Matt Simpson's blog

If you thought seasteading was crazy...

I've been catching up on the Econlib podcasts lately, and recently listened to Edward Castronova on Virtual Worlds. He makes a number of striking claims during the podcast, but in particular, Edward thinks that there is a very real possibility that virtual worlds will provide competitive pressure on governments. I know what you are thinking, doesn't the virtual world have to be hosted in meatspace where a government can get to it? Sure it does, but that doesn't mean it has to be centralized. Castronova points out that file sharing networks have to be hosted in meatspace, yet they are extremely difficult for governments to get a handle on.

I think seasteading has more promise, but this is an interesting possibility.


Missouri is #1

Today Dave Roland from the Show-Me Institute gave a talk on eminent domain abuses in Missouri at my school, Lindenwood University. He has previously worked for the Institute for Justice on, among other cases, Kelo vs. New London, so we were pretty excited to have him. One interesting thing I found out was that Missouri has the dubious distinction of having the worst laws on this issue in the country, at least in terms of how they are interpreted, and of having the highest number of eminent domain abuses per capita among the 50 states. And I thought San Francisco was the home of socialism. Apparently St. Louis holds its own in this battle.


Routine Libertarian Question Begging

Micha reposts this libertarian parable. In the comments, Scott links us too a response . Read them both if you haven't already for a bit of context.

The parable is a sort of standard story that libertarians tell to illustrate how the state is coercive. In Richard's response (he's actually responding to a similar story from Kling), he concludes:

There are good pragmatic reasons to favour some libertarian policies. But the moral ideology ("taxation is theft") is obtuse.

I completely agree, but for different reasons. Why does he think "taxation is theft" is obtuse? He quotes himself:

A well-ordered society is governed by the rule of law. This means that there are institutional processes to govern certain classes of action. The outcome of a just
institutional process -- whether it be a guilty verdict, or minimum wage legislation -- has a different normative status than the corresponding action of a neighbour who takes it upon himself to unilaterally impose his will on others.

I don't think any libertarian would disagree with that statement. Richard just misses the point - the libertarian theory of justice. Libertarians, at least of the sort we are talking about here, would simply claim that our current institutional processes are unjust and thus dodge Richard's criticism. The libertarian theory of justice is usually claimed to flow completely from the non-aggression principle (NAP). This is highly misleading, however, as Richard inadvertantly makes clear in the post he quotes himself from:

To claim ownership of a resource is to prevent others from making free use of it. If another attempts to use the resource in the same way as you do, you can call it "theft" and initiate force against them (or have the police do so on your behalf).

Thus it seems the NAP alone forces us to conclude that property is theft. And we thought Proudhon was a socialist. But this isn't the full libertarian story. A complete statement of the NAP, at least as I understand it, looks something like this:

It is always and everywhere immoral to initiate force against a person or his or her property.

Notice that the NAP presupposes property. There is another principle at work here which has to do with acquiring property coming straight down the pipe from Locke: the homestead principle (HP). For this reason I call this sort of libertarianism Lockean libertarianism or neoLockeanism. It rests on these two principles, as far as I can tell. Some versions try to derive the NAP from the HP, but that is unimportant fo For completeness, here is the HP as I understand it:

The only just way to acquire unowned property is by mixing one's labor with it.

These two principles together seem to be the foundation of neoLockeanism, though to digress, one important libertarian conclusion doesn't seem derivable from them: that voluntary exchange is always moral, or at least always just even if it is immoral. The NAP gives us that force or coercion is bad, but it doesn't give us that voluntary is good or even just. Perhaps I have screwed something up here (let me know if I have), but this isn't the point of this post anyway, so I'll let it go.

So Lockean libertarianism rests on these two principles, but do they hold water? The NAP is intuitively appealing and not all that controversial among ethicists. All deontologists (Kant) and virtue theorists (Aristotle, Aquinas, Hume) would accept it in some form while most utilitarians would reject it. Two out of the big three ain't bad. I say "in some form" above because the theory of property you accept may affect the NAP in some way, but the general idea runs across both classes of theories. I suspect even Richard accepts it in some form, with caveats for the formation of property.

The HP, on the other hand, has it's problems. For one, I still don't know what "mixing my labor" with something means. Labor isn't literally a substance that is mixed with other substances. Metaphors may be useful in communicating a complicated concept, but in this case we have all metaphor and no concept. Intuitively we have an idea of what it means, but without an actual definition, we'll argue endlessly about what actions count as labor mixture and how much property can be acquired by them - even with the "Lockean proviso," which is just as vague.

The problems with the HP don't end there, however. It is often asserted among libertarians but rarely defended. Locke himself tried to ground it in the existence of God. Ultimately, he assumes it anyway because God owns us by "maker's right" which allows him to argue that we have to take care of ourselves by acquiring property through the HP. I don't know what "maker's right" is outside of the HP. Rothbard is content to assert the self-evidence of his foundations without an account of what self-evidence means. Ultimately, he's waving his hands. Hoppe's argument is an attempt, but it doesn't work for a variety of reasons, on of which is that it isn't incoherent to argue with your slave (for fun, of course). Nozick also assumes the HP, but - and correct me if I'm wrong because I'm going off memory here (this applies for everyone else's views above as well) - he acknowledges this and points out that a rigorous account of property might substantively alter his conclusions, but he ignores the issue to get to other things.

As far as I know, no one has actually given a solid defense of the HP, let alone a clear exposition of what it actually is. I haven't read every libertarian theorist, so I might have merely missed it, but I have my doubts (but by all means, correct me if I am wrong).

In the mean time, let's forget about the HP principle and see what happens to the libertarian's favorite conclusion. The striking thing is that we know longer know if taxation is theft because we don't have an account of property. It seems the neoLockeans were begging the question all along.

So in the end, I agree with Richard's conclusion wholeheartedly - not, like him, because I think the neoLockeans misunderstand institutions, but because I think neoLockeans assume their pet theory of justice.

If one holds a markedly different theory of justice, say something like Hume's, governments seem almost by definition to have a legitimate property right. This doesn't automatically give us the social contract theory as the justification for government, but it does imply that governments are voluntary. Time permitting, I'll have more on this relatively soon.

Now, if this doesn't start a shitstorm, I'll be very disappointed in you guys. Or is my assumption that most of you are neoLockeans is wrong?

edit: Micha agrees that Richard misses the point.

edit: After reading Micha's post again, I think I need to make myself a bit more clear. I agree with just about everything he says. In particular, social contract theorist beg the question too; and Nozick, given his assumptions, doesn't really justify the state. At this point in my argument, it would just as question begging to say that taxation is theft as to say that it isn't. What social contract theorists and neoLockeans alike need to avoid the fallacy is a theory of justice/property. Until an adequate one is presented, we just don't know whether taxation is theft or not under any (or all)
circumstances. Time permitting, I plan on presenting a Humean take on this, but it may have to wait until the final weeks of the semester have passed.


Why I may be an Austro-Keynsian

Arnold Kling describes it here. Read the whole thing, it's short. Then we have my comment, reproduced just for you:

It's interesting that Horowitz departs from the standard Austrian
model. Traditionally, it's the increase in the money supply that is the
culprit for Austrians. For Horowitz, it's inflation, whether or not it
was caused by an increase in the money supply. I think this allows him
to avoid Caplan's substantial theoretical critiques of the Austrian
theory of the business cycle. But your right about it needing to be
integrated into a general theory of fluctuations, which takes into
account both Keynes and Schumpeter.

And the question, does Horowitz's version of the ABCT hold water? In particular, does it escape Caplan's criticisms of the traditional ABCT, available here?

I've long had the inuition that the Austrians were on to something even if the formal statement of their theory of fluctuations didn't quite work (Caplan's criticisms are pretty good). Perhaps this is it. By the way, I hesistate to call Horowitz's version "Austrian" because of the difference, but the emphasis on coordination perhaps merits the label, lets just be careful to keep the two versions straight. Perhaps big-A Austrian for the Mises-Hayek theory and little-a austrian for Horowitz's version?. One unAustrian implication which Kling mentions: deflation screws with the coordination process just as much as (according to Kling, more than) inflation.


Revolutionary Fractal Constitution and Political Theory - What?

An ad that google keeps on putting on my gmail page is for a M C Williams' book on "Revolutionary Fractal Constitution and Political Theory."  I'm extremely skeptical, but my curiosity has been piqued.  Anyone know anything about it? Or care to speculate?  link

The ebook is only $3.50 for anyone who is bit more curious than I.


Of Risk and Bailouts

A week ago today, I got to hear an Italian economist (whose name I can't remember) speak at the St. Louis Fed about the current financial mess. During the Q&A I asked him if he was worried that bailing out Bear Stearns would cause moral hazard problems down the road. He balked at me calling it a bailout and dismissed the moral hazard problem because $2 a share "isn't much." I believe the price has moved up to $10 a share now, but that still isn't much, or at least I think he would say that.

He seemed to be working with a different concept of bailout than me. To me, a bailout occurs when the government (Fed or otherwise) intervenes in some way to prevent someone from bearing the full consequences of a financial collapse. In this case, the Fed lent JP Morgan the money it needed to buy out Bear Stearns. Had the Fed not been there to offer a nice loan, JP Morgan probably wouldn't have been willing to spend as much money on the buyout, if at all. It wasn't a direct bailout, sure, but the bottom line is that the shareholders of Bear Stearns lost less than if the Fed hadn't intervened.

Which brings me to the moral hazard problem. For some reason the aforementioned economist at the Fed wasn't thinking at the margin. At the margin, shareholders at Bear Stearns were shielded from loss. At the margin, this encourages risky behavior. So, at the margin, we have a moral hazard problem. The size of the bailout may be small in the end, but by signalling willingness to orchestrate such a bailout at all, the Fed may create the moral hazard problem anyway.

Or am I completely wrong?

Russ Roberts agrees and Arnold Kling disagrees.

 


Sowell on Immigration, evidence?

Today I listened to this podcast with Thomas Sowell and Russ Roberts. At the end, Sowell gives some arguments against relatively open borders. I may be biased because of my own opinion on the subject, but he didn't seem to have as strong as an argument as in previous subjects in the podcast. In particular, he made an empirical claim- that our culture can't handle this many immigrants (at least from certain areas), but didn't provide any evidence. Then it struck me, is Theophanes' link to the article on the amount of americans in prisons evidence for Sowell's claim? To add to this, Daniel D'Amico points out that this number has been increasing in recent years.

It seems plausible that if a relatively high proportion prisoners are (legal) immigrants, then they are causing problems within our culture and our institutions. If this is the case, we should probably be wary because capitalism does depend, to a large extent, on the institutional and cultural foundation we have in the west.

It seems more plausible to me that this is a sign of the drug war or if it is a sign of our slowly crumbling culture, it's crumbling from within because of certain structural problems that help churn out people who are dissillusioned with capitalism and western values for whatever reason. In particular, I'm thinking of inner cities here.

The big question is, what does the evidence say? Can anyone think of/find anything relevant?

 


B.S. Sentences that I read today..

From my money and banking textbook:

As with adverse selection, the government has an incentive to try to reduce the moral hazard problem created by asymmetric information, which provides another reason why the financial system is so heavily regulated.

I fail to understand why textbook writers in general stop doing economics when the get to government intervention. It's one thing to say that these problems potentially justify government intervention, but the above sentence is simply false.

edit: html


Anonymous vs. Scientology

Scattered groups of hackers across the internet have united in response to the Church of Scientology's attempts to remove the Tom Cruise video from the internet. They call themselves anonymous, and they aim to destroy the church. Tons of people seem to have joined the raids. IRL raids are also happening. Relevant video:


Digg is their media outlet at the moment. They are keeping related links at the top of the page rather easily. Tons of news reports, some in mainstream outlets, are there, along with a couple vids of IRL raids, ex-scientologists talking about their experiences, files- including the full length tom cruise vid (hosted on torrent sites) and tons of documents (also on torrents).

They also seem to be trying to get Anderson Cooper to give them some attention, since he has been going after Scientology lately.

Here we have a decentralized "organization" taking on a centralized organization. The results should be rather predictable as long as the anons don't either get bored or, worse, scared once the church starts striking back, and they should be able to have the law on their side.

Who do you guys think will 'win'? Who do you want to win? Should someone set up a betting market? Does anyone else find this hilarious?


Psychological Egoism

Some time ago, a debate raged across Catallarchy and Crooked Timber about whether psychological egoism was true. A standard objection to the doctrine is that there is no conceivable action which couldn't be ultimatle selfish, thus it is simply a tautology, akin to "a triangle is a 3 sided figure." I think this objection fails because there is an action which is inconsistent with psychological egoism.

Imagine a man who is on the verge of suicide. He literally has a cocked and loaded gun in his mouth with his finger on the trigger. As he begins to squeeze the trigger, he realizes that he has no life insurance policy, has racked up $20,000 in debt, and would leave the entire mess to his wife if he killed himself. Out of concern for his wife, he takes the gun out of his mouth and decides to continue living.

The psychological egoist has a major problem with this thought experiment because it doesn't seem as if the man could possibly be acting out of his own self interest. His wife's predicament should play no role in his decision if he is an egoist. Even if he would feel guilty for hurting his wife or acting immorally, he can't feel these feelings if he is dead. If death is better than living before the realization, then death must be better after the realization.

One could object that he is worried about his potential afterlife. Realizing that hurting his wife could land him in hell, the man might be avoiding the lesser of two evils. This objection fails, however, because suicide could land him in hell. If the man was worried about going to hell, he wouldn't have tried to commit suicide in the first place.

The interesting thing about this thought experiment is that it isn't so much a thought experiment as history. The man is still alive and a friend of my adviser, who told me the story earlier today (minor details have been changed), which means that psychological egoism must be false. Or not, any objections? Comments?