Hoover Institution economist (and colleague) John Cochrane has an excellent long post on dollarization in Argentina. One highlight: Dollarization is no panacea. It will work if it is accompanied by fiscal and microeconomic reform. It will be of limited value otherwise. I’ll declare a motto: All successful inflation stabilizations have come from a combination of fiscal, monetary and microeconomic reform. (italics in original) That reminds me of what Michael K. Salemi wrote about what has been learned about ending hyperinflations. He wrote the entry “Hyperinflation” in The Concise Encyclopedia of Economics. While Argentina is far from having hyperinflation, which, as Salemi notes, is typically used “to describe episodes when the monthly inflation rate is greater than 50 percent,” Argentina does have very high inflation, in excess of 100% in the last 12 months. So the same principles for ending hyperinflation apply for ending, or at least substantially reducing, Argentina’s inflation. Here are Salemi’s two key paragraphs on ending hyperinflations: How do hyperinflations end? The standard answer is that governments have to make a credible commitment to halting the rapid growth in the stock of money. Proponents of this view consider the end of the German hyperinflation to be a case in point. In late 1923, Germany undertook a monetary reform, creating a new unit of currency called the rentenmark. The German government promised that the new currency could be converted on demand into a bond having a certain value in gold. Proponents of the standard answer argue that the guarantee of convertibility is properly viewed as a promise to cease the rapid issue of money. An alternative view held by some economists is that not just monetary reform, but also fiscal reform, is needed to end a hyperinflation. According to this view, a successful reform entails two believable commitments on the part of government. The first is a commitment to halt the rapid growth of paper money. The second is a commitment to bring the government’s budget into balance. This second commitment is necessary for a successful reform because it removes, or at least lessens, the incentive for the government to resort to inflationary taxation. If the government commits to balancing its budget, people can reasonably believe that money growth will not rise again to high levels in the near future. Thomas Sargent, a proponent of the second view, argues that the German reform of 1923 was successful because it created an independent central bank that could refuse to monetize the government deficit and because it included provisions for higher taxes and lower government expenditures. Another way to look at Sargent’s view is that hyperinflations end when people reasonably believe that the rate of money growth will fall to normal levels both now and in the future. My EconLog co-blogger Scott Sumner also has insights about dollarization.   (0 COMMENTS)

Who is the greatest economist of all time? In Tyler Cowen‘s eclectic view, you need both breadth and depth, macro and micro. You can’t have been too wrong–and you need to be mostly right. You have to have had a lasting impact, and done both theory and empirical work. If you meet all these criteria, […] The post Tyler Cowen on the GOAT of Economics appeared first on Econlib.

Last April, I did a post discussing the factors behind the severely restricted number of flights between the US and China. In recent months, the US government has allowed more flights, but only under the condition that Chinese airlines fly a much longer route between the two countries. US airlines had complained that they were at a competitive disadvantage, due to their inability to fly over Russian airspace because of the Ukraine sanctions dispute.US airlines are at a competitive disadvantage, just as US exporters to Hawaii that are limited by the Jones Act are at a competitive disadvantage to Chinese exporters to Hawaii.  But would that be a reason to extend the Jones Act to the rest of the world? Requiring the Chinese airlines to avoid Russian airspace has the following effects: 1. Turning a painful 13-hour flight from the East Coast to China into an excruciating 20-hour marathon. 2.  Sharply raising ticket prices. 3.  Increasing global warming. 4.  Reducing tourism between the two countries. This last item is especially important, as I believe that tourism is one of the best ways to improve international relations.  Covid travel restrictions pushed the world toward nationalism. The Biden administration suggests that global warming is one of the most severe crises facing the human race.  But when it comes to a choice between nationalism and environmentalism, their actions suggest they care more about nationalism.  They’ve also put trade barriers on the importation of clean technologies.  Don’t tell me what you care about, show me what you care about. PS.  Readers of Kurt Vonnegut may recognize the reference in the post title. PPS.  One recent study estimated the impact of the Jones Act on the Hawaiian economy: Thanks to this new research, we now know that local families pay almost $1,800 every year because of the act, including $389 for housing costs, $248 for groceries and restaurants, and $62 for gasoline. Overall, the act costs Hawaii’s economy an extra $1.2 billion a year, with side effects including thousands of lost jobs and lower tax revenues for our state and local governments.     (0 COMMENTS)

A disquieting Wall Street Journal column reminds us of what classical liberals and libertarians have been repeating: the state, however useful it may be, is very dangerous. With hindsight, it is surprising how so few people have taken these voices seriously, perhaps because the lobster has been boiled quite slowly. The problem is not unique to the United States but may be especially dangerous here given the enormous extent of the president’s power. Congress can be happily gridlocked; the president will not be (except possibly in his own mind, which doesn’t reduce the danger). The WSJ columnist focuses on the Insurrection Act, last amended after the Civil War, and which Donald Trump thought of invoking during his first term (William A. Galston, “Donald Trump’s Insurrection Act Gambit,” Wall Street Journal, November 15, 2023). The columnist writes about that law: Its scope, which is both broad and vague, gives the president enormous discretionary power. Key terms—insurrection, rebellion and domestic violence—aren’t defined. As an analysis by the Brennan Center shows, the president alone may decide whether these prerequisites for deploying the military have been met, and the Supreme Court has said it has no authority to review the president’s decision. To be sure, a 1932 Supreme Court decision held that courts may review the lawfulness or constitutionality of acts the military performs after it has been deployed, but in the swirl of events basic liberties may be curtailed well before the judiciary can step in. Consider this scenario: After a divisive campaign, a presidential candidate opposed by half the country is inaugurated, and a massive protest breaks out in Washington. While observers and authorities report that the demonstrators are mostly peaceful, the new president disagrees, federalizes the National Guards of Maryland, Virginia and the District of Columbia, and deploys them with orders to suppress the protests. Other scenarios are possible. Trump has shown that he has no clear idea of the desirable limits to government power. The packing of the large police bureaucracies in DC with yes-men, as his myrmidons are now planning for a possible second term, would give him much more power than most Americans can imagine. To those of us (I am not casting the first stone) who have been tempted to side with “the people” against the conceited and legislation-happy establishment, the surprise has a second dimension: the next blow to individual liberty may well come not from these people but from the mob excited by a demagogue. Lots of ordinary people, particularly in America, have kept a sense of liberty and decency. But a large number have been applauding a despot-to-be who has no political philosophy, no intelligence of this world, and is nothing but a rabble-rouser narcissist. One-third of American voters think that the 2020 election was stolen just because he says so. He once boasted that he could shoot somebody on Fifth Avenue and his followers would remain loyal to him (it is worth watching the 15-second video). He hopes that his future Department of Justice and FBI would too. Fortunately, he has lately been meeting some resistance from the judicial institutions of this country, but he understands that his interest is to politicize them further. This phenomenon of the betrayal of liberty by the common people for the comfort of following demagogues (after the betrayal of the establishment for the purpose of maintaining their control) reminds us of a remark by James Buchanan in a slightly different but related context (“Afraid to Be Free: Dependency As Desideratum,” Public Choice  [2005]): The thirst or desire for freedom, and responsibility, is perhaps not nearly so universal as so many post-Enlightenment philosophers have assumed. In his contemporaneous book, Why I, Too, Am Not a Conservative, Buchanan showed more faith (the word is his) in the future of liberalism. Neither Donald Trump nor Joe Biden ever tried, or thought of trying, or could probably try to think of trying, to abolish or seriously limit laws such as the Insurrection Act. They share the intuition that tyranny dwells on the other side of an arbitrary political-partisan line. Other “democratic” states in the world face similar dangers in different institutional contexts, but many would arguably follow America in despotism. (I put “democracy” in scare quotes because many seem to confuse it with competitive authoritarianism.) Not much imagination is necessary to see what could happen next. Institutions, which are sets of formal or informal rules, have their logic. Studying that logic has been a major enterprise of political economy. Without the idea of constraining Leviathan, prospects are dark. History is replete with examples, often in sophisticated societies. The reader interested in this topic might enjoy my review of the collection of articles assembled by Cass Sunstein in Can It Happen Here? Authoritarianism in America (2018): “You Didn’t See It Coming,” Regulation, Winter 2018-2019, pp. 54-57. Having just reread it, I found a paragraph that, if I had not written it, I would wish I had; please pardon my self-congratulation. About the chapter by New York University law professor Stephen Holmes, I wrote: Holmes exemplifies the statist elite suddenly surprised that the vast power they advocated for, and granted to, the state is being used by politicians not of their own tribe. They don’t realize that tyranny, not nirvana, is what happens when people put all their hopes in government, as Anthony de Jasay argues (notably in his 1985 book The State). How can these elites complain so much about government’s actions and yet not question its power? They had taken over the government and were pushing their brand of soft fascism when Trump displaced them. (0 COMMENTS)

Airbnbs and VRBOs are out. What’s that you say? What are they? They are short term rentals. Residential occupants rent out their domiciles for anything from a day or two or three up to several weeks and maybe as long as a month or so. Perhaps the vendors go out of town for that stretch of time, and want to add a bit of spending money to their budgets. Maybe they are in the business of renting out residential real estate for such short time periods. Why are they on the way out? This is because government is rendering this sort of commercial activity more and more difficult with more and more onerous rules and regulation, even including outright prohibition. And why, in turn, might that be the case? One path toward an explanation of this phenomenon is to ask quo bono? Who gains from interfering with this type of marketplace behavior? One answer is obvious: hotels and motels. They are in direct competition with those who rent out homes on a temporary basis. For a large family, a residence of 3,000 square feet for $1000 per night is a much better deal than five hotel rooms of $300 each. So, yes, it is a reasonable hypothesis to look at this sector of the economy for an explanation of these new stifling rules. Another source of dissatisfaction with Airbnbs and VRBOs stems from homeowners and renters who do not engage in such activities. They oppose all this moving in and moving out in their neighborhoods. They want a nice quiet residential experience. They want to know exactly who are their neighbors- whether for safety reasons, or for friendships or block parties or whatever. What is the optimal allocation of resources between temporary and more permanent accommodation? Desirable from whose point of view? From the perspective of all concerned. Yes, we can acquiesce that permanent residents want more permanence in their geographical areas. But how, then, do we factor in the desires of temporary residents, many of whom are tourists, who relish just that sort of permanent residences for their short visits, and wish for cheaper room rates? The free enterprise system provides the only way out of this physical and philosophical morass. The best solution, the only one, is for the government to withdraw its gargantuan powers and exit the scene entirely. Then, hotels will simply have no power to eliminate their competition. What about the interests of those who seek some semblance of permanency in their surroundings? Let them form condominiums and/or homeowners associations to limit or even prohibit this type of arrangement. If the transactions costs of so doing are less than the benefits, temporary housing will be severely truncated in those areas. If not, the tourists will be better served. In this way the “magic of the market” can be called upon to, in effect, weigh imponderables against one another. This issue does not arise only in housing.  For example, some people purchase automobiles and keep them for 10 and sometimes even 20 years. Others trade in their cars every two years or so. Then there are those who shun ownership altogether and lease a vehicle for a relatively long time, perhaps six months or a year. Further, there are still others, tourists, visitors, who rent for a day or two or three from Hertz or Avis or from many others in this industry. Should the government get involved here, too, and press its big fat thumb on the economic balance wheel and mandate either longer or shorter durations of our relationships with our autos? Maybe push us from ownership to rental or back the other way around? Of course not. It would be no more desirable or beneficial in this sector of the economy than it would be in the case of residential rentals. Socialism simply does not work in any sector of our economy. Walter E. Block is Harold E. Wirth Eminent Scholar Endowed Chair and Professor of Economics at Loyola University New Orleans and is co-author of the 2015 book Water Capitalism: The Case for Privatizing Oceans, Rivers, Lakes, and Aquifers. New York City, N.Y.: Lexington Books, Rowman and Littlefield (with Peter Lothian Nelson ). (0 COMMENTS)

What’s the freest state in America? According to a study by political scientists William Ruger, president of the American Institute for Economic Research (AIER), and Jason Sorens, a senior research faculty member at AIER, it’s New Hampshire. In the 7th edition of their study of freedom in the 50 states, they report on a number of variables that go into their measure. Unlike other measures of freedom, theirs’ includes not just economic freedom but also what they call personal freedom. I’ve never liked that term because so much of economic freedom is personal freedom too, but I get what they’re driving at. Even though I’ve thought about it a lot, I still haven’t come up with a satisfactory term. Their measures of personal freedom include incarceration and arrests, gambling freedom, gun rights, tobacco freedom, marriage freedom, educational freedom, asset forfeiture, travel freedom, and a host of others. As I look through the list, I see that a lot of these also involve economic freedom. Asset forfeiture, for example, often violates property rights. And what is tobacco freedom, if not the freedom to buy, sell, and smoke tobacco? (Missouri, by the way, leads on tobacco freedom.) One striking thing about their measure of overall freedom is that even though it’s composed of those two components (economic and personal freedom), New Hampshire wins on both: it’s the freest economically and the freest overall. (Although Nevada is #1 on personal freedom.) One thing that becomes quite clear is that the freest states, whether measured by overall freedom or economic freedom tend to be the “red states.” A big aside on red and blue. When I finally got a color TV in 1979 and started to watch U.S. election results, the states won by a Republican were colored blue and those won by a Democrat were colored red. That made sense because red was associated with socialism and communism and blue was associated with conservatism. I still remember, when I became a fan of Marty Feldstein in the 1970s, a big Fortune magazine article with the title “Martin Feldstein’s Electric Blue Economic Prescriptions.” I think the colors switched in the 1996 election when the networks started using red for Republicans and blue for Democrats. It’s worth taking some time to pull up the study and click on various states.   (0 COMMENTS)

Matt Yglesias has a post entitled: Trump would make inflation worse I have a slightly different view.  I’d make the following two claims: 1.  Trump would not make inflation worse. 2.  Trump would make “inflation” worse. That obviously calls for an explanation. Economists define inflation as the percentage change in the price level.  Alternatively, it can be viewed as the percentage decrease in the purchasing power of a dollar.  When the dollar loses purchasing power, the price of goods, services, and labor goes up.  By itself, this has no real implications.  It’s kind of like a two for one stock split—just an accounting change.  (And no, inflation is not the change in the money supply.) In our textbooks, we justify the widespread concern about inflation by pointing to various subtle “costs of inflation”: 1. People visit ATMs more frequently, to avoid holding lots of currency that is losing purchasing power. 2.  Restaurants have to redo menus more frequently. 3. People are less likely to save because our tax system taxes the nominal return on capital. But this is not why the average person cares about inflation.  If you ask people, they won’t say: “More trips to the ATM” or “costs of changing menus” or “deadweight cost of taxation of nominal capital income.” They’ll say, “Duh, obviously inflation’s bad because you have to pay more for stuff, and that lowers your standard of living.” But that’s wrong.  Inflation doesn’t directly hurt consumers, as a pure inflation causes incomes to rise as fast as prices.  Wages are also a “price”. It’s true that there are cases where incomes don’t rise as fast as prices, and in those cases people are hurt.  But then the thing that is hurting them is not inflation; it’s the thing that causes incomes to rise by less than inflation.  It might be the thing that reduces real GDP—some sort of real problem like a crop failure or an oil embargo.  Some people can also be hurt by redistribution of income from one group to another.  But in all of those cases it’s not really the inflation that hurting people, it’s the falling real GDP or the redistribution of income from one subgroup to another. The Fed is targeting inflation at 2%.  Right now it’s above 2%, but the markets seem to expect it to fall to close to 2% in a few years.  I don’t believe Trump being elected would change that fact.  Hence: 1.  Trump would not make inflation worse. However, Trump might well worsen the things that people actually care about when they say they care about inflation.  Yglesias mentions examples such as Trump’s promise to sharply raise tariffs on imports.  I believe that this would make most American feel worse off.  But not because the CPI would begin rising at faster than 2%, rather because the Fed would be forced to depress non-import prices in order to maintain its 2% inflation target.  In that sense, Trump’s policies might cause “inflation” in the way that the public wrongly conceives of the term.  That is: 2.  Trump would make “inflation” worse. You might say I agree with the bulk of Yglesias’s post, while not being on board with the post title.  Yglesias also mentions immigration and residential zoning as areas where Trump’s views differ from those of traditional Republican supply-siders.  And although Trump has promised to pay off the entire national debt in his second term, his actual tax and spending proposals suggest a big increase in the budget deficit.  This could further raise real interest rates, hurting investment.  In fairness, Trump would probably also do some tax and regulatory changes that would boost GDP growth, so the net effect of his policies is uncertain.  Yglesias’s post assumes a second Trump term would be more “populist” than his first term, as he’d fill his administration with true believers, not traditional Republican officials recommended by people like Mike Pence. I have no idea how things would actually play out. If you wish to argue that Trump would increase inflation, in the sense that economists define inflation, the strongest argument is that the budget imbalance would become even more severe (and it’s already gotten much worse in the past few years), and that this would trigger “fiscal dominance” over monetary policy.  I still think we are far from fiscal dominance, but in the very long run it’s a concern if the budget situation is not addressed. PS.  To follow up on a recent post, there are already rumors that Javier Milei is backing away from his dollarization pledge—but nothing I’ve seen is definitive. PPS.  See if this helps: 1.  Trump would not make inflation worse.  (cost of living) 2.  Trump would make “inflation” worse.  (standard of living) (0 COMMENTS)

Co-blogger Kevin Corcoran wrote a recent post titled “Economics in Everyday Life.” He asked commenters to give examples of how they learned economics in their everyday lives. Every example I could think of in my own life was one that I had already posted on in previous blog posts. See here and here, for example. Notice that the second link was motivated by Kevin’s post. I settled for giving a comment on Kevin’s recent post. I wrote: One of the things that most economists, including me, believe is that pay is based on the value of one’s output. On the way to work this morning, I heard a song on my FM channel by a young woman complaining that she was underpaid. I realized how often I hear that. Then my next thought was that even when I was in my teens and working in part-time jobs, I always understood that pay was based on productivity. I never told myself I was underpaid. I would then figure out how to be more productive in a job or, more likely, because job performance was constrained in some ways, how to find a job in which I would be more productive. That I understand the connection between pay and productivity gave me 3 good lessons: (1) the basic economic lesson that I laid out in my comment; (2) the idea that I shouldn’t whine when I got paid a low amount; and (3) the idea that if I wanted to make more money, I should go to a place where I could be more productive and where not a whole lot of people wanted to go. I’ll focus here on (3). I started college at age 16. (My birthday was November 21 and so I slipped in under the wire for starting Grade One; we didn’t have kindergarten in my small town. And I was so bored in school that my parents decided to have me skip Grade Four. I found out later that a psychologist that my mother took me to in Brandon had advised against it because I would be emotionally immature relative to my new peers. I think he turned out to be right.) My father had given me the $1,600 (in 1967 $) that he had saved for my university years. He understood who I was and that I wouldn’t waste it. I had some savings and I worked summer jobs in the summer of 1967. By being very frugal and picking up various one-time chances to make money, and by earning scholarships, I had enough money to pay for 2 years of college tuition, books, room and board (although my father subsidized the room part), and very modest entertainment (no concerts, no drinking, and no going out for meals except for the occasional pizza.) By May of 1969, I was down to a net worth of $20. I needed to make money to pay for my last year of university. (A standard degree in Canada took 3 years.) I thought, “What kind of job can I get where I could earn a lot of money in one summer?” I had been seeing ads for jobs in a nickel mine in Thompson, Manitoba. These jobs paid about $3.50 an hour in 1969 dollars. I didn’t have to think hard to realize that few young people would want to work in Thompson for a summer. Summer in Winnipeg was glorious: who would want to leave that? So my friend Don Redekop and I, less than an hour after writing our last exam for the year, stood outside the University of Winnipeg and thumbed rides to Thompson. It took a day and a half to get there. We quickly found jobs building a mine and the jobs paid almost as much as the pay for working in a mine. Unfortunately, he and I were put in separate groups of workers our second day on the job and on the third day, my group was laid off en masse. I had promised my father, who, when he thought of mines, thought of coal mines with all the attendant risks, that I would not work in a mine. I fully expected to keep that promise. But now that the summer was ticking away, I was desperate. So I went around Thompson applying for every well-paying job, whether in a mine, above a mine, or in a business that supplied to mines. After about 3 or 4 days, a diamond drilling company called me up (I was staying temporarily with Don’s sister) and I went down to their shop. I was hired on the spot and they had me pick out boots, slicks (rubber pants and top that you wore to repel water,) a belt, a helmet, and a light to fit on the helmet. A guy from the company who was delivering supplies to a mine 40 miles south of Thompson, out in the middle of frigging nowhere, drove me down that afternoon and I was to start that evening on the night shift. Even from about age 6 on, I was a cautious kid. I didn’t refuse to take risks but I informed myself about risks and decided whether they were worth taking. So on that 50-minute ride, I asked the driver what kinds of risks there were in the mine. His answer was sobering. He told me that 2 miners in the mine I was going to (called Soab Lake) had been killed a day or two earlier by using degraded fuses to light some explosives. I knew that as a diamond driller’s helper I wouldn’t be dealing with explosives and that even if I had dealt with them, I would have taken the time to get fresh fuses. I also knew, at a gut level, even though I hadn’t yet read Adam Smith’s The Wealth of Nations and hadn’t read the subsequent economics literature on “compensating differentials,” in this case higher pay for taking risks, that risky jobs paid more. The risk plus the physical isolation were two things that led to higher compensation. I started the job around May 15 and finished around August 15, a month before my 3rd year of university started. I worked every hour of overtime I could, and sometimes a day shift and a night shift in a row or a night shift and a day shift in a row. By August 15, I had enough money for a full year of college plus expenses, plus an extra $350 that I used to take a trip to an Intercollegiate Studies Institute seminar at Rockford College in Rockford, Illinois (my first ride in an airplane was from Winnipeg to Chicago on Northwest Orient Airlines), and then to take a further week to see Philadelphia and New York. In one of my last conversations I had with my sister, before she died unexpectedly in 2018, she told me that when I returned to Winnipeg that summer, she thought of me as a man for the first time. I was 18 and she was 23. I thought it was because I had bulked out because we could eat all the food we wanted and it was good. Later a friend I told that story to told me that she probably saw more than that: possibly a certain maturity after I had been in a mining camp with 300 guys in the middle of the wilderness. Lots of applying economics to my life.   (0 COMMENTS)

There are different versions of a saying I just saw on Twitter: “The State can give you nothing, because it produces nothing.” The statement does not challenge anything fundamental I believe. On the contrary, it would seem to buttress some of my arguments. The problem, however, is that it is false. The State certainly produces something in the economic sense, that is, goods and services that somebody is willing to pay for. The State may waste resources in its production, including by producing certain goods and services whose costs no consumer would be willing to pay. But many are willing to pay for the enforcement of the rule of law, which requires police and courts, as well as for national defense (which would be better named “territorial defense”). It is true that, given the inefficiencies of government production, people pay more in taxes for these and other public services, but this does not change the fact that there are goods and services that many are happy to consume even given their tax cost for them. Assuming there were no state, many if not most people would be willing to pay private producers (associations or for-profit companies) to produce some of the services they are now compelled to buy through taxes. And of course, if a state, on net, in some meaningful sense, destroys more value than it produces, anarchy would be the solution. The reader intrigued by the last two sentences and who wishes to explore the economics of anarchy should find a few useful readings in my recent post “Politics, Anarchy: What We Know (Nearly for Sure).” There are many other books to read on this topic, including Anthony de Jasay’s Against Politics: On Government, Anarchy, and Order (Routledge, 1997). Believe me, the effort is worth it. (And effort there is, even if you are a professional economist and political philosopher.) Perhaps you won’t end up agreeing with all or with the main arguments for anarchy, but the worst that can happen is that you change your mind. There are worse things happening in the world. Here is another illustration of what production is, taken from the private economy. In 1963, the federal government imposed tariffs on the imports of brandy and a couple of agricultural products. The tariffs became known as the “Chicken Tax” because they were retaliation for a European tariff on poultry. All these tariffs applied worldwide. The American automobile industry, which was starting to feel the heat of foreign competition, obtained the inclusion in the Chicken Tax of a 25% tariff on imported light trucks including pick-up trucks (see my EconLog post “Why the Chicken Crossed the Road,” March 30, 2018). The consequence, of course, is that the price of all light trucks, including domestically-produced ones, was pushed up toward 25%: that’s why the American automobile industry wanted it—to raise prices on the domestic market. Six decades later, the chicken tariff on light trucks still exists, which is one reason why many foreign producers such as Toyota and Honda established plants in the US to manufacture their pickup trucks. They thereby reduced the impact of the chicken tariff by incurring higher production costs here, which certainly means that prices are still higher than they would otherwise be. American purchasers of light trucks are still gouged by their own government, but saying that Ford, GM, or Stellantis produce nothing in America would be false. They just charge their customers a non-competitive price. As formulated in the Twitter post I saw, the statement is literally false anyway. The state can give you something that it does not produce: it just has to take it from somebody else. Indeed, redistribution represents the largest part of contemporary government budgets. In a more general form, this is the main argument of Anthony de Jasay’s The State: the state governs, which, de Jasay argues, means nothing else than favoring some citizens to the detriment of other citizens. Going back to my starting point, defending valid theories with bad ideas is problematic for at least two reasons. First, truth has a value of its own. When one incorporates false claims into a theory he believes in, he invalidates it or parts of it. Second, it is already difficult enough in our statist world to persuade our fellow humans of the validity of classical liberalism, libertarianism, or some shades of them, without using arguments that are false on their face and easy to debunk. (0 COMMENTS)

I’ve spent several blog posts summarizing the argument Yoram Hazony makes in his book Conservatism: A Rediscovery. So, what to make of Hazony’s case?  To begin with, do Hazony’s definitions of conservative and liberal make sense? One might say this is a moot question – Hazony is free to stipulate what he means by “conservative” and “liberal” and make his case according to those definitions. And in a sense I agree – as Hazony correctly notes, many people have used the term “conservative” to refer to many different worldviews, and for Hazony to make his case for conservatism effectively it is necessary to make clear exactly what he means when he speaks of conservatism. That said, his definitions are not without issue.  One issue is that it makes for some odd classifications. For example, if asked to put together a list of the most influential conservative thinkers in academia, one name that is almost guaranteed to be on anyone’s list is the Princeton professor  Robert P. George. Yet Robert George argues for religious freedom on the grounds that religious freedom is a universal human right, and the existence of this right is knowable by consulting reason – the kind of rationalist argument Hazony says is characteristic of liberal thought. So, by Hazony’s reckoning, we would have to classify Robert George as a liberal, not a conservative. If your definition of conservatism commits you to saying “Robert George isn’t a real conservative” you should expect a few people to raise their eyebrows in response. Perhaps that is a bullet Hazony is willing to bite – he briefly acknowledges this concern by noting “there are many writers who believe that conservatism should be based on something like Catholic natural law teaching, itself a form of philosophical rationalism.” But he also acknowledges this is a question he will leave unexplored, as “the book is already long enough, and an adequate treatment of this question would have taken me too far afield.” Fair enough – no matter how much we say on a topic, there is always more that could be said. But acknowledging that there are forms of rationalist thought like Catholic natural law theory (or secular natural law theory, for that matter) that also lead to conservatism undermines Hazony’s usual framing of secular/rationalist/liberal vs religious/empiricist/conservative.   There are numerous other examples of thinkers who don’t fit Hazony’s classification. It’s not as though all liberal thinkers accept every liberal premise Hazony articulates, nor does every conservative thinker accept all of Hazony’s conservative premises. One example that jumps to mind is the economist and philosopher F. A. Hayek. Hazony does acknowledge that Hayek confounds his classification in a way, because Hayek’s work contained “the most sophisticated defense of inherited tradition to appear during the twentieth century. He added significantly to the theory of tradition and custom, in the process making the Enlightenment liberal rejection of inherited tradition look amateurish and ill-considered.” Nonetheless, Hazony says, Hayek is a liberal, not a conservative, because Hayek was excessively concerned with the liberty of the individual, declaring individual liberty to be the supreme principle.  For Hayek to be a proper empiricist, Hazony says, “the status of the principle of individual liberty would have to be that of an empirically derived moral rule – which would have to be balanced out against similarly derived moral rules such as peace, justice, stability and permanence, national independence, and national cohesion, in an ongoing process of adjustment in light of experience.” Instead, Hazony says, “the freedom of the individual is not, for Hayek, an empirically derived moral rule which must be balanced against other such principles in seeking to steer the ship of state” but rather “appears to be a dogma or axiom that Hayek imports from Enlightenment rationalism.”  As it happens, Hazony is simply mistaken in his characterization of Hayek. A closer reading of Hayek’s work reveals that Hayek does not argue that “individual liberty is the supreme principle” as Hazony claims, but rather that a stable and enduring political system requires that we act as if individual liberty is a supreme principle, which cannot be traded off for the benefit of other concerns. And Hayek does, in fact, ground this argument based on what he believes experience shows, arguing in the first volume of Law, Legislation, and Liberty that, as a matter of experience, when “the choice between freedom and coercion is thus treated as a matter of expediency, freedom is bound to be sacrificed in almost every instance”, and thus “freedom can be preserved only if it is treated as a supreme principle which must not be sacrificed for particular advantages”[emphasis added], because the “progressive discarding of principles and the increasing determination during the last hundred years to proceed pragmatically” has shown destructive results. Treating individual liberty as something to be traded off for the sake of other socially desirable goals is “something most of the Western world has indeed been doing for the past two or three generations, and which is responsible for the conditions of present politics”, and experience shows this “view which has now dominated politics for so long has hardly produced the results which its advocates desired. Instead of having achieved greater mastery over our fate we find ourselves in fact more frequently committed to a path which we have not deliberately chosen, and faced with ‘inevitable necessities’ of further action which, though never intended, are the result of what we have done.”  So Hayek doesn’t argue as an axiom that “individual liberty is the supreme principle.” Hayek argues that we should act as if individual liberty is the supreme principle, because experience and history show that this approach works better than the alternative. Hazony is free to disagree with Hayek about whether or not this is really what experience shows – but he’s wrong to say Hayek treated the priority of individual liberty as an axiomatic premise. Hayek’s argument is firmly rooted in experience.  Hazony has also shown a strange tendentiousness in how he interprets the importance of liberty among other thinkers. For example, when discussing his book in an interview with Michael Shermer on Shermer’s podcast, Hazony again reiterates the need to keep individual liberty in its proper scope. Repeating his point from the book that liberty is just one goal among many listed in the preamble to the Constitution, Hazony calls out that there are “seven different purposes of government” listed in the preamble, and that “the very first one is to form a more perfect union” while “only the last one is the blessings of Liberty.” He seems to be implying that coming last on the list says something about its relative importance – buy why think that? I could just as easily (and just as arbitrarily) suggest that it being the last item mentioned signified that it was the most important of the values, because it shows liberty is the one to which all the others have been building up. He also points out in his book that these seven goals are very similar to a list laid out by Edmund Burke, thus connecting American conservatism to English conservatism. But liberty is placed much higher on Burke’s list – and there, Hazony feels no need to make a point about the ordering. In the next post, I’ll focus on some of what Hazony says about philosophy and economics.  (0 COMMENTS)