Sunday, January 29, 2006

Why Steve doesn't get worked up

I think Steve's a little bit mistaken. Steve would get worked up if he were me
right now.

What Steve didn't mention in his post is that he has the benefit of having gone through this phase already. He was once like me...excited, passionate, and sometimes obnoxious about Libertarian principles and economics (even before he knew he was a Libertarian), but over the years I've seen his political and economic views mature at a more rapid pace than my own. So even though I know the things Steve pointed out about people's beliefs, I still haven't accepted them as given, so they still frustrate me to no end.

This is not to say that Steve isn't still passionate, because he most certainly is. But it's not that incensed, immature, honeymoon fervor that I'm still learning to bring into constructive focus. And though he's resisted my efforts to get him to coach me on various principles and issues for fear of unduly influencing my opinion, his counsel, when he has chosen to give it, has been valuable.

So...all butt kissing aside, I've had a chance to reflect on the claim Steve mentioned about discrimination at the motorcycle campground and come up with what I think is a more constructive response. Say we assume the campground opens its gates to anyone, regardless of what they drive or ride, but it continues to be frequented by motorcyclists. Would non-motorcyclists who would rather not associate with a "bunch of rowdy bikers" and therefore choose to stay at another campground be engaging in discriminatory behavior? Absolutely...and they would be well within their right of freedom of association to do so. So why the double standard?

Saturday, January 28, 2006

Why Ron gets so worked up

So Ron asked me if I understand why he gets so worked up around his coworkers...

My answer is a qualified "no."

I sympathize, but if I were Ron I wouldn't get so worked up when I hear what Bastiat called "economic sophisms" from my coworkers. There are a couple of reasons:

1) People believe all kinds of things that don't jive with any kind of empirical analysis; this is often the result of availability bias or representative bias.

2) Most people's beliefs don't fit into any larger, coherent (or consistent) moral philosophy. Their beliefs about politics, philosophy, and economics are purely context-dependent. They will invoke the first amendment to fight censorship when they agree with the speaker and conveniently forget about the amendment's full implication when it comes to speech they despise.

Okay, I guess that can be frustrating. But it's to be expected. Most people have higher priorities than forming an internally consistent political or moral philosophy. As my colleague Bryan Caplan has repeatedly pointed out: they're being rational, in the economic sense of the word. There's little cost to holding inconsistent beliefs about politics or economics. Maybe if you thought about it, you'd experience some cognitive dissonance. Maybe if someone like Ron comes along, you might, maybe, be made uncomfortable when he points out contradictions in your views. But maybe not. Human beings have a great capacity for dissembling and compartmentalizing.

So this means that when someone objects to, of all things, a campground for motorcyclists only, on the grounds that it's discriminatory, she thinks this is a valid point. The libertarian contrarian responds that *of course* it's discriminatory, and so is a health club that only admits women, or a golf league that requires a handicap of less than six to join. The notion that discrimination is universally bad is a heuristic, i.e. a mental shortcut. In some cases, it's correct: sometimes discrimination is a bad thing. Jim Crowe is a good example of that. But the heuristic fails where free association is concerned. Rather than merely assert: "it's private property, they can do whatever they want," it may be better to present a puzzle, to bring the contradiction into the light: Is discrimination ever acceptable? Doesn't forbidding all discrimination essentially abolish free association? Many free associations rely on the ability to include (and therefore exclude) people based on all kinds of criteria. People, though, only seem to get very upset when a business discriminates, when they have criteria for who they will do business with. That's kind of strange, because no one seems to hold customers to the same standard, and the distinction between buyer and seller is very fuzzy in economics. More later on buyers, sellers, and the nature of money.

Thursday, January 26, 2006

Libertarians are all about big business?...It just ain't so!

Libertarians are an oft-misunderstood group. Many of the principles upon which Libertarianism is based are counter-intuitive, and they typically require a much more rational approach to various problems than many people are willing or able to take. Consequently, a lot of the things Libertarians believe are usually misunderstood by the masses, and these things are made worse by media misrepresentation of Libertarian ideals. I hope to shed some light on some of these misconceptions in upcoming posts, and to start the ball rolling I've decided to address the Libertarian perspective on business, particularly with regard to government involvement therein.

Many non-Libertarians believe that Libertarians are champions of big business. They believe that our vision of Utopia is an America ruled by giant corporations and international conglomerates. This is a grave misconception.

Libertarians are not corporate shills, ready to jump to the defense of the likes of Microsoft, Wal-Mart, or Starbucks at every turn. True, we do often end up defending such corporations on various principles, but it's not due to some notion that businesses (large or small) are altruistic institutions that have only the best interests of the public at heart. We neither believe nor expect them to be such.

Libertarians do believe, however, in the Free Market, which absent government involvement treats all businesses equally regardless of size. In a free market, businesses answer to consumers, who maintain absolute sovereignty over business by virtue of their buying or refraining from buying any given product. The size of a business is only relevant in its ability to serve consumers. In some industries, larger businesses are better able to serve consumers due to economies of scale, while other industries serve consumers best through smaller institutions.

Libertarians oppose legislation that would hamper business, whether through regulation, taxation, antitrust, etc. This is typically what fosters the "corporate shill" image often portrayed of Libertarianism. However, the other side of the coin is often omitted by non-Libertarian commentary, and that is the fact that we also oppose legislation that seeks to "help" business. This means we oppose government largesse toward companies who would otherwise fail. We oppose tax cuts that favor large businesses over smaller ones. We oppose payroll taxes, minimum wage laws, and other mandatory costs that make it more difficult for smaller businesses to compete. In short, we oppose any government intervention, whether negative or positive, in the market.

When government becomes involved in the market, the natural result is that some businesses or industries are favored over others. As long as government has power in the market, businesses will be able to buy that power. Large, favored businesses will benefit, while smaller, less well-connected businesses will suffer. This is the root of all the flap over campaign finance. If government didn't have market power to sell, would campaign financing really be an issue? But that's another discussion.

This is not to say that the federal government has no role whatsoever in the market. It simply means that the government's role is judicial, rather than legislative. Contract agreements must still be enforced. Theft and fraud must still be punished.

The Libertarian philosophy is deeply rooted in the belief that unhampered free markets are the best way to improve the quality of life of everyone involved. Many people find it difficult to reconcile this viewpoint with the perception of business as it is today. They see most businesses as being willing to do whatever it takes to make a profit, including cheating consumers or even endangering consumers' or employees' lives. It is important to understand, however, that the free market does not reward such behavior. As long as consumers have the right to choose the products they buy or do not buy, they alone will determine the success or failure of any business. Government intervention only serves to hamstring this process, allowing unscrupulous or inefficient businesses to survive despite consumer preference to the contrary.