Libertarianism

A Rothbardian Legal Order Ep. 159 ft. Law of Liberty

A Rothbardian Legal Order Ep. 159 ft. Law of Liberty

Dave of the Law of Liberty Podcast and I dissect Rothbard’s specific views on fundamental legal concepts. Dave is a graduating law student and alumnus of Mises University. He is one half of the Law of Liberty Podcast with his cohost Stratty.

Make sure to check out our first conversation on The Law of Liberty where we discuss many more legal topics.  While you’re there, be sure to subscribe!

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Show Notes:

Law of Liberty Podcast

Insurrection Inc. Podcast

Insurrection Twitter

Law of Liberty Twitter

Murray Rothbard: Law, Property Rights, and Air Pollution

The Man Behind the Beard: Liberty Weekly Podcast Ep. 27

FBI Entrapment on Foreign Policy Focus

Does Jury Nullification Protect Killer Cops? Liberty Weekly LBRY Exclusive

TGIF: What’s Wrong with the Welfare State

TGIF: What’s Wrong with the Welfare State

Let’s start with what is not wrong with the welfare state.

Much criticism of the welfare state focuses on how it encourages dependence not only on the government, but dependence on others per se. In some circles the wish for a social safety net is disparaged as a moral flaw encouraged by people who want to subvert humanity in general and the original liberal, or libertarian, project in particular. The welfare state is said to clash with such alleged and desirable virtues as rugged individualism and radical self-reliance. In this view the welfare state robs human beings of their essential character as independent persons–that it corrupts them with handouts and makes them parasites on the labor of others. (Such corruption of character cannot be ruled out as a consequence and can be found in some degree in the United States, but it is not inevitable because culture surely plays a role in how people respond to political incentives. See the case of Sweden and other countries in Scandinavia, which combine a “generous” welfare benefits with a substantially free-enterprise system.)

You ought to be able to spot the problem in the first step of this criticism of the welfare state. In the original liberal project, rugged individualism and radical self-reliance were not guiding principles because it was understood that people have always lived socially. The first liberal theorists knew this and had no wish to change society or human nature in that respect. In other words, people were always interdependent and dealt with one another in continuous mutually advantageous ways. That’s what society is. A human being living in isolation is not fully human.

Of course the ways of social living changed over time. For example, circles of trust grew, transcending family ties, and the division of labor expanded as technology and political institutions permitted. Dealing with strangers, once unthinkable and highly risky, became increasingly common as people glimpsed the gains from trade and other benefits of social contact. The ideal was to live interdependently to mutual advantage with others. Thinkers like Frederic Bastiat in the 19th century understood that well.

What’s the appeal of social living? The question really doesn’t need answering because the truth has been so obvious since antiquity. Peacefully interacting with others as a way of life magnifies our individual intellectual power, our ability to produce, and out emotional satisfaction. For example, as a practical matter, an individual may know something about a subject, but that person surely won’t know everything about it. Much is to be learned, then, simply by talking to other people, not to mention reading what others have written. A person is likely to learn more about a subject even when talking to an ignorant but inquisitive counterpart because just answering questions can lead to an extension of one’s knowledge though the emergence of overlooked connections. John Stuart Mill had this sort of thing in mind when he wrote in On Liberty, “He who knows only his own side of the case knows little of that.”

Society extends our intelligence. But that’s just one of the many benefits of social living.

Aristotle makes the point that continuous peaceful interaction with other people is the rational mind in action. As reasoning animals, we need that to live according our essential nature. Justice, respecting people’s rights, that is, the commitment to interaction via reason, fosters the flourishing of everyone concerned.

An obvious fact bearing on this subject is that social life takes place in a world of uncertainty. No one can know what personal and social misfortune lies ahead. Therefore everyone has an interest in hedging against calamity. Insurance, the pooling of risk with others, is an old institution, and no one would say that someone who buys insurance against bad luck is shirking his duty of self-reliance or seeking unreasonable dependence on others.

This point should sit well with any advocate of individual liberty and global free markets in which people, goods, and money moved around according to the preferences of the individuals involved.

Superficially, the welfare state can look like nothing more than than the formalization of this legitimate liberal (libertarian) social welfare principle. That could explain why most people accept the welfare state to some degree. Welfarism can appear to be a proper plan to address our entirely reasonable concern about the risks of an uncertain future. You pay in when things are going well; you draw out when they aren’t. That’s where libertarian analysis comes in. For the welfare state’s appearance is misleading. Moreover, the state’s underlying flaws point to a better way not toward fostering fictional atomistic individualism, but toward a moral and more effective way to address our rational need to hedge against an uncertain future.

Then what is wrong with the welfare state? The two biggest flaws stem from its nature as a government institution. The welfare state is coercive, and it is monopolistic and anti-market. As a tax-financed institution, the welfare state is obviously coercive. The fig leaf of democratic representation aside, taxes are compulsory payments. They are not like club dues or prices in a shop. As a taxpayer, you cannot say no.

It follows that a tax-financed arrangement has little in common with a market or noncommercial voluntarily financed service. If consumers are free to say no and buy elsewhere–as taxpayers are not–then service providers must be responsive to customers in a way that no government must be. Otherwise, they could go out of business. Moreover, free consumers provide critical feedback to providers, which tends to improve service.

On the other hand, a government system is subject to what are known as public-choice and (Austrian-school) knowledge problems. That is, first, the bureaucrats and politicians who run the system have their own personal agendas (like career advancement and power) that may have little to do with the good of the people they ostensibly serve, and second, even if their incentives were perfectly aligned, they couldn’t know what they would need to know to do the best job possible because the competition and consumer feedback that freedom generates would be absent. Ludwig von Mises showed that without market-generated prices, economic calculation and hence efficiency in the use of scarce resources are impossible, and F. A. Hayek showed that crucial knowledge related to what would serve our well-being is scattered throughout society and much of it is never articulated. The only way to obtain that knowledge in a usable form is via the prices that emerge when people are free to express their preferences through market activity.

These are serious practical flaws. Because of incentive and knowledge problems, even a modest welfare system that at first addressed only actually unfortunate people may not stay that way. Political dynamics may tend to bring expansion far beyond the original mandate, leading to fiscal problems, slowed economic growth, and liberty violations. And because of knowledge problems, blunders could abound in the absence entrepreneurship to sniff out and correct error.

In contrast, since all participants in an unmolested competitive marketplace and the larger noncommercial voluntary sector are free, providers have to work to win consumers over, that is, to persuade them that their offerings are superior to those of competitors. Hence, they must innovate, exhibit entrepreneurship, and find ways to lower prices and enhance quality. It is no accident that the market, even a heavily regulated one such as ours, displays more imagination than governmental service providers. Competition makes it in people’s interest to spot and correct errors.

These considerations lead us to conclude that what’s wrong with the welfare state is not that it caters to people’s concern with uncertainty, but that it does so in a coercive and inferior way to other alternatives that would be available if the government did not crowd them out. That’s a damning indictment. (It has also been shown that the welfare has been politically intended to keep poorer people who have been exploited through crony capitalism from rocking the boat by giving them money and other benefits and so keeping them quiet.)

What are the alternatives? We can point to two broad categories: for-profit market institutions and what were once known as mutual-aid organizations. The first group would include commercial insurance firms of all kinds. The second are voluntary organizations that are cooperatively owned by their members. The largely unknown history of mutual aid offers excellent ideas on how people can grapple with uncertainty without the coercive state. (For details see David Beito’s landmark work From Mutual Aid to the Welfare State: Fraternal Societies and Social Services, 1890-1967.)

In their heyday mutual-aid organizations, also known as lodges and friendly societies, were largely working-class associations that not only provided an arena for camaraderie but also elaborate methods of obtaining a variety of insurance benefits and even medical care, including hospital services. It was an extraordinary chapter in American (and British) history that holds the key to replacing the costly, debt-ridden, and ever-expanding U.S. welfare state with a free, innovative, and flexible arrangement capable of catering to a variety of needs in an uncertain world.

Who knows what services would be available today had mutual aid not been subverted by the welfare state?

TGIF–The Goal Is Freedom–appears on occasion Fridays. Topics discussed here are also addressed in my What Social Animals Owe to Each Other and Tethered Citizens: Time to Repeal the Welfare State.)

Smothering the State w/ Agorist Action ft. Jose Galison Ep. 158

Smothering the State w/ Agorist Action ft. Jose Galison Ep. 158

Jose Galison returns to the show to discuss Agorism in action. We also discuss the Neocon Twitter wars, Tower Gang!, the culture war, and what it means to be a man in today’s society.

Follow Jose Galison:

No Way, Jose! YouTube Channel

No Way, Jose! Apple Podcasts

The Liberty Movement YouTube Channel

Episode 158 of the Liberty Weekly Podcast is Brought to you by:

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Show Notes:

The Agorist Primer

Agorist Class Theory

New Libertarian Manifesto

Teenager Escapes Communist Romania, Warns the US is NEXT Ep. 143 (Carmen Alexe)

Pete Quiñones on a multifaceted approach to politics and culture
(Blackbird w/ James Jenneman)

Jose Galison’s side hustle is the cat’s meow (Blackbird w/ James Jenneman)

Lessons from the Top 5 Regrets of the Dying Ep. 135 Liberty Weekly Podcast

No Way, Jose!: Episode 27- Military Culture w/ Shane Hazel

DEBATE NIGHT! Youtuber Vs Youtuber! Kevin Castley Vs Keith Knight – Don’t Tread On Anyone

Challenging George Mason University’s Cadre of Patent Enthusiasts

Challenging George Mason University’s Cadre of Patent Enthusiasts

I’ve previously criticized George Mason economist Alex Tabarrok’s views on patents.1 For example, as noted in Patent Policy on the Back of a Napkin, Tabarrok makes a Laffer-curve style argument that patent rights are currently “too strong.” Of course, he is correct that patent rights are too strong. However, he assumes that we should reduce patent strength, since it’s “too strong” now, but not abolish it, since zero protection is too weak. Instead, there is an optimal amount of patent strength, somewhere between zero and infinity, and we should try to adjust the patent system to optimize the production of innovation.

But there is no evidence that patent policy produces any kind of net societal gains at all,2 nor does Tabarrok provide any.

I noticed that Tabarrok and fellow GMU economics professor Tyler Cowen (“T&C”) have a textbook, Modern Principles of Economics (3rd ed. 2015).3 So I thumbed through it to see what they say there about patents and IP. They deal with the issue of patents, in Chapter 13, not surprisingly, since this chapter’s topic is “Monopoly.” And patents are state grants of monopoly privilege.4 Which … our “free market” economist authors are… in favor of. (See the relevant language from ch. 13 in this excerpt [PDF].) T&C repeat the standard argument that you need some patents, but not too much, but they provide no support for this claim. And such a claim is ultimately an empirical one, which needs empirical support. For example, as I point out elsewhere,5 in order to make an empirical argument in favor of the patent system, you must present evidence:

it is incumbent on those who claim the patent system bestows benefits on society to be forthright in acknowledging the costs of obtaining the desired results. They should enumerate the costs, and the benefits, and explain why it is clear that the latter exceeds the former.

It is not enough to show that some innovation is stimulated by the patent system (though I doubt even this is the case); you must compare it to the costs imposed by such a system. In other words, you must determine: How much cost does the patent system impose on society (including innovation that is suppressed, impeded, or retarded); and what is the value of the extra innovation that is incentivized by the patent system, if any? Is the latter greater than the former? You can only know this if you have cardinal measures of each factor.

In short, is the patent system “worth it,” in empirical terms? All the empirical studies I can find conclude either that the patent system is a net cost on society, or that there is no clear evidence that it is a benefit.6 The few that pretend to find benefits are incredibly shoddy and dishonest, such as the risible Commerce Dept. study and others.7 But not much has changed since Austrian economist Fritz Machlup, in an exhaustive 1958 study prepared for the U.S. Senate Subcommittee On Patents, Trademarks & Copyrights, concluded:

No economist, on the basis of present knowledge, could possibly state with certainty that the patent system, as it now operates, confers a net benefit or a net loss upon society. The best he can do is to state assumptions and make guesses about the extent to which reality corresponds to these assumptions. … If we did not have a patent system, it would be irresponsible, on the basis of our present knowledge of its economic consequences, to recommend instituting one.8

T&C’s only attempt to cite evidence for their contention that some patents are “necessary”—i.e., that some level of patent protection produces net benefits—is to cite Douglass C. North:

Video games may seem trivial, but the trade-off between lower prices today  at the expense of fewer new ideas in the future is a central one in  modern  economies. In fact, modern theories of economic growth emphasize that monopoly—when it increases innovation—may increase economic growth.

Nobel prize–winning economic historian Douglass North argues that economic growth was slow and sporadic until laws, including patent laws, were created to protect innovation:

“[T]hroughout man’s past he has continually developed new techniques, but the pace has been slow and intermittent. The primary reason has been that the incentives for developing new techniques have occurred only sporadically. Typically, innovations could be copied at no cost by others and without any reward to the inventor or innovator. The failure to develop systematic property rights in innovation up until fairly modern times was a major source of the slow pace of technological change.”

Douglass C. North, Structure and Change in Economic History (1982), p. 244.9

Now note that even if you could show that patent law increased the pace of technological change, this still does not show that such a system is worth the cost imposed by the system: the cost of hiring patent attorneys, defending lawsuits, increased insurance costs and uncertainty, and reduced innovation (as when a would-be competitor is unable to compete because he is blocked by a patent monopoly, and thus does not bother to invest resources in technological improvements to the original innovations). But does North show even this?

Turning to North, again we find no empirical evidence. (See the relevant language from North in this excerpt [PDF].) He basically repeats the type of argument Tabarrok makes in the Napkin post and T&C make in ch. 13 of their text: that without state granted monopoly privileges to protect innovators from competition, there will be some kind of underproduction of innovation, and that with the “right” amount of patent protection, we will get more innovation and thus more wealth and prosperity. But the argument itself is just an argument; it is not empirical proof. Even Tabarrok, in his Napkin post, concedes that patent protection can impede innovation. How does he know that even a weaker patent strength won’t also impede innovation? How does he know there is a “Laffer curve” type shape; I believe the curve monotonically decreases from zero: the more patent strength, the less innovation and prosperity. It’s like taxes or the minimum wage: a large minimum wage will cause drastic unemployment; but even a low minimum wage will cause some unemployment.

In North’s book, he simply gives arguments for why he thinks patents contributed to the rapid increase in technological innovation and improvements during the industrial revolution, but he does not provide any evidence for this contention, nor does he even try to show that any increase in innovation spurred by patents was worth the (non-zero) cost of the patent system. Ironically, the only empirical evidence he cites is the 1958 Machlup study which, as noted above, concludes: “No economist, on the basis of present knowledge, could possibly state with certainty that the patent system, as it now operates, confers a net benefit or a net loss upon society” (emphasis added; see p. 165, n.3). But of course he does not quote Machlup saying this! He only cites Machlup to support the notion that there has been controversy over whether the value of patents. Indeed there has!

Consider the timeline here. The only outliers are North, then T&C:

  • England, pre-1623: Patents granted by the king to protect court favorites from competition (cronyism; protectionism; mercantilism).
  • Statute of Monopolies, 1623: Eliminates most monopoly-granting patents, but permits patents for inventions to continue to be granted. No empirical studies done.
  • Founders, 17891790: Constitution authorizes patent law; Congress immediately enacts first patent law. No empirical studies done to show that patents actually do “promote the Progress of … useful Arts”. It’s just assumed.
  • Fritz Machlup, 1958: “No economist, on the basis of present knowledge, could possibly state with certainty that the patent system, as it now operates, confers a net benefit or a net loss upon society.
  • Douglass C. North, 1982: The technological progress and innovation that accompanied the Industrial Revolution was due to the modern patent system. Perversely cites Machlup. Must not have read it.
  • George Priest, 1986: “[I]n the current state of knowledge, economists know almost nothing about the effect on social welfare of the patent system or of other systems of intellectual property.”10
  • Wesley M. Cohen & Stephen A. Merrill, 2003: “There are theoretical as well as empirical reasons to question whether patent rights advance innovation in a substantial way in most industries. …The literature on the impact of patents on innovation must be considered emergent. One reason is that the effect of patent policy has many dimensions … and these continue to challenge scholars both theoretically and empirically.”11
  • François Lévêque & Yann Ménière, of the Ecole des mines de Paris, 2004:

The abolition or preservation of intellectual property protection is … not just a purely theoretical question. To decide on it from an economic viewpoint, we must be able to assess all the consequences of protection and determine whether the total favorable effects for society outweigh the total negative effects. Unfortunately, this exercise [an economic analysis of the cost and benefits of intellectual property] is no more within our reach today than it was in Machlup’s day [1950s].12

  • Boston University Law School Professors (and economists) Michael Meurer and Jim Bessen, 2008: “it seems unlikely that patents today are an effective policy instrument to encourage innovation overall”; instead, “patents place a drag on innovation” and “the patent system fails on its own terms ….  Overall, the performance of the [U.S] patent system has rapidly deteriorated in recent years. By the late 1990s, the costs that patents imposed on public firms outweighed the benefits. This provides clear empirical evidence that the patent system is broken. . . . [O]ur analysis has relevance to innovation in other countries.”13
  • Michele Boldrin & David Levine, 2008: Exhaustive empirical study in Against Intellectual Monopoly, concludes that patents do not promote, but hinder, innovation.
  • Andrew Torrance, 2009:

Patent systems are often justified by an assumption that innovation will be spurred by the prospect of patent protection, leading to the accrual of greater societal benefits than would be possible under non-patent systems. However, little empirical evidence exists to support this assumption. One way to test the hypothesis that a patent system promotes innovation is experimentally to simulate the behavior of inventors and competitors under conditions approximating patent and non-patent systems. Employing a multi-user interactive simulation of patent and non-patent (commons and open source) systems (“The Patent Game”), this study compares rates of innovation, productivity, and societal utility. … Initial data generated using The Patent Game suggest that a system combining patent and open source protection for inventions (that is, similar to modern patent systems) generates significantly lower rates of innovation (p<0.05), productivity (p<0.001), and societal utility (p<0.002) than does a commons system. These data also indicate that there is no statistical difference in innovation, productivity, or societal utility between a pure patent system and a system combining patent and open source protection.14

  • Boldrin & Levine, 2013: “The case against patents can be summarized briefly: there is no empirical evidence that they serve to increase innovation and productivity….”15
  • Tabarrok & Cowen, 2010–2015: Cite North (1982) to support the contention that patent monopoly grants increase innovation and thus economic growth.
  • Petra Moser, 2016: “when patent rights have been too broad or strong, they have actually discouraged innovation”16
  • Heidi L. Williams, 2017:

“To summarize, evidence from patent law changes has provided little evidence that stronger patent rights encourage research investments…. The patent system is a widely-used policy lever attempting to better align the private returns to developing new technologies with the social value of those inventions. The past few decades have seen the development of large academic literatures in a variety of fields – including economics, law, and strategy, among others – investigating various aspects of the patent system. However, surprisingly little research has focused on empirically estimating the key parameters needed to evaluate the social costs and social benefits of the patent system. A half-century ago, Penrose (1951) and Machlup (1958) argued that insufficient empirical evidence existed to make a conclusive case either for or against patents. Today, I would argue that given the limitations of the existing literature we still have essentially no credible empirical evidence on the seemingly simple question of whether stronger patent rights – either longer patent terms or broader patent rights – encourage research investments into developing new technologies. While researchers have recently begun to make progress on the more limited question of how patents on existing technologies affect follow-on innovation (Galasso and Schankerman, 2015; Sampat and Williams, 2015), evidence on the overall effects of patents on research investments are needed as one input into optimal patent policy design.

  • Hon. Maureen K. Ohlhausen, 2016:

Respected economists Michele Boldrin and David Levine find “no evidence that intellectual monopoly achieves the desired purpose of increasing innovation,” describe IP rights as an “unnecessary evil,” and call for the patent system’s abolition.38 Economist Adam Jaffe and Harvard Business School professor Josh Lerner call the patent system “broken.”39 Law professors Michael Meurer and James Bessen think it “unlikely that patents today are an effective policy instrument to encourage innovation overall.”40 As for encouraging ideas, the Economist wrote that “[t]oday’s patent systems are a rotten way of rewarding them.”41 Indeed, the magazine appeared to embrace the notion that “society as a whole might even be better off with no patents than with the mess that is today’s system.”42 In law professor Thomas Cheng’s view, theory and empirical studies “firmly refute[] the notion that patent protection is necessary for securing innovation.”43 Richard Stallman argues that “patent law should be abolished.”44 The Electronic Frontier Foundation’s view is that the “patent system is broken” and “it’s time to start over.”45

The chorus of criticism goes on. Attorney William Hubbard argues that “patent protection in the United States should be weakened.”46 The Hon. Richard A. Posner sees “serious problems with our patent system.”47 A leading authority on patent law, Mark Lemley, has proclaimed the existence of a “patent crisis.”48 A renowned economist, Carl Shapiro, believes that the “patent system . . . provides excessive rewards to patent holders . . . reduc[ing] economic efficiency by discouraging innovation.”49 Even Google, which secured more than 2,500 patents in 201450, has sometimes poured cold water on the importance of IP rights. Its general counsel, Kent Walker, has opined that a “patent isn’t innovation. It’s the right to block someone else from innovating” and that “patents are not encouraging innovation.”51 Although outright elimination of the patent regime is an outlier view, many commentators believe that society ought to jettison patents in particular fields of invention such as computer software, business methods, and genetics.52 Even some who have defended the status quo have done so reluctantly.53 ]17

So if T&C favor a patent system only if and because it makes us all better off, by creating net prosperity, by incentivizing more innovation than otherwise would arise without patents, where the value of this extra innovation dwarfs the value of innovation suppressed by patents and other costs of the patent system; but if they provide no evidence that this is in fact the case… they why do they favor it? Why not call for abolition, or at least be open to this option?

If anyone believes I am somehow overlooking or missing something here, please feel free to call it to my attention.

This article was originally featured at the Center for the Study of Innovative Freedom and is republished with permission.

Butchering Compassion in COVID-1984 Ep. 157 ft. Nick Ashley

Butchering Compassion in COVID-1984 Ep. 157 ft. Nick Ashley

I invited Nick Ashley on the show to discuss how the COVID19 dystopia has affected the human condition. We also discuss Nick’s his journey from neoconservative to libertarian anarchist. In doing so, we touch on several libertarian topics from Austrian economics to cryptocurrency. Nick is the host of the newly minted “The Individualist Podcast.”

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Show Notes: 

The Battle for Liberty

Raeford Davis: Former Police Officer Outlines the Moral Injury of State-Based Policing Ep. 75

Mike Tilden on the Liberty Weekly Podcast

TGIF: That Old Minimum-Wage Magic

TGIF: That Old Minimum-Wage Magic

You don’t have to actually think that legislating and raising the minimum wage will help low-skilled workers earn more money. That’s not the point. The point is to display your correct political religion. Today favoring stepping the minimum wage up to $15 an hour is part of the so-called progressive dogma, or civic religion. Progressives who oppose $15 would likely have their credentials questioned or yanked. They would be branded heretics on Twitter. And religiously minded people, even if the religion is secular, rarely like heretics. They must be rooted out, shamed, and if possible, induced to recant.

What gives force to this take on the subject is that the case against legislating a minimum wage is nothing like rocket science. It’s rather simple logic. If someone can’t produce something like $15 worth of goods or services in an hour, why would a law forbidding any wage below $15 help that person? Common sense would tell almost anyone that it will be of no help whatever, and studies bear this out. You may ask how wages and productivity are determined, and the answer lies in the competitive market process. Arbitrariness is driven out by rivalry among entrepreneurs trying to maximize their profits. (More on this below.)

So someone whose productivity is below $15 won’t be hired, and those with jobs may well be fired and replaced either by people with higher skills (which is why unions support the minimum wage) or machines. Either way, that’s not good for the stated beneficiaries of the law. It wouldn’t be the first time that the stated beneficiaries of a policy turn out not to be the same as the actual intended beneficiaries. Many lies go into policy-making. Remember Bismarck’s insight that it would be better if the people didn’t see how laws and sausages are made. Better for whom?

Okay, maybe not every low-skilled worker will lose the job. Employers have avoided firing people (not necessarily a pleasant experience or good for morale) by cutting other aspects of a job. Maybe, in firms’ efforts to cut their losses, the workers will have their hours reduced so that total payrolls don’t change, or workers may lose other on-the-job opportunities and noncash benefits, such as formal training for advancement and other amenities. That’s not necessarily an improvement for low-skilled workers.

Depending on particular market conditions, companies may be able to pass a wage increase on to consumers through higher prices. But let’s not forget that many consumers also have low incomes, so where is the general gain in welfare? If people eat fast food less frequently because of the price hike, how does that help workers? One thing we can predict is that the least-efficient firms may be driven out of business, killing jobs for more than the unskilled.

The point is that Adam Smith’s invisible hand will continue to operate. Companies will find ways to avoid losing money. They aren’t charities after all; they’re businesses. If they go out of business, all their employees will lose jobs. People who want to help low-skilled individuals should find other, peaceful, ways that don’t impose requirements on others, especially when they harm the vulnerable in the process. If you really want to help, find a charity that assists the low-skilled to gain the skills they need to make higher wages. When the competition (including from small-scale self-employment and cooperative management) is free, wages tend to correspond to productivity, so the key is to improving low-skilled workers’ wages is to increase their productivity. Mucking with the price system is the wrong way to go because prices, including wages, are indispensable signals that guide our activities in a world of scarcity. If government distorts the signals (which it does in many ways), it misleads individuals as they try to improve their situations. (It’s a sobering thought that our well-being hinges on people learning to appreciate something as so seemingly boring as price theory. It’s not really boring.)

The government can help low-income by removing the myriad barriers to improvement, starting with the monopoly schools, which give no more than crumbs to kids growing up in lousy circumstances. Also on the policy hit-list should be occupational licensing, zoning and other land-use controls, intellectual property laws, and anything else that bars or impedes free-lance competition against vested business and labor interests.

This assumes the minimum wage is well-intentioned. While I’m willing to assume that most people who favor it do mean well, can that really be said for organized labor, whose members make far more than even $15 an hour? Maybe labor organizations are willing to spend so much on lobbying for the wage because they anticipate that when low-skilled workers are let go, higher skilled workers, potential union members, will take their place. We should also understand that in early days, progressives caught up in the eugenics movements favored the minimum wage as a way to keep undesirables out of the workforce.

Some defenders of the minimum wage will insist economic theory is on their side. But when will they explain how a worker who is worth $15 an hour persists in being paid less than $15? Even in our government-saturated economic system competition exists for low-skilled workers; the fast-food industry is just one example. If workers really do produce $15 worth of value in an hour, why hasn’t the wage been bid up simply through competitive hiring among all the fast-food rivals? It has not been explained why alert fast-food entrepreneurs haven’t offered a wage somewhat higher than the prevailing wage to lure the best workers. That competitive move would set in motion a rivalrous process that would culminate in $15, if that is indeed the magic number under current circumstances. It seems unlikely that every fast-food owner and manager in the country once met in a room somewhere and agreed not to pay more than, say, $10. So what’s the theory? Keep in mind that many fast-food and other low-skilled workers already earn more than the legislated minimum, $7.25. Ask yourself why.

There is no theory. Rather, as I said at the top, it’s a religious creed and nothing more. Questioning it is a sin. But obviously it’s not harmless. As one economist put it, the minimum wage has the same effect as a law banning low-skilled people working. Who would support that?

TGIF–The Goal Is Freedom–appears on occasional Fridays.

 

Individual, Not National, Self-Determination Should Be the Goal

Individual, Not National, Self-Determination Should Be the Goal

Jeff Halper, the American-born, Israel-based veteran human-rights activist is heroic. He has dedicated his life to working for justice for the Palestinian victims of Israeli settler colonialism, much of that as the director of the Israeli Committee Against House Demolitions. His new book, Decolonizing Israel, Liberating Palestine: Zionism, Settler Colonialism, and the Case for One Democratic State is the subject of a recent YouTube video, which I recommend to all who are interested in the struggle for freedom.

As much as I admire Halper, I still must take issue with him and many others in his camp on a basic issue: national self-determination. The issue is important because it is a key part of the collectivist-left outlook and therefore in conflict with libertarian individualism, which otherwise shares many of the same concerns.

Halper, like a growing number of people who have worked to bring attention to the Palestinians’ plight, favors “one democratic state” in the land between the Mediterranean Sea and Jordan River. This position has emerged from the realization that the two-state solution is impossible in light of Israeli policy and actions in the West Bank, Gaza Strip, and East Jerusalem. These areas are still called “occupied territories,” but in fact, after the more than half-century since Israel conquered them, they are more aptly called de facto annexed territories, with varying degrees of repression of the stateless non-Jewish residents. In January the most prominent human rights organization in Israel, B’Tselem, issued a report supporting its declaration that the entirety of the land between the sea and river, and not just the territories acquired in 1967, constitutes “a regime of Jewish supremacy.” “This is apartheid,” B’Tselem said.

I agree with these positions. For me they flow naturally from my commitment to individual rights, including the right to peacefully acquire and exchange things, even things like parcels of land. When individual rights are respected, we may reasonably speak of the right to self-determination. But regrettably, Halper and his colleagues don’t talk so much about individual self-determination. They prefer to talk about national self-determination; they seem to see the oppression of individuals as merely a manifestation of the oppression of a national group. I find this odd. I would have thought that self-avowed left universalists would find the idea of national self-determination unappealing. It’s true that the slogan has been used by groups striving to break free from an empire. But nationalism and national rivalries have cost many lives and caused much misery over the centuries. So why does the left emphasize national self-determination rather than individual self-determination? Nations after all don’t have selves. People do.

I wonder if it’s because the collectivist left senses that individualism clashes with their basic beliefs. It suggests a framework that is pro-market, pro-trade, and — horror! — pro-private property–things they do not generally like.

What I want to say to such leftists is that, with respect to Palestinian justice, they can’t get where they want to go by confining their analysis to national self-determination.

This is clear from Halper’s interview. He says he supports both Palestinian and Jewish national self-determination and insists that an exclusive nation-state is not required for it to be realized. (This may strike one as odd since Palestinian refers to geography and Jew refers to religion.) All that’s required for national self-determination, Halper says, is for a group to control its culture (whatever that means), resources, and land. But if he’s right, how can a program of national self-determination for both groups get him where he wants to go, namely, to a non-supremacist state in which both groups can coexist?

The very heart of the controversy as it is generally understood is a dispute over who the land belongs to and who should control it: the group that has lived there continuously for the last millennium-plus — mostly, Palestinian Muslims, Christians, and secularists, along with other, including Jewish, communities — or the Europeans (of the Zionist movement) who arrived only a bit more than a century ago for the explicit purpose of changing the land into a Jewish State by dispossessing most if not all of the Palestinians. (Many of the Europeans in this group were complete secularists, even atheists, who nevertheless called themselves members of the Jewish People. They thereby invoked the same discredited racial theory that was rejected by liberal-minded people when it was espoused Europe in the 1930s by those who wanted to murder Jews.)

Halper’s embrace of national self-determination for both “national peoples” in Israel/Palestine, then, can’t be the path to peace and justice because it resolves nothing.

But we need not despair. We can still hope for peace and justice. How? By jettisoning national self-determination in favor of individual self-determination. After all, the rights that the Zionist project violated, and continues to violate, are not national rights. They’re individual rights. Identifiable Palestinians were expelled by European Zionists from homes and real estate that they demonstrably owned. (Pre-Zionist Jews also legitimately owned property in Palestine, and their rights should be respected in any new arrangement.) Those property-owning Palestinian individuals lived in the hundreds of villages that the Zionist militias destroyed in their quest to establish a Jewish state in 1947-48. Some of those Palestinian individuals still possess the keys to their old houses and the deeds to their old real estate.

In other words, this isn’t about nations or peoples. It’s about individual human beings with natural rights, including property rights. The Palestinian People were not killed, dispossessed, and plundered by the Jewish People. Rather, particular Palestinian individuals were victimized by particular European Jewish individuals (though again, most were secular and even anti-religious) who claimed to be acting in the name of an ethnic or racial entity. (In fact, Jews are of many races and ethnicities.)

I don’t deny that in process of establishing a Jewish state, Palestinian culture was assaulted and even erased. What I’m saying is that culture is carried by individuals. You can oppress a culture only by systematically violating the rights, including the property rights, of many individuals. The individual is the unit of moral analysis.

The path to peace and justice, then, lies in a single classically liberal state in which the rights of all individuals, regardless of religion, race, or ethnicity, are respected. This entails the right to engage in commerce and to move about peacefully.

I discuss these and many issues, including the claim that Zionist organizations and individuals purchased all of the land from Palestinians legitimately, in Coming to Palestine.

The Enduring Genius of Murray Rothbard

The Enduring Genius of Murray Rothbard

This week we celebrate the life of Murray N. Rothbard, born on the second of March 1926, a Tuesday, in the Bronx.

And what a Bronx it was, teeming with brilliant intellectuals, dedicated Communists, and rock-solid middle-class Americans like David and Rae Rothbard. The family would later become friendly with their apartment building neighbor in Manhattan, one Arthur F. Burns. Burns, an economist at Columbia, was destined for a political career at the Council of Economic Advisers under Eisenhower and as Federal Reserve chairman, appointed by Nixon. Tellingly, Burns was also the man who later nearly sabotaged Rothbard’s dissertation at Columbia. By the standards of academic economists, he certainly reached the height of his profession.

Yet we might ask how many people remember or read Burns today as opposed to Rothbard.

The answer is that virtually nobody remembers Arthur Burns. But Rothbard, like his mentor Ludwig von Mises, is far better known and far more widely read today than at any time during his life. There is both poetic justice and a degree of melancholy in this, as Murray suffered the slings and arrows of his detractors just as surely as he enjoyed the friendship and respect of his countless colleagues and readers. For Murray and his beloved wife, Joey, childless but enormously social creatures, the books and ideas themselves became the offspring and legacy. Both have grown in the intervening years.

For any serious thinker, the ultimate reward must be found in the longevity of one’s work. Is it still read and considered five or ten years hence? Twenty-five years? A century later? By this measure, Rothbard surely is far more successful than his antagonist Arthur Burns. Even posthumously, Rothbard is a lightning rod. Burns is a footnote. We know Rothbard will be read across the twenty-first century. We know decisively that Burns will not.

How prolific was Rothbard? Surely the sheer volume of words he wrote surpasses nearly any writer in the twentieth century. Henry Hazlitt once remarked at age seventy about having written every day of his life since age twenty; he estimated his lifetime output at roughly 10 million words. Rothbard, despite living only to sixty-nine, surely exceeded Hazlitt by a wide margin. Make no mistake, Murray was still writing at a brisk pace when he died.

A discussion of his oeuvre is too long for any article. His bibliography alone spans sixty-two pages, complete with thirty full-length books and one hundred book chapters. His published scholarly articles, some lost to time and microfiche, are conservatively estimated at one thousand. And his popular articles, including op-eds, movie reviews, political analysis, and sports commentary, are innumerable.

It is hard to imagine anyone today matching his staggering scholarly work across economics, history, philosophy, sociology, political theory, and law. A sliver of his writing would make a great career for a professor working in today’s hyperspecialized, “stay in your lane” world of academia.

Yet the volume and erudition of his work alone do not explain his enduring appeal. Rothbard tapped into something deeper, and whether we call it integrity or intransigence, he possessed it in spades. Rothbard’s remarkable career underscores a critical but often overlooked point: almost everything interesting and innovative and valuable in the world happens on the margins. We see this in technology and business, in arts and literature, in education and medicine, in politics and government, and in any part of life where new thinking threatens the status quo. We certainly see it in the world of ideas.

This is why nothing good comes from tired and compromised sources like the New York Times or The Atlantic, nothing worthwhile comes from DC think tanks or risk averse academics, and nothing interesting comes from court intellectuals or dissolute pundits on TV. This is why the most original and compelling writers today use Substack or Medium and the most dangerous thinkers are found on YouTube or small podcast platforms rather than cable outlets. Rothbard took on the established economic and political thinking of his day without hesitation, using the alternative venues and platforms available to him at the time.

Murray was always outside the status quo, on the margins. It made him what he was.

Serendipitously, and usually by necessity, Rothbard spent his career writing at the outer bounds of then current thought and scholarship. Working at the margin, combined with his blistering intelligence and capacity to retain knowledge, was his comparative advantage. As with Mises, an easier path would have changed everything.

Had Rothbard’s PhD not been delayed by Burns, he might never have spent nearly fifteen years at the Volker Fund. This time spent writing and researching, as opposed to working on the kind of academic papers he would have been expected to write to support tenure at a university, transformed both his understanding of Austrian economics and his writing style. It set him on a course of writing for both lay and academic audiences, which ultimately made him far more influential than any professor. And most importantly, it gave him time and support to begin his magnum opusMan, Economy, and State, which transformed the trajectory of his career and presaged an Austrian revival. His path gave him freedom and time, the two most valuable commodities for any intellectual hoping to make fearless and radical contributions.

Professors seeking tenure, by contrast, tend to be timid creatures looking to add their small bit to the existing literature. They also tend to have mortgages. Had Rothbard sought a traditional academic position, as his Ivy League credentials and publications certainly warranted, who knows whether the “full Rothbard” would have emerged? Similarly, had he become comfortably ensconced at the Cato Institute, the politics and compromises of DC think tank–dom would have created pressure to mute both his anarchism and his harsh denunciation of the US empire.

A comfortable Rothbard may never have produced Power and Market, where he made his full case for privatized defense. He may never have issued the blistering challenge to small government liberals found in Anatomy of the State. He might never have tackled the toughest issues, like self-defense and proportional justice, in The Ethics of LibertyInstead, he almost single-handedly built a new normative system of anarcho-capitalism from the loose foundations of political anarchism and laissez-faire.Only his unbridled independence allowed him to argue comprehensively against the predatory state as harmful to liberty by its very existence.

Will there be another Rothbard in our lifetimes, in this dumbed-down digital age of sound bites and dopamine hits and preening superficial intellectuals? We should hope so. Consider how Mises viewed the state of intellectual affairs in the mid-twentieth century, evidenced by flashes of pessimism in his memoirs. Coming from prewar old Vienna, America in the 1960s must have seemed a cultural wasteland. Yet that same decade, the Age of Aquarius, produced Rothbard’s aforementioned Man, Economy, and State and breathed new life into Misesian thought. Just as Mises revived Menger and Böhm-Bawerk, Rothbard revived the essence of the Austrian school and gave it a footing in North America. He found its pulse, and he rooted it once again in praxeology. Mises praised Rothbard’s book, but he never imagined the renaissance his name and work would enjoy over the decades following his death, in large part due to Rothbard’s efforts. So we cannot afford the luxury of pessimism today. New voices and thinkers will continue to emerge, and “another Rothbard” may well be toddling around the Bronx today in diapers. But even if a hundred young Rothbardians are needed to fill his shoes, this should not deter us.

Rothbard’s work continues to gain purchase today not only because of his genius and insights, but because he focused so singularly on the ideas themselves rather than on the accoutrements of intellectual life. It’s not only that he never sold out, but something more: it simply never occurred to him. For Murray, the work was the point.

Rothbard endures. He endures because he never flinched from asking hard questions or giving hard answers. It is hard to imagine any thinker today matching the depth and breadth of this writing, his sweeping scholarly reach, or the sheer blinding intelligence he brought to any intellectual venue. Instead of succumbing to the zeitgeist, he moved it. Ignore his critics and read Rothbard for yourself. You will find a happy warrior and a mind like a diamond.

This article was originally featured at the Ludwig von Mises Institute and is republished with permission.

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