29 June 2011

Fair and Balanced...

In the interest of presenting opposing viewpoints I present a Stephen Metcalf, who seems to have a need to chastise libertarians.

Unfortunately I can't really respond because it really is just an endless stream of character- and straw-man-assassination... To say nothing of the considerable factual errors (here, here, and here).

My favorite part is this:

When I think with my own brain and look with my own eyes, it's obvious to me that some combination of civil rights, democratic institutions, educational capital, social trust, consumer choice, and economic opportunity make me free.
My, how relieving it must be to believe such simple nonsense.

27 June 2011

The Philosophy of Liberty

Another fantastic video! This time on the Philosophy of Liberty.

I found this and the two previous links on the Videos section of the web site of the Foundation for a Free Society.

The Story of Your Enslavement

Here's a fairly powerful philosophical examination of what it means to be free.... or enslaved....

Ten Principles of Classical Liberalism

This is a pretty good summary of the principles behind classical liberalism (by a G. Stolyarov II):



The only one I would disagree with is #5. I don't believe an aggressive response to aggression initiated by another need be proportional. Someone who has initiated aggression has implicitly given permission to their victim to respond in whatever way necessary to stop the aggression as quickly as possible, to prevent further loss and damage, and even to recover what was taken (if possible).

21 June 2011

Why I believe in free markets...

I was standing with my dad at the check-out counter of a cooperative grocery store one afternoon. It was full of the kind of propaganda you expect in a cooperative -- hat-tips to a myriad of populist causes, in various forms such as bumper-stickers, refrigerator magnets, mugs, etc.

My dad pointed out one of the pieces of schwag, a sticker that read, (paraphrasing) "Economics, as a discipline, as has never considered the idea of a maintaining a steady-state economy." Since he had previously made negative comments about "growth"-based economic policies I knew he was trying to get me to think.

My immediate inclination was to think about what would happen in an economy imposed upon by such a policy, considering the facts of world population growth and poverty... certainly, the world standard of living would decline and poverty would grow. (as I interpret it, the comment was derived from a concern about environmental issues rather than economic success, so perhaps the authors of that blurb hadn't considered this potential)

But then I began thinking about it more deeply. Economics is not a "discipline", any more than physics is. A discipline is something that you do. It implies that your methodologies could change, thus altering the outcome. For example, computer programming is a discipline because I can alter my methodologies in order to improve efficiency.

But as a physicist there is nothing I can do about the law of gravity -- gravity exists, an attractive force between all matter in the universe. And no matter how I would wish it to be so, I can't, as a physicist, alter my discipline in any way to change that fact. My discipline is in using the scientific method to discover and verify the existence of the force of gravity.

Economics is the same way. The discipline is in discovering the laws (if there are any) that can be used to predict economic outcomes, just like physics is the discipline of discovering the laws that can be used to predict physical outcomes. Physics is the thing being studied -- not the discipline. Economics is the thing being studied -- not the discipline. People conflate the two, leading to nonsensical assertions that if we could just alter the discipline, economic reality would be different.... if we could just alter the discipline, physical reality would be different....

Now, it's true that people can manipulate physical reality -- as long as they do so within the limits of physical constraints. Doing so results in some very positive outcomes (light bulb, plumbing, etc.). Why can't the same be done with economics? The answer is in the nature of economic constraints, and how those constraints resist discovery. (by the way, economic constraints have a root in physical constraints -- the law of conservation of mass is the fundamental physical law behind the economic reality of scarcity)

The problem is that economics deals with the results of individual human decisions about how best to meet their own needs with the resources available to them. It's a system that is far more complex and unpredictable than physics (if this isn't blatantly obvious to you just from day-to-day interactions with others, research and consider the chaotic nature -- in the mathematical sense -- of neural networks).

For the sake of discussion, let's compare a physical particle of mass to an economic particle -- a person (this is an analogy -- not an equivalency). Instead of simple hypotheses like "a particle in motion tends to stay in motion" (conservation of momentum), what similarly simple and elegant hypothesis can be made to predict the economic behavior of an individual? NONE! Because an individual can take in any number of pieces of data (variables) in the process of making a decision (through the mathematically chaotic processes of his mind), the only hypotheses that can be made at this level are big, ugly, complex hypotheses, that are likely to only be valid within some large error percentage. The physical equivalent would be to try to derive a mathematical model for a physical process where the input variables are not static, and the function isn't either!

Now, consider that physicists have the luxury of being able to setup repeatable experiments to falsify their hypotheses. They can even do computer simulations that are accurate to within minute margins of error. Economists cannot do this. Experiments, if they are to be done, must be done in-flight! The results to be interpreted only after the experiment has passed into history. The physical equivalent would be to design and build a modern commercial aircraft, and to test it by sending it on its maiden flight, fully-loaded with passengers!

All of this coalesces into the following reality: No economist (really, no person) has the intellectual ability to accurately predict economic realities. Any economist who tells you otherwise is, at best, guilty of conceit (I don't want to speak for Hayek, but I believe this is equivalent or highly related to the fatal conceit). Every time a politician tells you they are going to do X, Y, and Z, to make the economy better, they are sending you on a flight in an untested, experimental aircraft, in a universe where the rules of aerodynamics are volatile and unpredictable. The notable exception is when they are proposing to undo the bad policy they previously enacted.

It is precisely a good understanding of economics which leads (good) economists to recommend free markets as the best possible prescription, from a government policy perspective. They understand that: (1) There are certain economic realities that cannot be bent, similar to physical realities which can't be bent; (2) Even if policies could be put in place to harness the economic realities, similar to, say, applying aerodynamics to resist gravity, there are no experiments that can be done to determine what those economic realities are; (3) No one is intelligent enough to understand and model the chaotic economic activities of hundreds of millions to billions of people.

It is precisely because economics cannot ever be understood with the same accuracy and precision that physical reality can that you should want to actively resist putting economic control into the hands of politicians.

06 June 2011

A "Cambrian explosion in government?"

This looks interesting...


Who favors more freedom, liberals or conservatives?

Environment protection via the free-market

Give fishermen an ownership stake in the fisheries they make their livelihood from and watch the fishery depletion issue vanish: http://vimeo.com/23564293

I had never heard of PERC before. A conservation group that looks to free markets and property rights for solutions. Woohoo!

In their solution, the fishermen themselves have a stake in the fisheries. But it doesn't have to be that way necessarily. Any ownership concept in a fishery would work: if I own a fishery, it behooves me to make sure there are fish to fish each season or else I make no money (either because I fish and sell them for my livelihood, or because I lease access to the fishery to fishermen).

I've long wondered at the fact that the ocean is treated differently than land with respect to property rights. I've always thought it was a little odd, but couldn't ever quite figure out how else it would work... leave it to people smarter than me...

Now we can add this lesson to the oil-drilling lesson we learned last year. Specifically, no one was looking out for the ocean in the deepwater horizon disaster. The government granted permission to BP to drill for oil, but didn't have the proper incentive to protect the ocean once it did so. Had someone owned the region of the ocean where the drilling was occurring, and they granted permission to drill, they would have been more interested in safety because of the potential for damage*, and because of the potential for liability.

* Of course, the ownership stake would have to be more than for just oil rights, so that there would be other economic incentives for ensuring safety. Consider dividing a region of ocean into different ownership interests, such as oil rights and fisheries. In the case of an oil spill accident there would be a clear responsible party to target for purposes of liability and compensation, and in there would be a clear impacted party to which compensation would flow.

One might argue that the oil companies would simply buy up all of the fisheries to avoid being liable to anyone else, but that seems unlikely to me as it generally doesn't happen on land, and an oil spill tends to (as we saw last year) impact a whole lot more area than would otherwise be needed for your typical oil drilling operation. That is, an oil company would have to buy up a LOT of ocean in order to protect its ability to be unsafe... seems unlikely... certainly no more likely than the government avoiding liability entirely after being given a monopoly on granting drilling rights.

A philosophical epiphany

Over the weekend I suddenly realized the fundamental core of my philosophical beliefs with respect to government. It can be summarized this way:

Human beings can be evil, whether intentionally or accidentally. Historically, the most evil has been done when individuals associate (voluntarily or otherwise) and aggregate into groups having some form of coercive power over others*. So the fundamental burden for humanity is to figure out how to limit the amount of power that is available for people to wield.

(* to me, such a group fits the most general definition of a government)

Such a philosophical perspective naturally leads to two conclusions:

(1) Big government and activist government is bad, simply because it necessarily allows those in government to wield a huge amount of power. That is, it is fundamentally stupid for the people to willingly yield their rights over to a coercive entity, when the fundamental burden of humanity is to try to figure out how to stay out from under that yoke.
(2) In order to prevent any group from eventually wielding coercive power over others, there must be some agent to provide for compensation and punishment when that coercive power is wielded (and hopefully to serve as a deterrent). That is, government is unfortunately necessary in order to prevent other (more despicable and despotic) governments from forming.

(1) & (2) obviously conflict. The question is where is the balance struck? In my view it's exactly where government does nothing more than impartially adjudicate and enforce a legal code that protects individual rights. Granted, impartiality is probably a difficult target to attain given that politics is involved, but it sets the target right, and is -- I would argue -- a much more realistic goal than anarchist Utopia, communist Utopia, or anywhere else in between.