the hands of a few dials, in order to adjust their activities to changes of which they may never know more than is reflected in the price movement.

He illustrated the point by describing how consumers and producers tend to economize on a material (he used tin) when the price goes up, even though only a few people know why the price has gone up. The price rise will encourage people to use less and or to use known substitutes and even discover substitutes. Others will be induced to search for new supplies of that material using new technology. Innovation will result. An economy run by politicians cannot approach this process.

What the price system accomplishes when left free is no mean feat. It makes longer and more prosperous lives possible for everyone. In a world of eight billion people, the unsexy price system is literally a lifesaver on a mass scale. Keep that in mind when politicians and activists call for interference with production and commerce.

We can’t acknowledge Hayek’s contribution without also paying tribute to his teacher Ludwig von Mises, which Hayek indeed did in other articles. For example, “Professor Mises’ [1920s critique of socialism] represents the starting point from which all the discussions of the economic problems of socialism, whether constructive or critical, which aspire to be taken seriously, must necessarily proceed.” Hayek, who had favored socialism before he met Mises, also wrote that Mises’s “central thesis could not be refuted.” (Hayek, “Socialist Calculation I: The Nature and History of the Problem,” in Individualism and Economic Order.)

Hayek was referring to Mises’s 1920 pathbreaking paper, “Economic Calculation in the Socialist Commonwealth,” and his 1922 book, Socialism: An Economic and Sociological Analysis. Mises’s fundamental point, which logically precedes Hayek’s later addition, was that without real, honest market prices for all inputs, the economic calculation required for rational and efficient mass production would be impossible. And, he went on, you can’t have honest market prices without private ownership and markets in resources and producer goods. (The Marxists sought the abolition of private property.) Flourishing and even life itself thus depend on prices and their prerequisites — prices that cannot be ascertained or even generated except in the market, where producers and consumers act according to their personal and often improvised preferences, make unpredictable discoveries about what circumstances they prefer, and choose among real, not hypothetical alternatives. Bureaucrats and economists cannot simulate this process, no matter how powerful their supercomputers are.

This critique was devasting to all forms of socialism (including fascism), and history has proved Mises and Hayek correct. Remember, socialism was supposed to be the all-around better way to deliver prosperity to all.

Many people who should know better pretend that Mises and Hayek never found these flaws in socialism. Shame on them. As for others who say they favor socialism, what’s concerning is not that they’ve heard Mises’s and Hayek’s critiques and answered them, but that they have never heard them at all! Enter the libertarians.

TGIF: Abolish Billionaires?

by Sheldon Richman | May 5, 2023 | Economics, Featured Articles, Justice, Sheldon Richman, TGIF

Sen. Bernie Sanders wants to abolish billionaires. You read that right. He says he’d confiscate 100 percent of people’s money above the $999 million mark — as if that would cover a significant portion of the nearly $7 trillion the feds will spend in the next fiscal year. Even if the government stole everything over $1 million, the money wouldn’t go very far. The rich don’t have enough money to finance the profligate state, and they wouldn’t submit to the tax collector even if they did: incentives matter.

But no matter — raising revenue is not Sanders’s goal. He just wants to deprive people of money he thinks they do not deserve. Why don’t they deserve it? Because it’s so much more than most people have. So there.

Sanders, who has long favored a wealth tax on top of the income tax, says, “I think people can make it on $999 million” — as though it’s for him and his colleagues in power to tell people how much they are allowed to want or need.

Don’t bother to point out that most billionaires — over 70 percent — are self-made (not that inherited money should be confiscated either). Sanders won’t care. For him, a person who makes a fabulous fortune or builds on inherited wealth by providing valued goods and services better than competitors is no different from one who gets money by stealing it or, what is the same thing, having good connections with politicians. It would be a different matter if Sanders paid attention to the myriad ways the politicians help some people gain wealth at the expense of others, but that’s not what he does. His target is wealth per se.

He just doesn’t like wealth inequality, and right now he’s drawing the line at billionaires. Later on he’ll probably be willing to lower the threshold further. Do you think he’ll be content with almost-billionaires on the loose? Presumably the new level will be above his own millionaire status. “I wrote a best-selling book,” he said. “If you write a best-selling book, you can be a millionaire, too.” However, he apparently was being modest about his wealth.

Who really epitomizes “greed,” as people typically define it? Value-creating entrepreneurs who engage strictly in voluntary exchange? Or Sanders, who covets other people’s money for his own purposes and is ready to call on armed agents to seize it? Don’t be fooled because he says it wants to benefit other people with that money. In fact, he wants to expropriate the money of creators so he can live his chosen life as a savior. Beware humanitarians with guns.

We’re talking about envy and bitter ignorance. Why should anyone take seriously a plan to confiscate wealth? It can’t be because the confiscators will put the money to better use. That cannot be the case because the confiscators are insulated from the signals that indicate how consumers would like scarce resources to be used. Those signals are prices, the spontaneous result of suppliers and demanders interacting — cooperating — in competitive markets.

Governments, as we all too well know, squander unbelievable amounts of wealth on overt and covert wars, subsidies to the well-connected, politically favored infrastructure boondoggles, and the like. And there is the disappearing money, which audits constantly show. The pro-confiscation lobby seems to delight in transferring wealth from where it is subject to market forces generated by regular people and giving it to politicians who only have to pretend to care about the people. If they really cared, they let people keep their money and make their own decisions.

But is it their money? A couple of Sanders supporters say on YouTube that the money doesn’t actually belong to wealthy people. How do they know? Do you see any business person’s name on the money? they ask. It’s the government’s money, and the government is just taking it back. (Watch this.) They don’t seem to realize that their astounding claim would apply to low-income people too. Have they never wondered where the government gets the money? It’s not through production.

It’s true that the government operates the monetary system, but that’s only because it won’t let a competitive free-banking system operate. Such a system would have no need for the government’s printing press or the Federal Reserve’s magical money machine. Stable free banking and market-based money, without government involvement, is as old as ancient Greece.

But don’t expect Sanders and his ilk to know that. They are a resentful group that disguises its envy in deceptive blather about equality. The kind of equality they want ignores the vast differences in people’s capacity to satisfy consumers in the marketplace. It also assumes that one person’s gain in what Adam Smith called the “natural system of liberty” is another’s person’s loss — which is demonstrably false. Unlike political relations, market transactions tend to be win-win in the eyes of the participants. The only equality worth struggling for is “equality of authority,” in which no one has the power to aggress against anyone else.

The bottom line is that no one has the right to take anyone’s honestly acquired possessions — including money — from anyone else.