Category Archive: Government
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Alexis de Tocqueville feared that Americans would willingly give up freedom for a “soft despotism.” Full interview here.
Comments Off on Reddit AMA with Economist and Iconoclast, Professor Bryan Caplan
Bryan Caplan is a Professor of Economics at George Mason University. He is a prolific blogger and author of three books: The Myth of the Rational Voter: Why Democracies Choose Bad Policies (2007), Selfish Reasons to Have More Kids: Why Being a Great Parent is Less Work and More Fun Than You Think (2011), and the forthcoming The Case Against Education.
Professor Caplan has appeared in the New York Times, Wall Street Journal, and Washington Post, and has appeared on ABC, Fox News, MSNBC, and C-SPAN. He recently appeared on The Rubin Report in association with Learn Liberty, and starred in the Learn Liberty video series: Econ Chronicles.
Mark your calendar and join us for a rousing conversation at Reddit.com/r/Libertarian this Tuesday, June 20th at 3:00pm ET where you’ll have the chance to chat with Professor Caplan and ask him anything!
Update: The AMA is now live!
Comments Off on Sports betting should be legal across the country. Here’s why.
The Oakland Raiders’ impending move to Las Vegas has reignited debate about the legality of betting on sports. Most states ban betting schemes (although Nevada is an exception), and NFL Commissioner Roger Goodell supports these bans. Other commissioners, like the NBA’s Adam Silver, oppose them. As for the general public, a 2011 study from Fairleigh Dickinson University shows that Americans are split on the issue. So, should we lift the bans or not?
The Paternalist Argument
As far as I can tell, the main arguments against legalizing betting are paternalistic: the state should ban gambling to protect gamblers from themselves. For instance, a ban could prevent gamblers from becoming addicted.
But outright prohibition is not the only way to address gambling addiction. For instance, some states offer self-exclusion programs, which enable people to voluntarily ban themselves from certain gambling activities. Gambling facilities must then refuse wagers from and deny gaming privileges to these people; facilities can even arrest self-excluded patrons for trespass if they enter the gambling floor.
What’s more, other activities like drinking alcohol present a considerable risk of addiction and yet remain legal. Rather than imposing a general ban on drinking, we take a more targeted approach and offer treatment to those particular people who suffer from an addiction (and ban drinking for minors, too). I see no reason to treat sports betting differently.
Your Money, Your Decision
Here’s a positive argument for legalizing sports betting: people generally have the right to spend their money as they see fit, so they should be allowed to spend their money on gambling. If you may spend your paycheck on a sports car to chase thrills, why aren’t you allowed to spend it betting on the Super Bowl for the same reason?
Alternatively, you could bet on sports in an attempt to make money. In this respect, betting on sports seems similar to other, perfectly legal activities. Someone who buys stock in General Motors is “betting” that the company will sell lots of cars, just as someone who puts money on the New England Patriots is betting that they’ll win the game.
Skill vs. Chance, Investing vs. Gambling
Maybe investing in the stock market is different than betting on the NBA playoffs because the proceeds of the latter are “predominantly subject to chance.” Suppose this is true — whether you win money from your bet on the Golden State Warriors is mostly a matter of luck, whereas whether you win money from your “bet” on General Motors is mostly a matter of skill.
Why should this matter when it comes to legality? The thought might be another paternalistic one: in games of chance, your odds of winning are “too low,” so the state must stop you from gambling away your money.
But people often have higher odds of winning games of chance than games of skill. Suppose a local pub charges a $100 entry fee for its dart contest. The winner receives $1,000. Darts is a game of skill, not luck. The trouble is, I don’t have the skill. So I have virtually no chance of winning. Crucially, I have a significantly lower chance of winning the dart contest than winning my bet on the NBA Finals (which hovers around 50%). It’s strange, then, that I may enter the dart contest but I may not bet on the NBA Finals.
Lastly, I may legally perform actions that have a 100% chance of financial loss, so why isn’t it legal to perform actions that only have, say, a 50% chance? For instance, I am within my rights to simply hand over $500 to Brooke the bookie as a birthday gift. So why may I not hand over $500 to Brooke when there is at least a chance that I’ll get some money back on a bet?
Of course, betting $500 on sports could be a bad idea. But then again, gifting Brooke the $500 could be a bad idea, too, and that’s perfectly legal. Even if sports betting is unwise, that’s not nearly enough to make it criminal.
Comments Off on Government surveillance and academic thought policing are taking us to 1984.
There are some books you should read only once, and others you should reread occasionally. George Orwell’s 1984 is one you should read repeatedly and deeply. Without it, no education is complete.
It tells the story of a man, Winston, grappling with ordinary desires for love and privacy — but in a totalitarian socialist world in which every word and even desire is subject to control and punishment by “the Party.”
1984 teaches timeless truths and shows its characters grappling with questions that do not have easy answers. The dystopia Orwell presents emerged out of the soil of a society in which little by little, inch by inch, thought by thought, and idea by idea, people forsook their liberty, their dignity, and their humanity.
Parallels between the world of Orwell’s 1984 and our own are increasingly obvious — and troubling. For one thing, we live in an ever-growing “anti-terror” surveillance state, and one that is encouraged if not openly embraced by fearful people who are, if I may be blunt, really bad at math and really lacking in perspective. Every death is a tragedy, but terrorism is far down on any list of mortality risks—and it always has been. And there is little evidence that all the surveillance and security programs added since 9/11 have caught or prevented terrorists in any significant number.
For another thing, on college campuses across the country, we are seeing disinvitations of controversial speakers, demands for “safe spaces,” and shout-downs of ideas deemed heretical — proof that the open and rigorous exchange of ideas does not come easily and must be defended.
The campus thought police
In their Atlantic cover story, “The Coddling of the American Mind,” Greg Lukianoff and Jonathan Haidt explain and explore how higher education is fast becoming a place where students expect not to be faced with or to contend with controversial ideas but to be protected from them. Commentators such as American Enterprise Institute scholar Christina Hoff Summers have drawn unflattering comparisons between Orwell’s Junior Anti-Sex League and those controlling campus discussions today. The subtle change from “these ideas are incorrect as matters of logic and evidence” to “it is immoral to even subject these ideas to rigorous inquiry” threatens to subject the liberal arts and sciences to a thought police.
The way the characters in 1984 are “conditioned” once their subversive activities are found out turns this novel from interesting dystopian fiction to an absolutely terrifying classic. Mere obedience is not enough for the Party officials. They can only be satisfied, if that’s the right word, once they completely occupy the thoughts and wants of their subjects.
An obedient objector is still a potentially dangerous revolutionary. Dissent — anything other than wholehearted, brainwashed obedience — is intolerable. The humanity of Winston is completely abolished, and in a fate worse than death, his resistance is crushed and he comes to love Big Brother.
On this, the 68th anniversary of 1984’s publication, it is perhaps worthwhile to take a few minutes and consider whether we have unconsciously adopted the three slogans of the Party — War Is Peace, Freedom Is Slavery, Ignorance Is Strength. In our unthinking rush for “safety” of all kinds, I’m afraid that in some ways, we have.
Dave Rubin and Deirdre McCloskey: Free Trade, Trans in Academia, and the (Classical) Liberal Heritage — Full InterviewComments Off on Dave Rubin and Deirdre McCloskey: Free Trade, Trans in Academia, and the (Classical) Liberal Heritage — Full Interview
Dave Rubin: We’re continuing our partnership with Learn Liberty this week, and joining me is an author of seventeen books, a former professor of economics, history, English, and communications at the University of Illinois at Chicago and a historian and economist in her own right, Deirdre McCloskey. Welcome to The Rubin Report.
Deirdre McCloskey: Well, thank you. I’m very glad to be here.
Rubin: That is quite a bio for you. It took me a while because there was a lot that I had to leave out but there’s only so many words I can say in a sentence.
McCloskey: Well, I’m very old, so I’ve had a very complicated life. I’m also an adjunct professor of classics and philosophy, or was, and I’ve taught philosophy for money in Holland. I feel that you can’t be a real economist, which is what my original training was, without at least reading books in the other fields, to kind of put the rationality of humans in some kind of context, so you include the other things they do.
Rubin: Yeah. All right, so before we get going here, I thought the best way to start would be to read a quote from you. I’ve never done this before in the year plus that I’ve been doing this show, but I thought this was so perfect, and it sort of captures everything about you, and I think you know what I’m going to read already. I want to get this right. “I’m a literary quantitative post-modern free market progressive Episcopalian Midwestern woman from Boston who was once a man, not conservative. I’m a Christian libertarian.”
McCloskey: That’s me there. That’s me. All the way.
Rubin: I mean you’ve given me everything here. I don’t even know where to go from here. Okay. Where should we go from here? All right, well, let’s start because I don’t think we have to spend a tremendous amount of time on it unless you want to, but let’s just start with the trans stuff.
McCloskey: Well, sure. I was born Donald, which by the way in Irish means world ruler, so you can apply this to our president, our new president.
Rubin: Oh, lordy, lordy. We’ll get to him in a little bit.
McCloskey: We’ll get to him in a while. Then I, from age eleven on, I wanted to be a woman, but I was born in 1942, so I’m very aged. In 1953 there was nothing to be done about it, so I said, okay, I got to be a guy. So you’re looking at the captain of her high school football team, admittedly a very small school. I was an athlete in college and was married for thirty years to the love of my life and have a couple of grown children and three grandchildren. I had a full male life up to age 53 and then I…. My joke is: did I want to be an old man or an old woman? I thought, oh well, let’s be an old woman. It’s not as trivial. This isn’t about cost and benefit. It’s not a career move to become a female professor. That doesn’t improve you….
Rubin: Yeah, the idea that you even framed that within an economic model is sort of amazing.
McCloskey: I did. At one point I did about two months or so before I realized that I could do it and should do it, which was August of 1995, I actually did a cost-benefit study of changing gender. I mean, this is insane. This was not how you make decisions.
Rubin: So what did you do? Did you sat down with two columns and….
McCloskey: I sat down with two columns. It was completely ridiculous and then in the middle of August in ’95, I, as the English say, they’ve got a nice expression, I twigged to it. I got it. That I could do it and should do it. I was not a sad sack before. I was not going to commit suicide or something, but I’m happier. Unfortunately my marriage family turned against me. My former wife of thirty years and my children haven’t spoken to me since those days.
Rubin: Wow. Did your wife know when you first got married or throughout the marriage that….
McCloskey: Yeah, throughout the marriage she knew what I knew, which was that I was a heterosexual cross dresser. Eh, every once in a while, not very often, I would dress in women’s clothes, not in her presence, and it wasn’t a big deal. If like a foot fetish or something, guys as women learn to have a lot of little weirdnesses that they go in for and it doesn’t really amount to anything often. That’s how I viewed it for decades.
I was terribly ashamed when I was younger, and then finally, in my forties or something, I said, oh well, okay, so what? So we went along perfectly well and then that last year, 1995, I finally twigged as I said.
Rubin: When you did it, at that age…. I mean people think of it now…. I mean trans has become sort of hot now.
McCloskey: Not in 1995.
Rubin: It’s the.… It…. Right, it wasn’t at that time. There was really sort of nobody to.… I’m sure you could find somebody academically to look at.
McCloskey: Not too many.
Rubin: If you did some research you could find somebody.
McCloskey: Very few.
Rubin: But very few in terms of culturally and on television and all that kind of stuff. When you decided to do it, what was the reaction after? You had a career, you were a professional, etc., etc.
McCloskey: It was kind of funny because the economists tended to.… You know, all economists, even if they’re not free market economists, tend to think that choice is desirable, and there’s not controversy about it, so they would say, oh well. It’s okay if he, I mean she, wants to do it. I mean, whereas my historic.…
Rubin: So that would be the libertarian view of it.
McCloskey: That’s the kind of libertarian view, but most economists, even if they weren’t libertarians seem to have this attitude. My historian colleagues and my colleagues in anthropology and so on, they were less, it’s less easy for them because they think in terms of identities. They think, and we … Once you have an identity you’re supposed to keep it. If you’re Chicana, you’re Chicana, period. I think that was their problem, but it wasn’t.… You know I didn’t, very few people turned away from me, and the women especially of all descriptions were wonderful.
In my book called Crossing, a memoir published in 1999, I have an opening section where I thanked all the women who helped me a bit, you know, in sending a nice letter or inviting me to lunch and so on. It was 240 names in the three years of my transition.
Rubin: Wow. What’s the part of being trans that people don’t think about it? Is there a piece that.…
McCloskey: Well, what they don’t get is it’s not true the kind of journalistic phrase of a woman trapped in a man’s body or vice versa. It turns out there are about equal numbers on the other side, going the other way. They think it’s this terrible conflict, whereas, you know, people adjust. People adjusted to extermination camps. They can adjust to almost anything. I don’t mean to compare being a guy to being in an extermination camp, but they can adjust.
Then the other thing that they need to know is that it’s a minority interest. It’s more common than we once thought, but it’s not going to change the gender ratios. It costs about as much as a new car, kind of a moderate new car, not a Mercedes. When I see new cars on the street, I say, oh, why didn’t those people change gender instead. Oh yeah, they don’t want to. Most people are satisfied with their gender, even if they regard how men are treated or how women are treated as makes them uneasy and they worry about gender stereotypes, nonetheless, they don’t want to change.
Rubin: Yeah, did you have any regret after? I know.…
McCloskey: No. There’s something that’s really important for straight people to understand. No one has regret. A, the number of people who have a regret one way or the other, male to female, female to male, is minuscule, and B, if they have regret they can change back. You say, okay, well, gee, you can’t grow a penis. Well, so what? Many perfectly well-functioning men don’t have penises from terrible accidents or war injuries. Big deal. It’s how you present yourself. It’s how you live in the world. That’s what determines how society takes you on. You know what I mean.
Rubin: I’m curious. You mentioned the economists that you worked with and the historians and the sociologists. What about the psychologists at the university?
McCloskey: Oh, the psychologists are fine.
Rubin: Even back then? None of them were.…
McCloskey: Not a problem. But the psychiatrists are really dangerous.
Rubin: Yeah. Can you explain the difference, for someone that doesn’t know the difference between a psychologist and a.…
McCloskey: Well, a psychiatrist is one with an MD. Is a doctor. They’re usually he but some shes. Anyway, he’s a doctor that specializes in diseases of, mental diseases. Thank God there are lots of things we can do about depression and a little bit about schizophrenia, and drugs and so on have been developed, and I’m all for it, but the trouble is the psychiatrists now, the MDs know nothing about transgendered things, yet they figure they’re an expert. You know the old joke is, what’s the difference between God and an MD? God doesn’t think he’s an MD.
I was seized by my sister twice. She tried it three times for mental observation and confined in a madhouse twice. It cost me $8,000 in attorneys’ fees to get out of these places.
Rubin: This was when you were transitioning?
McCloskey: This is in ’95, the end of ’95. The psychiatrists were just really creepy. It was the worst horror movie you can think of. Here’s my advice to anyone who gets seized for.… I mean, the cops come, seized for observation. Don’t make any jokes. They have no sense of humor. You make a joke, they write it down.
Rubin: They write it down. That wasn’t funny.
McCloskey: It’s really scary.
Rubin: That’s really.… You know, I never really thought of this before, but so for a psychiatrist in a weird way, they would be the least qualified to deal with a trans person because their method is based in drugs, right?
McCloskey: It’s based in drugs, and it’s based in extreme pathologies. Thank god.… I mean, I’m not against psychiatry as a profession. I think it’s fine, although by the way it’s the source of homophobia, 100 years of homophobia in Northern Europe was I think closely connected with the rise of psychiatry as a profession. But in any case, not against them in general, but they deal with people who are really ill, and so they want to put you in some illness category. Instead of saying, “Oh well, that’s kind of weird. Hey, how about them Hawks?” That’s actually how the students at the University of Iowa, where I was teaching at the time, that’s how they reacted. They had seen rock musicians with eye makeup and Boy George and so on. They didn’t care. It didn’t bother them.
Rubin: You know, it’s funny. I only went to a psychiatrist once because I wanted to get Xanax because I used to have anxiety related, just to fly, when I was on a plane, and that was it. That was the only reason I wanted it. The psychiatrist would not let me leave without telling me that I had time-shift disorder, which sounds like an absurdly made-up thing, and gave me a prescription for something else, which I proceeded to throw out when I walked out of the building, but that sort of idea, we can prescribe everything.
McCloskey: Here’s the symbol of it. The Diagnostic and Statistical Manual of Mental Disorders, DSM, it’s been through five editions since, I think, the 1960s. It’s going to name and tell you how to diagnose all the mental disorders. It starts in the 1960s being about that thick, about half an inch thing. By now it’s about three inches thick, which implies that we’ve all become crazier since the 1960s.
Rubin: Well, what does that.… Does that say that our modern lives have made us crazier, or that the pathology of finding things wrong with people.…
McCloskey: It’s the authoritarian mentality. It’s the “I’m from the government and I’m here to help you” mentality. It’s the nudge mentality. It’s the socialist mentality. It’s the conservative mentality. It’s everything except true liberalism, which is if people are not doing something to hurt you, leave them alone. There’s a deep libertarian argument here. The famous psychiatrist Thomas Szasz used my case in his last book as an instance of the overreaching of the profession of psychiatry.
Look, you get put in the mental hospital, you may not ever get out. Because they’re in charge. If you’re put in jail for, I don’t know, armed robbery, you pretty much know your chances of getting out and so on because it’s on TV all the time, at least in the movies. You have some conception, you know, from your friends, but you don’t know with psychiatry. It’s very scary. I was very frightened by these episodes.
My sister was a psychologist, academic psychologist. At the time she was at the Harvard School of Public Health. You can be sure that when she wrote to the judges she used the Harvard stationary.
Rubin: Yeah, which I assume helped at some level.
McCloskey: Oh boy, did it. She could say.… She told lies. Now she and I are very close, but it took a few years for me to get over it.
Rubin: All right, so one more thing on trans, and then I want to move to actual issues. Not to diminish the trans issue, but we’ve established it.
McCloskey: Unfortunately it’s going to be at least the second sentence of my obituary. I’m trying to drive it down into, I don’t know, the fourth sentence.
Rubin: Well, look, you gave me a lot of good other buzzwords here, so we’re going to get to those in just a second. My last thought on it would be 2016, this was the year that trans really became mainstream, you know.
McCloskey: Oh yeah, it’s amazing.
Rubin: From Caitlin Jenner to.…
McCloskey: Caitlin Jenner.
Rubin: Orange Is the New Black and just this feeling of there are trans actors, now there’s a visibility.
Rubin: Transparent. Of course I’m forgetting.
McCloskey: Where the only sane person on the set is the transitioner.
Rubin: Yeah, yeah, exactly. Right. Really flipping everything on its head. That must feel incredibly validating for you.
McCloskey: Well, it isn’t so much validating. I had a lot of years to work on validation, but it’s another freedom. Look, all men are created equal, endowed by their creator with certain inalienable rights. A slave owner wrote that, yet it’s been the kind of marker, laying down a marker for American politics, and we keep pushing it. First we got rid of slavery eventually. Then we had votes for women. Then we had, finally, civil rights in the South. Then we had rights, then we had feminism. Then we had gay rights. Then we had handicapped rights. All the ones that happened during my lifetime I have the correct opinions about.
I was in favor of the civil rights movement. I was against Vietnam. I was in favor of gay rights. I was in favor of women’s rights, blah, blah, blah, blah, blah. But I didn’t do anything about it. I didn’t burn my draft card. I was still Donald. I didn’t do.… I just said, oh gee, that’s good. Then God, in 1995, tapped me on the shoulder and she said, she’s my Anglican god, she said, okay, deary, now you can testify. If you don’t do this, if you don’t.… I mean allow yourself to be a public exponent for trans people then you’re just a jerk, and so I did.
I’ve been giving talks. I’m not a professional gender crosser. I’m a scholar. I’m a teacher. I’m a writer. Yeah, but I think I should, a tenured professor should be the one that stands up because she can’t be fired.
Rubin: Yeah, that’s a little bit.… It reminds me sort of when Jason Collins, the NBA basketball player, came out, he was really sort of at the end of his career, wasn’t.… It allowed him to do it in a way where they knew the Nets could sign him, and then at the same time, he wasn’t going to play much. It would sort of go under the radar, but something good would have come out of it. But you put.… Even though you took risks obviously. You’ve put your butt on the line.
McCloskey: Well, I thought I was going to lose my job but actually it turns out that the University of Iowa, where I was teaching at the time, was very progressive in these matters, way more progressive than my alma matter, which is Harvard, in the nineties. Harvard, you know, the Eastern privates took a long time to get on this particular train.
It didn’t happen, but it shows in such a career-driven person as me, such a person that wants to publish books and so on, it shows how much I wanted it when I realized I could do it, that I was willing to lose my job.
Rubin: Now let’s shift to some of those other issues because you said something in the midst of all that that I think is a sort of beautiful thing about what real liberalism is. One of the things that I’ve really been making the focus of this show is to show people what real, true, classical liberalism is because I think it’s been conflated with a lot of leftist ideas in America, but really all over the West and to also show that it doesn’t mean that you’re purely a libertarian because I think there’s some problems with that. What would be your.… Do you consider yourself a classical liberal?
Rubin: That would be your.… If I had to put another label on you?
McCloskey: Yes. Yes. I’m certainly a classical liberal. The only trouble with the phrase is that as soon as you say classical, people say, oh well, that’s old-fashioned. In a modern complicated economy we can’t have, we got to regulate, which is of course exactly the opposite of the truth. In a modern complicated economy it’s too hard to regulate. In a household, households are socialists enterprises, entirely appropriately. Mom is the central planner and everything works out just fine. People share. Okay, that’s cool.
That’s for a very simple little economy. For what Friedrich Hayek called the Great Society before Lyndon Johnson took the phrase, namely, a large society, you can’t do the sharing stuff. That’s not how it works. You got to trade and you can’t regulate it. It’s insane to try to regulate it as though people in Washington knew better what to do than the people on the scene. I call it real liberalism. I’m working on a book that maybe I can, of essays that I’ve done on this, called How to Be …, hear this, a Sisterly Real Liberal. I’m hoping to catch my left-wing friends because the word liberal in Britain and the United States got way off track in the late nineteenth century. Came to mean anything.… Came to mean slow socialism.
Rubin: Right. It came to mean progressive basically.
McCloskey: Progressive, yeah.
Rubin: But, as I’ve said many times, progressiveness is starting to veer into regressivism because these ideas are not for liberty and freedom.
McCloskey: It’s not starting to. Right from the beginning, because it was.…
Rubin: So I was just late to the party.
McCloskey: In the late nineteenth century it was terribly paternalistic and in the form of American progressivism, Wilson and Roosevelt, first Roosevelt and all that, it was highly paternalistic. Nasty even, racist. One of the things that my friends on the left think is just grand is the minimum wage, and 100 years ago the minimum wage came into being in the United States, state by state, and its declared purpose was to keep immigrants, women, blacks, Chicanos out of the labor force. To drive them out entirely. Newspaper editorials, economics profession, they all said, oh boy, this is good for the Anglo-Saxon race.
Rubin: Right, basically because those people would be the ones qualified, because those were good jobs to have.
McCloskey: Those were good jobs and you just take all those people out and then the only people that are left are Northern Europeans. It was a terrible, terrible thing.
Rubin: What did they think was going to happen to the other people?
McCloskey: They were going to.… They literally said they’re going to die out. Now how women are going to die out, I don’t quite understand, but these were people in favor of immigration, closing immigration, in favor of segregation. Woodrow Wilson famously would not have a great black scientist to the White House, and so it went.
Modern liberalism was conceived right from the beginning in this authoritarian way, and it’s still, even though they.… My friends, the liberals, liberals in the American sense, have this assumption that people who are not progressive are just bad people. Why would you listen to Hitler? So they don’t listen to arguments that you or I make, so they don’t get that what they’re actually about is authoritarian control over other people’s lives.
Rubin: Yeah. You know, I’ve mentioned this many times over the last couple years, but as I’ve sort of had my awakening to this, and I mentioned to you before, I kind of, I basically was a progressive for a while.
McCloskey: I was too. I was a Marxist at one point.
Rubin: We’ll get to that too. That as I’ve had my awakening, I’ve seen that the most intolerance comes from these people when I try to debate them on ideas. Friends, I’m talking about. The amount of friends that I’ve lost in the last couple years.
McCloskey: I was just reading this morning a column in the Times, the London Times, by my friend Matt Ridley, who’s a science journalist in Britain. He was saying that environmental regulations aren’t working very well. The comments were just terrible. They were oh, you’re a bad man.
Rubin: You must be being paid by the fossil-fuel people.
McCloskey: You must be being paid by the fossil-fuel people, etc., etc. it’s as though they’re just not listening. Matt was making very simple quantitatively based arguments. I don’t need to go into them. Their reaction was not to listen.
Rubin: Right, they sort of hate, progressives sort of hate religion, and yet they love the purity test of religion, they love that.
Rubin: I want to back up to something you said about minimum wage, because just in the last week I was seeing, there were these marches for $15 minimum wage here in the States.
McCloskey: Oh God, what a mistake.
Rubin: So we can unpack that a little bit, but at the same time that I was seeing this, I was also seeing in the news that Amazon is now opening stores that are going to have no employees. You’re just going to walk in, and your phone will recognize something over wifi, and you’ll be able to take what you want. I thought what a disconnect in an idea and the actual world. Amazon is saying we don’t need humans to do any of this anymore and blah, blah, blah, and meanwhile you have these people out there. I think most of their intentions are good.
McCloskey: Of course their intentions are pure, and it’s sort of like Immanuel Kant. They think that all that matters is intentions, and I wish they’d get over that. Look, they’ll say, my friends on the left, and I do have a lot of friends on the left, they’ll say we ought to put a tax on soft drinks because, boy, it’s making poor people obese. This is part of the paternalism. Then I say, well, isn’t labor the same way? If you make the price of labor higher, won’t people consume less labor? No, no, no, no, no, that’s not true. But dear, you just said that it works for soft drinks. Why not for labor? Oh, labor and soft drinks are different.
McCloskey: Okay. Gee whiz. People are going to hire people at $15 when they’re only worth $10. Hey, what kind of insanity do you think prevails in the business world?
Rubin: Right. Then the same people who are out there protesting for the $15 minimum wage are the same people who are buying a lot of stuff on Amazon privately at home.
McCloskey: Of course they are.
Rubin: It’s … We all sort of live in this strange place between our actions and our.…
McCloskey: I know, it’s like being against Chinese trade yet and buying a $5 hammer made in China. Or like Donald Trump being against Chinese trade and those ties that he wears four inches too low are all made in China.
Rubin: Right. So in Trump’s case, when I saw people tweeting about that, I actually argued he was making logical sense because he was saying, look, our deals are bad, so me as a businessman makes them in China or in Mexico, but I want the deals to be better. Do you think that’s a fair.…
McCloskey: I think that’s a fair characterization of his thinking.
Rubin: Yeah, I’m not saying it’s right, but I’m saying that …
McCloskey: To the small extent that he thinks at all, but it’s not, I think you agree it’s not sensible as economics. You can’t get a better deal than more or less free trade and that’s where we’ve moved. After the war, every country was protectionist. There were no free trade countries. Even the old free trade country, Britain, had long since, thirty years before become protectionist country.
Since then we’ve been moving steadily towards free trade, and it’s been very good for the poor of the world. This idea that the poor are made worse off by free trade is just lunacy.
McCloskey: Because, you know, it’s the wage per.… What you can get with the wage is the key point. What you can get with the wage has steadily increased, even though you’ve heard people say, oh, things are getting worse. No, they’re not. The sky is not falling.
Rubin: So what do you make of Trump when it comes to economics, because on one hand I think there’s a sense.… You know a lot of people like the fact that it was “buy America, we’re going to fix these trade deals, we’re going to do that,” but that’s also, that’s not really a conservative position.
McCloskey: No, it’s not.
Rubin: Because it is going to take more government interference.…
McCloskey: Of course it is.
Rubin: To do those things so he’s sort of.… What does this say really about the conservative movement actually?
McCloskey: Well, he’s not a conservative, and that’s why people like Ryan didn’t like him. Romney and so forth, who embarrassingly bowed to the new emperor.
Rubin: You saw that picture at dinner?
McCloskey: Oy vey. But okay. I want what’s best for the American people. I don’t care if it’s thought to be progressive or conservative or liberal, real liberal, classical liberal. His policies are just not going to help the ordinary person. In fact, what I kind of hope … Actually I don’t hope it exactly, but I think what is going to happen is it will be so plain that his policies don’t help those 80,000 people who got him in the White House that maybe they’ll wake up. I hope they do and see that.…
Look, manufacturing jobs in the United States peaked in 1977. They’ve been going down ever since. Why? Is it because of China, Mexico, and so on? Not much. That’s maybe 10 percent of the lost jobs. Jobs are being lost either to other Americans, moving to California or Texas, especially to Texas, or to automation. Just as you said, the store, the bricks-and-mortar store for Amazon, has no people in it. Well, that’s what’s happening, and now, that’s a good thing, not a bad thing.
The purpose of the economy is not to make jobs. Jobs are infinite. We can make construction workers use teaspoons instead of shovels and that will make for more jobs. The purpose of an economy is to get more goods and services so that we have the leisure to pursue our hobbies and to educate ourselves.
Rubin: Would a classical liberal want a true.… What would be the difference in an economics sense from your argument as a classical liberal to someone like Paul Ryan, who I think is probably more of a libertarian, but at the same time he’s stuck in it with the Republicans and it blurs the lines?
McCloskey: Well, some of the proposals that he and especially Trump are going to make, and I hope they pass, make sense to me, like cutting the corporate income tax. Corporate income tax, most economists left and right agree, is a kind of a silly tax. It’s double taxation to start with, but it’s also.…
Rubin: Can we just explain why that is because I know people say that but for business owners that money’s been taxed throughout. You paid payroll tax and all the.…
McCloskey: It’s taxed.… Exactly. All the people involved, the human beings involved, the workers, people employed by the suppliers to the corporation, the owners of the various corporations that have supplied them, the customers, the owners of the stock in the corporation you’re talking about, all of them get taxed on their income.
I wish not. I wish there was other ways of taxing like consumption taxes, but set that aside. Income tax, we know who pays it pretty much. When I get taxed, I get taxed. There it is. Deirdre McCloskey pays about a third of her income to the government. Okay. At least the marginal income. We don’t know who pays the corporate income tax. We’ve been working on it for about seventy years, trying to figure out with econometrics and fancy math, and eh, we do studies. We don’t know who pays it. It may be the workers for the corporation, it may be the managers, maybe the owners. That’s who people think, it’s these rich owners and for one thing they’re not rich and for another thing we don’t know they pay it. Maybe the customers.
Rubin: Right, meaning that it trickles down to the workers or the customers, the cost.
McCloskey: It goes away. The cost is imposed at the level of corporate profits. Suppose the corporation moves to Ireland. Who ultimately pays for that? Who gets hurt? Who gets helped? Well, some Irish people get helped, and some Americans, employees, say, get hurt. In effect, the burden of the tax is on these American workers.
McCloskey: I’m not saying we know that because we don’t know. It’s crazy to have a tax that you don’t know the incidence of. You don’t know who really pays it.
Rubin: So when Trump then says we’re going to renegotiate these trade deals to keep companies in America, that makes sense to a lot of people …
McCloskey: I know, but it also …
Rubin: You’re saying it doesn’t because of regulation, it’s done via regulation.
McCloskey: Well, no. The problem with it is that we don’t know who’s going to get the benefit. What we do know, suppose we just cut off foreign trade entirely. Now that’s not his proposal, but suppose we just walled off the United States. Well, then, every American would be poorer. Every single American.
Now, some of them would get fancier jobs because we’d have to make our own steel instead of importing it as we do largely now, but so, plus for them. Everyone else gets hurt. That’s true of the minimum wage. It’s true of a lot of the.… Look I was talking to the make-up person here about licensing hairdressing. She’s also a hairdresser, besides being a cosmetologist. Cosmetology is not licensed. Hairdressing is. Hairdressers have a little bit higher income, say, not that high but a little bit higher because of these crazy licensing laws. You have to go to school for two years to become a hairdresser. What? We economists are not licensed. You can set up as an economist tomorrow.
Rubin: I just spray once and then kind of.…
McCloskey: Well, forget about the hair. You can become a professional economist tomorrow by hanging out a shingle.
Rubin: It’s that easy?
McCloskey: It’s that easy. There’s no.… You don’t have to get a PhD or anything. You just say, “I’m an economist,” because there are no laws against that. But there are laws against calling yourself a hairdresser without licensure. That means that every one of, all the women especially, have slightly higher prices for hairdressing, and this little group of hairdressers are a little bit better off.
Now that’s a lousy deal. That’s what this anti-trade, minimum wage, more regulation, that’s what it does. It gives George or Harriet a little bit, and it’s like agricultural subsidies, and everyone else is made worse off.
Rubin: Because then all the people that have to use them have to pay more.
McCloskey: Exactly. They have to pay more.
Rubin: And then they have less money for something else.
McCloskey: Take a look at agricultural subsidies. Cotton farmers. Large cotton farmers are the main.… I mean large. Rich people. 500 of the, no, 20 of the top billionaires in the United States, billionaires get agricultural subsidies from the United States government. I don’t mean that’s the main source of their income because agriculture is quite a small industry in the United States, but you can tell. Big massive cotton fields in Alabama are being financed by the United State government. It’s nuts.
Rubin: So how do we untangle some of that stuff? There’s so much of that, this idea of crony capitalism and the giant, these twenty people that can pay all the lobbyists. This of course is what Trump was running against. It’s what Bernie Sanders was running against.
McCloskey: I know.
Rubin: How do you untangle some of that stuff without actually burning down the system? Because that’s what I think a lot of people think is we have to burn the system down, and I certainly wouldn’t be for that.
McCloskey: It’s puzzling because, look, the system is democracy, and I’m in favor of democracy. I’m a democrat, small d. H. L. Mencken, the great libertarian journalist of 100 years ago, said democracy is the theory that the ordinary people know what they want and deserve it good and hard. That’s, I’m afraid, is what’s happening with Trump, but what to do?
Well, maybe Trump will be able to stop some of the regulations, but there’s a clumsiness about it. He’s put this oil man forward as his secretary of state, and he’s handed over the Department of the Interior to another oil man.
Rubin: Right, so Rex Tillerson, the Exxon guy, we’ll see. By the time this airs.…
McCloskey: He might not.…
Rubin: It sounds like he is, but I.…
McCloskey: He might not make it.
Rubin: Yeah, we know that Trump tries to.…
McCloskey: But the secretary of the interior is not a problem. He’s.… Is it a he or a she? I can’t remember, but in any case, oil corporations, big corporations are going to do very well in the Trump administration, and you notice that by the way on the stock market.
Rubin: Right. Stock market’s.…
McCloskey: And oil stocks in particular have gone up. They said, oh well, maybe this guy, we can work with this guy, and that’s exactly the problem that you mentioned. It’s crony capitalism, not the kind of capitalism that you and I admire, which is not cronies. It’s letting people do what they want and depending on the tremendous amount of cooperation that goes on in a free market system and the competition that goes on to protect consumers as it does.
I don’t know. I’m a little bit pessimistic that we can untangle it because, here’s why I mention democracy. Because the reason we have big government is that about 100 years ago, the people, now fully enfranchised in countries like Britain and France and the United States, demanded it. They demanded protection from the government. So people keep voting for socialism essentially. I mean, the size of governments, the United States and Japan are among the smallest, but still they’re very big in the rich countries.
The people keep voting for subsidies and blah, blah, blah. The extreme case is Argentina, where everyone subsidizes everyone else. Now just think about that for a moment. You can see that’s not going to work out. There is this conflict between the democracy of politics and the democracy of the marketplace. I’m in favor of both of them, but I recognize that there’s a dilemma, there’s a conflict here and that the democracy of politics tend to want to kill off the democracy of the market.
Rubin: Yeah, that’s really interesting. So when somebody would say, and I think this is most of the criticism that I hear when I’ve brought on classical liberals or libertarians, and they say “free market, free market. We don’t like crony capitalism, but we want the free market.”
McCloskey: That’s me.
Rubin: Most of the pushback that I get is people say, “Well, wait a minute, that doesn’t make sense. If you let people do whatever they want, then ultimately that’s what will breed crony capitalism.” Now I suspect you don’t agree with that, but how would you argue against that?
McCloskey: No, I don’t agree with it. There’s this tremendous fear among my friends on the left about shoe companies. They’re terrified at the big corporations, you know. New Balance, just oo ee scary music, oo ee the monopoly. It’s so silly because the big monopoly is the government, because the government has the monopoly of violence, alas. Well, it has to. I’m not in favor of multiple competing violent forces.
Rubin: Right. You’re for one government that should have the army.
McCloskey: I’m for one government that has the monopoly of violence, but then we’ve really got to watch it very closely because it’s easy to misuse it. The underlying threat of a government is violence, physical violence, and the trouble is that they, they can use it, whereas New Balance can’t force you to buy, can’t put a .38 to your head and force you to buy its shoes. Nike and New Balance and all the others are competing with each other, and that’s by far a better protection for the interests of ordinary people than the so-called protections that the government offers.
Let’s take food quality. Why aren’t, why isn’t there very frequent cases of people being killed by restaurants, poisoned. Why not? Hey, what’s stopping it. They’ll say, oh yes, food inspection. This is crazy. Any person who owns a restaurant knows that the food inspectors come once or twice a year max, and often they’re corrupt and you can pay them $20 to overlook the rat feces in the kitchen. Okay? Whereas, look, put it this way. If Coca-Cola, if they found one mouse in one can of Coca-Cola, anywhere in the world, the Coca-Cola Corporation would go bankrupt.
Rubin: Yeah, the endless PR, the years.
McCloskey: The endless PR, all the years of building up Coke as the real thing would go right down the drain. That expenditure they make on advertising is a bond so to speak. It’s a bond they’ve put up. An enormous billions-of-dollars bond to shore up their reputation for having a soft drink that doesn’t have mice in it.
Rubin: I think they tried that. Wasn’t that new Coke?
McCloskey: There was a.… Well, that was consumer preference, but poisoning is not popular. There’s a nice fact. If you ask, who’s that guy that travels around doing food shows?
Rubin: Oh. Anthony Bourdain.
McCloskey: Yeah, Anthony Bourdain, he’s great. If you ask him what to eat in a foreign country, he says for God’s sakes don’t eat the hotel food. Eat the street food because the street vendors have regular customers in their neighborhood, they poison someone, they’re finished.
Rubin: That’s it.
McCloskey: Whereas the hotels, they go away.
Rubin: That to me is the best argument for a free market.
McCloskey: I think so too.
Rubin: Your own interests, if you own a restaurant, it’s not that the inspector is going to force you to do it or that the government comes in or as you said you can pay him off and all this stuff, but the best is that your reputation, the caring of your work which is a great segue to I want to talk about: virtue.
McCloskey: Well, that’s why, by the way, that’s why we need a free press. That’s why these movements in Russia and now in Turkey, in imitation of Russia to close down the newspapers is a complete disaster for the ordinary people.
Rubin: Where do you think that puts us in America right now because Trump has this massive fight with the press. As an alternate press guy, as a digital online guy, I see a lot of value in what he’s doing, and at the same time I absolutely see the risk in what’s happening.
McCloskey: Yeah, it’s completely.… He’s a danger to the First Amendment. Fortunately the genie is out of the bottle. You can’t put it back in so far as electronic media is concerned. The newspapers are slowly descending, which I, I personally love having a newspaper, but okay. It’s like the invention of the printing press. In many countries, although not all of them, the printing press was very hard to control, and now it’s even less easy to control the internet. The Chinese do a fairly good job of it, but when I was in China a month ago my friends told me, “oh yeah, here’s how you get around that.” It was free. You could do it and sneak around the wall that they have put up around China.
Rubin: So the Great Wall was probably more effective than their internet wall.
McCloskey: The Great Wall was surprisingly effective actually. Its purpose was to slow down the barbarians long enough to bring reinforcements.
Rubin: Yeah, I don’t know if the reinforcements are going to come in time to stop this barrage.
McCloskey: That was the problem. Every two or three hundred years in China, the Great Wall defense would fail.
Rubin: Yeah. There’s some parallel to the internet wall there.
McCloskey: Yeah. There is. Well, what there is is that the cost of liberty is constant vigilance. It’s in the interests of the government, more or less every time to cut off free speech, and if they can get away with it they will, more or less no matter who’s in charge. Obama, who I didn’t vote for but I don’t think is the antichrist as some of my conservative friends think, claimed that he was going to have an open government. No way Jose. He kept closing it, but that happens in every administration.
Rubin: Yeah, so it just happens, no matter what they say beforehand, like when he said Obamacare, we’re going to air the hearings on CNN or on C-SPAN, right. Of course that didn’t happen. He’s jailed whistle blowers. Look at Snowden and all that.
McCloskey: Yup. Snowden, etc.
Rubin: And yet the left lets him off the hook on that because we’ve all been just sort of relegated to our teams, right?
McCloskey: I know.
Rubin: You just pick your team.
McCloskey: I know. I know. It’s because people come to their political opinions in their late teenage hood, most of them, and then it becomes part of their personal identity. I have a roommate of mine, a man who I love very much from college. He was a lefty as I was in college and he still is. You know he still, he.… And then my sister, my beloved sister who I really do love, the other day, the other month, she said, “You know, I watch RT, Russia Today, and I think that’s just great. They give me an alternative view.” I said dear, don’t you know this is Putin’s propaganda arm? “Oh really? Oh I don’t think so. I think it’s wonderful what they do”.
People get these identities, left and right, and then they don’t ever listen to any more evidence. Another hero of my youth, John Maynard Keynes, was.… Someone complained that he had changed, Keynes had changed his views on free trade, to which Keynes said, “When I get new information, I change my mind. What do you do?”
Rubin: Isn’t true liberalism?
McCloskey: Of course it is.
Rubin: Isn’t that, that finding new information.…
McCloskey: An open-mindedness.
Rubin: Bertrand Russell, there’s that great quote about not being tied to an ideology but to reality.
McCloskey: Except he was tied to an ideology, except for that, probably. The perfect example of this is John Stuart Mill, who was very open-minded. He was open-minded to socialist ideas. Harriet, his friend eventually became his wife, was more of a socialist. This is the middle of the nineteenth century. He was very open to that. Someone who’s been a great economist friend of mine said John Stuart Mill tried the experiment of being fair to his opponents. This experiment has never again been done in economics.
Rubin: Yeah, in economics or almost in any field anymore, right?
McCloskey: Look, the assumption on the left in the United States among progressives is that if you make a free market argument, it’s because you’re a bad person who hates poor people. Why pay attention to such a person? Why pay attention to Hitler? Hitler may have arguments, to hell with it, I’m not going to listen to Hitler. I don’t listen to Hitler. I don’t say, oh gee that’s interesting. Let’s exterminate the Jews. Maybe that will be a good idea. No, I don’t. I don’t view that as on the table.
It’s this off-the-table business that makes our friends on the left impervious to any argument. We make arguments against, I don’t know, against the minimum wage or agricultural or.… Look, talking to a friend of mine on the left the other day, and she said, “I’m very suspicious of this Uber business, the breaking down the taxi-cab monopoly.” I said, “What? You mean you’re in favor of taxi monopolies? Do you know who owns those?” She said, “No, I don’t know. Isn’t it the cab drivers?” No, it’s not. It’s the millionaires, the multi-millionaires who own thirty taxi medallions in New York, each of which sells for a million and a half bucks.
Rubin: Yeah. You’re not making that up, by the way. That’s actually true. To get that medallion that a cab driver needs.
McCloskey: In Chicago it’s a third of a million. In New York it’s a million and a half. You know, so it’s so strange. Any free market argument is just off, the image of being off the table is I think correct. It’s just not for discussion. It’s maddening. We on the free market side, you know we laboriously argue against this, that stupid regulation and that stupid regulation. We offer facts and have comparisons of one country to another. We’re very earnest, and we expect our friends on the left to say, “Oh yeah. You’re right.” No, they don’t. They don’t listen, so they don’t understand the arguments.
A spectacular example of this is the bottom of page six in the English translation of Thomas Piketty’s book on Capital in the 21st Century, where he screws up supply and demand curves. I mean he really does. He doesn’t understand supply response to a higher price. He doesn’t even think it’s possible. He’s an economist.
Rubin: Yeah, maybe he wrote the book upside down?
McCloskey: I don’t know what went wrong with him. Actually I know what’s wrong with him. He was educated in France, and in economics that means you’re educated in mathematics without knowing anything about how an economy works. I plead with him, please, and they won’t listen.
Rubin: What do you do then if.… Well, first off I know a certain amount of people are going to watch this and say, “Well, wait a minute. Then Deirdre must be right because you focused on the left here.”
McCloskey: Left, right.
Rubin: And it’s just nonsense.
McCloskey: That’s all people can do. We say, we real liberals say now look, there are at least two dimensions. One is economic freedom, left, right. That’s pretty easy to talk about. The other is personal freedom, left, right. And we libertarians are up on the left, left quadrant. We believe in keeping out of people’s bedrooms and keeping out of people’s voluntary deals in the economy. It’s a keeping-out mentality.
What’s the beef here? Why are you complaining about some deal I want to make? Shut up. It’s none of your business. Let’s just make it, and that’s it. We believe in freedom, whereas in one aspect or another our opponents, whether Republicans or Democrats, conservatives or progressives, they all believe in compulsion. They all believe in getting out the government gun and forcing people to do things. They think that’s going to make the world better.
Rubin: It actually makes the world more resentful, I think.
McCloskey: Usually it does. Now look, there are some things.… Always it’s so tedious. I always get people, my progressive friends will say, don’t you think there should be a role for government, and I say yeah, yeah, there should be a role for government. Preventing force and fraud and a few other things.
Rubin: So basically you’re not an anarchist?
McCloskey: No, I’m not an anarchist, although we real, true Christian liberals view our anarchist friends, and I have some, with a certain sisterly sympathy, but I’m not an anarchist. I don’t believe in zero government. Actually my first politics was when I found Prince Kropotkin’s book, Mutual Aid, in the local Carnegie library. I like the irony of that, in Wakefield, Massachusetts, and for you know six months when I was fifteen I was an anarchist.
Rubin: How did those six months go for you?
McCloskey: Well, I didn’t tell anyone about it, so it didn’t bother anyone.
Rubin: Yeah, it was fine. You just kept it to yourself.
McCloskey: I wasn’t secret about it. I just didn’t notice that politics was about telling people stuff.
Rubin: Yeah. All right. I want to back up to virtue, because I think it’s sort of a through line in almost everything we’ve discussed here.
McCloskey: Yes, it is.
Rubin: And you’ve written a lot about it. You talk about it, and I think it’s something that’s so missing in society. Doing something virtuous just because.
McCloskey: Yeah. You know, and I’ve been studying China for the last ten years. For a long time I tried not to because I knew I would become fascinated, and I needed to know more about Europe and the United States. I was afraid I would drift off into China studies. The interesting thing about the Confucian attitudes that started in the sixth century BCE is that it claims that the main protection of the citizens is the virtue of the governors, and that’s correct to the extent that they’re being treated by the government.
The Confucians were not particularly, they didn’t have a lot to say about regulation of the economy. You have the economy off to one side, and indeed it was heavily regulated in China as was everywhere else, but let’s talk about the relationship between the government, the emperor, and the citizens. The Confucian idea is not the balance of power of the founding fathers where we’re trying to make a machinery that will keep people, keep the governors from hurting their citizens.
Rubin: Right, which is what we have here.
McCloskey: What we have here, and we try to make it work, and I’m all for it because.… But they, the Confucians like the so-called civic republicans in Europe in the seventeenth and eighteenth century said, look, rulers need to be good as well. That I think this is true. Look, corruption in Italy say, you’re not going to solve Italian corruption by passing another law. They’ve got laws against corruption.
McCloskey: The problem is.…
Rubin: The laws will actually breed more corruption, right, because they actually breed somebody to do this.…
McCloskey: They easily do it, particularly if the ethical mentality of Italians is the government is a band of robbers into whose clutches we’ve fallen, to quote a famous anarchist writer. We’ve got to evade every law we can. As long as you do that. As long as the people are not being virtuous, sensibly, following the sensible laws and the government is not being virtuous. It’s stealing from everybody. Passing another thing through parliament is not going to have any effect at all. There has to be an ethical change, and I claim, this is my big claim in this trilogy of mine called The Bourgeois Era, which I, praise the Lord, I just finished last spring, that it’s a change in attitudes towards the virtues of the bourgeois that made the modern world.
That up until liberalism, the coming of liberalism in people’s heads in the eighteenth century and then in actual policies in the nineteenth century, until that happened, people were extremely suspicious and hostile towards merchants, manufacturers, inventors. Innovation, the word innovation in English, you can look it up in the Oxford English Dictionary, was until the nineteenth century a bad word. You don’t want to innovate. He’s innovated, eh, that will disturb things. That was the universal attitude. Then in liberalism, the basic idea of which is let people alone. As Adam Smith said is what we need is the liberal plan of equality, liberty, and justice. Equality, he didn’t mean equal income distribution. He meant equality of social standing by liberty. He meant the ability to start a business or become an economist or whatever you want.
Rubin: Equality of opportunity.
McCloskey: Equality of opportunity. Justice means equal justice before the law, neither of which is perfectly attained in any society I know of, but the change from say the seventeenth century to the nineteenth century was dramatic, and that made people bold and they enriched us all. I speak of the bourgeois deal. You let me, a bourgeois start a business, and in the first act, I’ll make a lot of dough if it’s a good business. In the second act, these pesky competitors will come in and drive out my profit, but oh well. The third act, I’ll enrich you, and that’s what they did. There’s an ethical change.
Rubin: Wait. How do you get from the second act to the third act? The second act now, the competition now comes in.
McCloskey: Competition, and so my profits are eroded, so everyone’s doing it the better way, whatever it is, Uber or improve.… Look what happened to film. When I was young, Kodak and then boom, suddenly we had pixels.
Rubin: Yeah, and now we’re doing [inaudible]. I don’t know how it’s happening, but it’s happening.
McCloskey: I don’t know. Here we are.
Rubin: Yeah. The third act then is that the product itself gets better.
McCloskey: Exactly. Those cameras that are pointing at us are by historical standards, they’re ridiculously small. These are high-quality cameras that do as good a job as an enormous TV camera, much better job than a TV camera and even better than the great big film camera in the 1930s. There they are, and that’s, the first person to think of this made a ton of money, but actually in the end the inventors don’t make that much. They make about 2 percent of the social gain, which, if you’re Steve Jobs is a lot of money, but still 98 percent goes to us, the consumers.
Rubin: Right. And bringing this around to Apple, they make a lot of the stuff. The ideas come from Cupertino as they always tell us, but a lot of it’s made in China, and don’t they do everything they can to avoid corporate taxes.
McCloskey: Of course.
Rubin: Which sort of ties in everything that we’ve talked about.
McCloskey: There’s a crazy regulation that the EU, the common market is trying to impose to equalize corporate taxes across the EU because they don’t like what Ireland’s doing, which has a 15 percent, no 12.5 percent corporate tax instead of our 35 percent corporate tax and the people in Brussels are really annoyed at the Irish. I think it’s outrageous. There should be the Cayman Islands. There should be competition. The government shouldn’t have us as serfs to extract money from any time they want to invade Iraq. To heck with it.
Rubin: What I always find to be the funniest argument is that the progressives argue that they want, that the government is deeply corrupt.
McCloskey: I know. I know.
Rubin: Then at the same time their response is to make it bigger.
McCloskey: I know. I know. Look, I’ve spent some time in Italy in the last few months, and I love Italy. Who doesn’t? The Italians know how to live, but they all ought to be classical liberals because any sentient Italian knows that sending more money and power to Rome is a terrible idea, just awful.
Rubin: Framed with that, saying Rome actually adds to the picture.
McCloskey: Well, it’s like our Washington or Springfield in Illinois. Everyone knows it’s a terrible idea, yet the Italians keep voting for socialists or for conservatives who are actually socialists. I can’t understand this. In Sweden I get it. I’ve taught in Sweden, and I like Sweden a lot. Lots of friends there, and they all tell me, well, you know our government is honest, and I say, yeah, yours is. Minnesota is, but Illinois isn’t. Italy isn’t.
86 percent of the people of the world are governed by governments that everyone would agree are completely corrupt and incompetent. The Italians, of 180 or so governments that were surveyed, the Italians ranked 75th, and yet they keep voting for more of this. I don’t know what to do. I’m desperate.
Rubin: Yeah, I wish I had an answer for you, but you’re not going to get it to me. There’s so much more that we could do here, but I will end on something that you slipped in once or twice. That you used to be a Marxist.
McCloskey: I was.
Rubin: The word Marxist, I think people have no idea what they’re talking about. Like socialism, they don’t know what they’re talking about. Most of these words, most people don’t know what they’re talking about, but Marxist I find to be the one that people really just have no concept of what they’re talking about. First, can you just define what a Marxist is and then just tell me a little bit about your journey?
McCloskey: Well, a Marxist really in the simplest terms is someone who follows Marx. Just as I am a Christian, I follow Christ. Marx was, now here’s where I get my right-wing friends, just they go nuts. I say Marx was the greatest social scientist in the nineteenth century without compare, and all my friends at the Hoover Institution go eh. Then I say, but he got everything wrong. Then my friends on the left go ahhh. Which is why I haven’t got any friends.
Rubin: The life of a classical liberal. It ain’t easy. It ain’t easy. Well, you’re pissing off people on the both sides.
McCloskey: Pissing off people on both sides. Now the basic idea of Marxism of course is that history has a particular pattern and that ideas come from that pattern, from that material pattern, that the class struggle is central. The history of all hitherto existing societies, to quote The Communist Manifesto, is the history of class struggle. If you believe that and you believe that ideas are just epi-phenomenal, that they just come from your class position, which is what Marxists are supposed to think, then you’ll be a follower of Marx. Oddly, from about 1890 to about 1980, nice symmetry there, most intellectuals in the West were some kind of Marxist. Even the conservatives were. Even the conservatives believed that material interests were what determined ideas.
Whereas my claim and the claim of a growing number of historians and especially historians is that no, no ideas themselves have an influence, an independent influence. The idea that all men and women are created equal is a terrifically powerful idea. It’s that egalitarianism of eighteenth-century liberalism that I’m trying to re-invigorate.
Rubin: Yeah, well, I think you’re doing an incredibly good job at it.
McCloskey: My books. You got to mention my books.
Rubin: Yeah, well, I’m going to tell people about Twitter and the whole thing. This, the.… Wait, the.…
McCloskey: This is the first book, The Bourgeois Virtues, and there’s Bourgeois Dignity, and then the last one is the thickest called Bourgeois Equality. In 1906.… Sorry, I’m a historian. In 2006, 2010, 2016, all available at the University of Chicago Press. I’m hoping for a boxed set like Harry Potter. The three of them together.
Rubin: I’m a Star Wars guy personally, but that works for a trilogy too.
McCloskey: It makes a wonderful Christmas present. Your mother will be delighted to get these highly academic books.
Rubin: Well, you know what, we’re going to put the link right down below and then people will just be able to click it and get it. It really was a pleasure talking to you.
McCloskey: Thank you dear. It’s been fun.
Rubin: You know these are the ideas I’m trying to get across too, so I guess we’re going to have.… We’re stuck in the middle, right?
McCloskey: We’re stuck in the middle. We get unfriendly fire from both sides.
Rubin: Yeah. But we got each other. There you go. All right. Well, I want to thank Deirdre McCloskey and Learn Liberty for sending her our way, and for more on Deirdre you can follow her on the Twitter. It’s @deirdremcclosk. Thanks for watching. We’ll do it again next week.
Comments Off on What’s wrong with gun control? The same thing that’s wrong with immigration restrictions.
A common argument for restricting immigration to the United States and other developed countries — maybe even the most plausible one — runs like this. Opening the borders will bring in people who will consume more public services than they pay for in taxes and who will vote for more statist politicians who support those public services. The result will be less freedom for everyone in the long run. Therefore, many conservatives say, immigration control is a regrettable but necessary step to securing freedom.
Meanwhile, a common argument for restricting gun ownership in the United States and other developed countries — maybe even the most plausible one — runs like this. Opening the market to the free sale and possession of guns will allow criminals to get their hands on deadly weapons, perhaps through theft if not legal purchase, resulting in more murder and less freedom in the long run. Therefore, many progressives say, gun control is a regrettable but necessary step to securing freedom.
These common arguments for restricting immigration and restricting gun ownership are surprisingly similar in form. They show us that the reason why fierce immigration control advocates are generally not also fierce gun control advocates (and vice versa) has more to do with ideological confirmation bias than sound logic.
Furthermore, both these arguments make a questionable implicit assumption: that it is morally acceptable to take away the freedoms of some people to secure the more important freedoms of others.
When is it morally acceptable to restrict freedom?
In some emergency scenarios, we might be tempted to agree with this assumption. For instance, it might be morally acceptable for you to steal my car to prevent a murder across town. I’m not sure this is true, but let’s concede for now that it might be true. Even if it is true, we generally think that you still need to return my car once you no longer need it to prevent the murder, and that you need to compensate me for any damages and trouble you caused.
Few of us would think it acceptable to set up a standing policy of car theft for murder prevention. Should we have a permanent division of the police to go around stealing cars when they think they’re necessary for otherwise legitimate police work? Surely not.
Furthermore, virtually everyone would agree that stealing the car would have to be the least invasive way of preventing the murder. If there’s a way to prevent the murder that doesn’t involve stealing at all, like using your own car or paying a willing driver, you must not steal.
Can violating one freedom promote another, greater freedom?
The advocates of immigration- and gun-control policies seem to think we should have a standing law-enforcement body to go around violating freedoms in the hope that a greater gain in freedom will happen down the road. How is this different in principle from setting up a division of the police for commandeering cars — or a division of the military for commandeering homes, a practice of the 18th century British army banned by the Third Amendment to the US Constitution?
Even if violating some people’s rights to protect more people’s rights through standing enforcement agencies is morally acceptable in principle, advocates of such measures need to show that the violation of freedoms will actually work in the way that they claim. The burden of proof is on them; it isn’t okay to take away freedoms systematically on the basis of mere speculation — only on hard, indisputable evidence.
In the case of immigration and guns, that evidence is thin and disputable. Legal immigrants are, on the best evidence, a small net fiscal burden to existing US taxpayers, on average. Is stopping a small net fiscal burden a greater gain to freedom than the loss of freedom associated with immigration law enforcement? That seems unlikely.
Are there alternative solutions that don’t violate freedom?
Moreover, an alternative, less invasive solution to the fiscal burden problem would be to make immigrants ineligible for more programs. In the same way, a less invasive solution to the problem of immigrant votes for statists would be to make earning the right to vote more difficult than obtaining the right to live and work in the United States. It is also questionable whether immigrants tend to vote for statists; certainly, anti-immigrant rhetoric from the right makes immigrants less likely to vote for right-wing parties.
On guns, there is a big debate in the literature, but there are just as many high-quality studies finding that gun regulations increase violent crime as there are studies that find that they reduce violent crime. Many find no effect at all, and one points out that different modeling assumptions have a substantial effect on study results, such that basing a policy decision on any particular model is dangerous. Even if gun laws did reduce crime a little, we don’t know whether other, less intrusive methods of reducing crime, such as supporting mental health treatment, would work just as well.
The principal arguments for restricting immigration and for restricting guns both depend at minimum on the assumption that it is acceptable to take away some people’s freedoms on an ongoing basis whenever doing so preserves greater or more important freedoms. This assumption implies some absurd conclusions, such as it being okay for police to steal cars for their work rather than buy them.
A weaker, more plausible premise, that it is acceptable to take away freedoms if doing so is the least invasive available means for preserving greater freedoms, still cannot justify immigration and gun laws, because less invasive means for solving the supposed ills of immigration and gun ownership do exist. Moreover, the evidence is thin as to whether immigration- and gun-control laws even promote greater freedom at all — more likely, they simply reduce freedom.
 A careful analysis of native- and immigrant-headed households in New Jersey found that, looking at just state and local public sectors, “native households in New Jersey bear a total net fiscal burden of $232 per native household from the fact that the average immigrant-headed household receives $1,484 per immigrant household more in state and local services than it contributes in state and local taxes.” In California, “the average native household contributes a fiscal surplus of $283 per household to fund a fiscal deficit of $831 per immigrant-headed household.” However, immigrants are a net contributor at the federal level: $127 per immigrant household in California and $520 per immigrant household in New Jersey. That still works out to a small net fiscal burden from immigrant households.
Comments Off on The king is dead, long live chaos! Why Hobbes was wrong and Burke was right.
The 17th and 18th centuries marked a turning point in Atlantic history that caused the Western world to move from governments run by absolute monarchs to governments run by and for the people. During the early modern period and the Enlightenment, many theorists attempted to undermine the belief that kings had the same power as parents had over their children, giving them an absolute right to absolute power. Two early and notable theorists, Thomas Hobbes and John Locke, developed an ahistorical state of nature to demonstrate that God created equality among men at the beginning and that only through a social contract can anyone obtain a legitimate reason to rule.
Hobbes, Locke, and the Social Contract
Hobbes stripped inequality down to its most brutish element: strength. While some leaders would make a claim to rule based on superior strength, Hobbes declared that a weaker person could simply attack the stronger one while he slept, or band together with others to overcome him. Might did not justify inequality.
To create a reason to initiate a society, he painted a picture of the state of nature that would cause anyone to flee from it. Hobbes claimed that “the life of man [was] solitary, poore, nasty, brutish, and short.” To express their equality, people could decide to form a society. Once they agreed, however, they lived under an absolute sovereign.
Not satisfied with this result, John Locke took up the task of eliminating the absolutism associated with the Hobbesian social contract by portraying a softer, gentler state of nature — but one carefully constructed to remain unappealing. According to Locke, people in the state of nature enjoyed equality because all “creatures of the same species and rank” have reciprocal “power and jurisdiction.”
Despite the easier life in the Lockean state of nature, people had trouble enforcing rules, which allowed bad actors to steal from others. These bad actors could not be held accountable for lack of an objective arbiter, since “power and jurisdiction” are “reciprocal.” Thus, the desire to create a system with enforceable rules causes individuals to form a social contract and create a society. Locke’s system involved direct democracy at the creation of society: all people have to consent to enter into society.
A Problematic One-Size-Fits-All Theory of Government
The concepts of the state of nature as the birthplace of equality and the social contract as a means of holding government accountable provided early revolutionaries with the tools to overthrow oppressive kings. These theorists created universal truths applicable to all people in all situations: we’re born free and equal; government exists to protect us; and for Locke, when government doesn’t protect our rights, the people can overthrow it.
With these words, many theorists finished their work and released it into the world. They failed to see the drawbacks of creating a one-size-fits-all model of government. The more moderate classical liberal theorists saw the problem more clearly.
Montesquieu and Edmund Burke saw the application of theoretical models of government to real governments as extremely problematic. According to Montesquieu, laws develop over time in a particular geographic location among a unique group of individuals. If a founder or reformer ignores the historical context of a given society, they do so at their own peril. A successful founding occurs when the legislator considers these elements.
Montesquieu references the Athenian statesman Solon on this point. When others asked if he had given the Athenians the best laws, Solon replied: “I have given them the best laws they could endure.” Montesquieu goes so far as to say that liberalization can have negative effects, just as “pure air is sometimes harmful to those who have lived in swampy countries.”
While Montesquieu wrote before the age of democratic revolutions, he understood that the radical changes proposed by many classical liberal theorists could create a violent reaction among the people, followed by decades of turmoil. His prediction came true in the French Revolution.
Burke similarly emphasized the importance of historical context and the connection between rights and a particular government, eschewing the idea of natural rights. He watched with horror as the French Revolutionaries ate their own and destroyed the complex constitutional system developed over hundreds of years in France.
In Burke’s opinion, the French lacked a respect for history and relied too heavily on ideal theories of democratic governance. The French looked to radical liberal thought, convinced that they need only create the Declaration of the Rights of Man and give it to people all over the country to cause a democratic revolution.
Lacking the knowledge and skills needed to create or run political institutions, a group of lawyers, intellectuals, and journalists called the Girondins, and eventually the Jacobins, known for their extreme egalitarianism and violence, led the country incompetently. The newly formed national government quickly descended into chaos. For Burke, these events showed that the program of radical reform could not be implemented quickly.
Moderation in reform never provides the same fireworks as dramatic and radical reform. Reflecting on regime change over history, the revolutions of the French or the Russians come to mind most readily while the steady reforms of the English Commonwealth rarely come to the fore as a guide for founders and reformers.
Much like the dramatic revolutions, radical theorists like Hobbes and Locke come to mind easily, while moderates like Montesquieu and Burke do not provide easy answers to hard questions about reform. The process of building and changing liberal regimes requires investing in a better understanding of the complicated web of considerations associated with large states. A better understanding of theorists like Montesquieu and Burke will provide better answers, albeit more complicated ones.
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Bryan Caplan says we could get rid of 95% of government health care intervention, and STILL have subsidized health insurance for the poorest. Watch the full interview
Comments Off on Suffering is Venezuela’s new normal.
Venezuela is an unfolding story of the chaos resulting from government intervention in economic affairs. President Maduro faces a political crisis, and violent protests pose real threats to his desperate attempts to retain power. The economy is collapsing in front of our eyes, but the real tragedy is not the macro indicators that we read about daily: soaring inflation rates, increasing unemployment numbers, nonexistent consumer goods, and crashing oil prices. The real tragedy is that the innocent citizens of Venezuela suffer and that suffering is the new normal.
The Maduro administration continues to believe that it can use policy to assuage the angst of the citizens who cry out against him and the policy wreckage under which they suffer. In a last-ditch effort to “help” people, Maduro raised the Venezuelan minimum wage by 60% and offered free apartments to those who are displaced. This is the 15th minimum wage hike enacted by Maduro since he took office in 2013, and while the increase sounds nice on paper, the new wage amounts to just under $50 per month — hardly a windfall.
Not only is this paltry income insufficient for surviving, let alone thriving, it occurs against the backdrop of out-of-control inflation that the IMF predicts to soar above 1600% this year. Every hour of every day, the bolivar is worth less and less, stealing from citizens their ability to buy basic goods and services and forcing them into the black-market economy.
There is no magic policy wand
F.A. Hayek understood the nature of market activity. It is the organic process of exchange among individuals guided by prices, profits, and losses in the context of the institutions of property rights. As such, economies cannot be directly controlled by experts, technocrats, or dictators.
The economy is not a jigsaw puzzle that we are trying to solve. The economy is a dynamic process of discovering new ways of doing things in the context of institutions that facilitate exchange. When this process is allowed to function, income and wealth grow — across all people and places. There is no policy that can act as a magic wand to override or “fix” what we deem insufficient.
Moreover, as Hayek highlighted, for governments that use policy to increasingly control the economy, totalitarianism is a likely result. The more control government officials extend over what are normally individual economic affairs, the more economic chaos results. That chaos breeds more control, which breeds more chaos. This is the current state of affairs in which Venezuelan citizens find themselves.
Totalitarian authority is a feature, not a bug, of increasing efforts to control economic affairs — precisely because economic affairs are ordered by ordinary people pursing their interests. As the necessary conditions for productive market exchange — prices, property rights, and the rule of law — erode, suffering is exacerbated and the economic breakdown continues to spiral out of control.
Totalitarian governments suppress value creation
Economic activity is about individual exchange within the context of institutional arrangements. That exchange can be productive when individuals are allowed to use profit and loss to guide their use of scarce resources. In a market economy, the result is that we grow richer.
Markets are positive sum. For me to make a profit, I must give you something that you need or want, and there is pressure to deliver at ever-lower prices and ever-higher levels of quality. Growing rich does not come from arbitrary wage increases set by governments; it comes from being rewarded for creating value.
Venezuelans suffer today because it is increasingly difficult to create value for oneself or others in a totalitarian regime that tries to control economic life. Trading partners are limited, needed goods and services are nowhere, and there are no strong incentives to be creative and entrepreneurial because there is no just reward. People are forced into black-market activity and barter economies.
Mandating wage raises will do nothing to restore the necessary institutions of value creation and entrepreneurship. Rather, these mandates restrict the possibilities for legal exchange, thus forcing more people out of work and condemning Venezuelans to further poverty and suffering.
Markets work best when governments retreat
The best way to restore productive institutions of trade, value creation, discovery, and entrepreneurship is to retract the government’s scope and size and allow markets to work. In the words of F.A. Hayek:
It is often said that political freedom is meaningless without economic freedom. This is true enough, but in a sense almost opposite from that in which the phrase is used by our planners. The economic freedom which is the prerequisite of any other freedom cannot be freedom from economic care which the socialists promise us and which can be obtained only by relieving the individual at the same time of the necessity and of the power of choice; it must be the freedom of our economic activity which, with the right of choice, inevitably also carries the rise and the responsibility of that right.
People must be free to choose and to make themselves rich through value creation within the market process. This economic freedom will make them rich in a way that no coercive government policy, no matter how good it sounds, can.
Comments Off on Highlights from our Reddit AMA with Professor Sarah Burns
Did you miss our recent Reddit AMA with Professor Sarah Burns of RIT’s political science department? You can find the whole conversation here, or check out some of the highlights below.
Comments Off on The origins of money: What’s at stake?
My last two posts covered the origins of money. I discussed the two leading theories of why money exists: the emergent theory, which holds that money is a spontaneous product of exchange relationships, and the chartalist theory, which holds that money is a “creature of the state,” arising because strong groups imposed debt obligations on weak groups.
It turns out that much chartalist history is good and valid, but as a theory, it cannot actually explain what it purports to. Within well-defined social groups, gift exchange and credit systems work great. But to facilitate exchange with the Other — between groups, where individuals often do not know each other personally — money is the way to go.
Chartalists vs. emergent theorists
I believe that the debate over the origins of money is an interesting historical question in its own right, and it can shed light on the efficacy of spontaneous order processes to generate beneficial social outcomes. But in terms of implications for contemporary monetary economics, especially contemporary monetary institutions, I don’t think it much matters which side is ultimately right.
In his new book, The Ontology and Function of Money, Leonidas Zelmanovitz rightly notes that hard-line proponents of either theory are often guilty of the genetic fallacy. They incorrectly reason that the origins of money determine how current monetary institutions must operate.
The genetic fallacy
Here’s an example of the reasoning: if money historically arose due to state power, it must be the case that the state is necessary for a well-functioning monetary economy. Contrariwise, if money historically arose due to spontaneous exchange processes, the state is necessarily a hindrance.
Both of the preceding sentences contain conclusions that do not follow logically from the premises. Even if the chartalists are right, a free market in money and credit may be the best system today. Even if the emergent theorists are right, the heavy hand of the state may be best in sustaining a well-functioning monetary order.
Finding a clear winner
It’s a good thing that we don’t need to pin down precisely money’s origins to do good work on contemporary monetary institutions, such as the question of central banking vs. free (laissez-faire) banking. If my colleague Will Luther and I are right, both dynamics — political coercion and market cooperation — played a role in determining what goods became the media of exchange throughout history. This makes finding a clear winner — or at least sufficiently clear to persuade well-intentioned critics who hold opposing views — extremely difficult.
Don’t get me wrong: this is a valuable research area. But it does not constrain or in any way determine what is permissible in debates over what money, and its associated institutions, ought to look like today. Those are two separate conversations. One can contribute to both, but it’s important not to mistake the latter as being reducible to the former.
Comments Off on “Walk your bike!” — Formal rules and informal order
On the way to my classroom, I cross a wide bike path that goes through our campus. The other day, the main path was blocked by a barrier, a large sign that read “Road Closed,” and caution tape.
I glanced past the “Road Closed” warning, and saw several cyclists. They pedaled right past the barrier in the space allowed on either side of it, without a second thought.
Someone else saw what was happening, and called after a cyclist who had just passed the barrier, “Walk your bike!” She dutifully got off and walked her bike, and everyone behind her did the same … for about ten feet! Then they hopped back on and kept pedaling.
Elinor Ostrom and other scholars of the Bloomington School showed that three things are needed for successful governance of a common resource (in this case, the bike path): organization, monitoring, and sanctioning. Organization refers to the process of defining rules, rights, and responsibilities. Monitoring refers to people watching to find out whether those rules are being followed. And sanctioning entails the enforcement of the rules.
We can see in this situation that attempts to govern the use of this path on this particular day were a complete failure, but where did it all go wrong?
Clearly, monitoring and sanctioning were not effective. There was no monitoring except on the part of a random guy that took it upon himself to point out the violation.
Sanctioning was nearly non-existent. Being called out as a rule breaker is a type of sanctioning, but because most other people in the situation either couldn’t care less or were rule breakers themselves, it was ineffective. This was confirmed by the fact that the offenders resumed riding once they were out of earshot.
Perhaps if the guy shouting “Walk your bike!” had been a uniformed police officer, the cyclists would have got off their bikes to avoid the costly sanction of a traffic ticket.
Now, what of organization? This small governance attempt failed on this margin as well. Those who tried to establish the new set of rules (“Road Closed”) failed to recognize that there was already a set of unspoken rules in play (that people can bike there). These types of informal rules are often very well established within groups, and attempts by people from outside the group to change the rules can be ineffective if they don’t mesh well with the governance system already in place.
In this case some of the rules the cyclists followed included copying the behavior of the cyclist in front of them, continuing as long as there was a way through, and using the established path. Furthermore, it was evident that social norms tolerated a disregard for the official traffic rules.
I’m not sure why the road is closed, but bike traffic is not going to cease unless violations are monitored and sanctions are enforced or until the incentives cyclists face are changed by some other factor.
An obvious change in incentives would involve actual construction work happening on the road. If that were to occur, I’m sure that more people would stop and go around that section of the road. It’s important to note though that this change in behavior would be the result of something other than the formal change in the rules.
Can you think of other examples of successful or failed governance of the commons on your campus? Do smokers hang out next to a “no smoking” sign? Does garbage accumulate on the quad?