A Lesson in Public Choice: Lifeboats and the Titanic
From WSJ:
Governments find it easy to implement regulations but tedious to maintain existing ones—politicians gain little political benefit from updating old laws, only from introducing new laws.
And regulated entities tend to comply with the specifics of the regulations, not with the goal of the regulations themselves. All too often, once government takes over, what was private risk management becomes regulatory compliance.
It’s easy to weave the Titanic disaster into a seductive tale of hubris, social stratification and capitalist excess. But the Titanic’s chroniclers tend to put their moral narrative ahead of their historical one.
At the accident’s core is this reality: British regulators assumed responsibility for lifeboat numbers and then botched that responsibility. With a close reading of the evidence, it is hard not to see the Titanic disaster as a tragic example of government failure.
The Hong Kong Experiment: Looking Backward and Forward
This Thursday, Patri Friedman will be speaking at TEDx San Francisco on the theme of what oceans and biological evolution can teach us about the societal ecosystem and how governments evolve. It will be his third time participating in a TEDx event; the video of his second talk, at the December 2011 TEDx Hong Kong, is now online.
Last time, Patri used the TEDx stage to explain how seasteading can disrupt the government industry and enable dozens of floating Hong Kongs, each with millions of prosperous citizens. “I like Hong Kong so much that I’ve spent the last 10 years trying to figure out how we can have more places like it,” began Patri, seemingly channeling his grandfather, the late Milton Friedman, who spent much of his career trying to persuade governments to act more like this literal shining city on near a hill.
In a 1997 article titled, “The Hong Kong Experiment,” the elder Friedman wrote:
“Economists and social scientists complain that we are at a disadvantage compared with physical and biological scientists because we cannot conduct controlled experiments. However, the experiments that nature throws up can be every bit as instructive as deliberately contrived experiments. Take the fifty-year experiment in economic policy provided by Hong Kong between the end of World War II and this past July, when Hong Kong reverted to China … in 1960, the earliest date for which I have been able to get [data], the average per capita income in Hong Kong was 28 percent of that in Great Britain; by 1996, it had risen to 137 percent of that in Britain…
Mr Lupe has been in tribal government, off and on, since 1964. His career thus spans several historic changes for Indian tribes, each of which affirmed and increased their sovereignty. “When I was first elected, I received no financial reports, no letters, they all went over there,” he recalls, pointing across the street to a branch of the Bureau of Indian Affairs (BIA), the federal agency that handles relations with tribes. “Over the years I took their power away.” Then he flips his middle finger in the BIA’s direction. “I’m not responsible to you, I’m a sovereign nation.”
That sovereignty is still a topic of discussion at all should be surprising. America’s constitution names three sovereigns: the federal government, states and tribes. The “treaties” America signed with tribes in the 18th and 19th centuries also implied sovereign parties. Tribes could not keep armies or devise a currency, but they could issue their own passports, as the Iroquois have famously done (which made their lacrosse team miss a tournament in 2010, after Britain refused to recognise the documents). The Iroquois, the Sioux and the Ojibwe (Chippewa), even separately declared war on Germany in 1941.
Casinos are lucrative, but the opportunity for jurisdictional arbitrage offers great promise in other industries as well. Michael Strong previously wrote on bootstrapping Native American sovereignty here:
In the U.S., Chief Justice John Marshall laid out a series of opinions starting in the 1830s that affirmed the sovereignty of indigenous peoples. For instance, in Worcester v. Georgia, he wrote, “The Cherokee nation . . . is a distinct community, occupying its own territory, with boundaries accurately described, in which the laws of Georgia can have no force.” To which, of course, President Andrew Jackson is said to have replied “John Marshall has made his decision; now let him enforce it!” Jackson’s subsequent policy of “Indian removal,” including his infamous support for removing the Cherokees from their homes and sovereign territory in “The Trail of Tears” makes his actions among the most shameful in U.S. history (Google offers “Andrew Jackson worst president” as among its autocompletes).
Arguments for continued and expanded Native American sovereignty are strong; Here is an excellent summary of the state of Native American sovereignty from Harvard’s Project on American Indian Development led by Joseph Kalt, who got his doctorate under Armen Alchian. Even more important than Marshall’s Supreme Court decisions is the fact that the U.S. government signed treaties with most of the Native American tribes as sovereign governments.
Robert Nozick’s Utopia: Beyond Side Constraints and Rights
Over at Bleeding Heart Libertarians, Peter Boettke raises the idea that best way to read Robert Nozick is not as a rights-based political theorist, but as a “process theorist” who uses invisible hand explanations for how certain political arrangements may justly arise and fall.
Ever since Anarchy, State, and Utopia was published, academic philosophers attacked Nozick for assuming the existence of rights from the get go–or what he called “side constraints”–without ever giving a moral justification for them. Since the entitlement theory of justice Nozick offers in Part II of the book depends on such rights, Thomas Nagel and other egalitarians claimed Nozick’s criticism of competitors was hollow. The upshot was “libertarianism without foundations.”
But as I wrote here a few years ago:
You can earn yourself a PhD writing on Anarchy and State, but not Utopia, getting pats on the head if you point out that Nozick never justifies his notion of “rights.” (The Experience Machine is still a magnet as well, again earning yourself bonus points if you say Nozick doesn’t think about fantasy worlds at the margins.)
This party upfront is extremely unfortunate–the last third of his book is a cascade of fireworks on competitive government, a reinvention of a theory of clubs, and is far more rewarding than the previous sections. It deserves more attention than this.
Like James Buchanan, I find Nozick’s vision for a utopia of utopias wonderfully attractive and convincing. Since many of its arguments support our mantra (let a thousand nations bloom!), I think it’s worth revisiting in greater detail.
What Nozick’s tut-tutting critics never seemed to notice is that the last section of his book stands freely. Even if Parts I and II depend on bogus arguments with dubious assumptions, Part III must be reckoned with on its own terms. As Nozick wrote in the closing paragraphs of the book:
The argument of this chapter starts (and stands) independently of the argument of Parts I and II and converges to their result, the minimal state, from another direction. In our discussion in this chapter we did not treat the framework as more than a minimal state, but we made no effort to build explicitly upon our earlier discussion of protective agencies. (For we wanted the convergence of two independent lines of argument.)…We argued in Part I that the minimal state is morally legitimate; in Part II we argued that no more extensive state could be morally justified, that any more extensive state would (will) violate the rights of individuals. This morally favored state, the only morally legitimate state, the only morally tolerable one, we now see is the one that best realizes the utopian aspirations of untold dreamers and visionaries. It preserves what we all can keep from the utopian tradition and opens the rest of that tradition to our individual aspirations.
As projects like Seasteading and Charter Cities begin to flourish, and competition between political units takes off, I anticipate his vision will gain more attention, while all that pitter-patter about rights will molder in the dry as dust academic memory hole.
Given the headline, I had to make sure this wasn’t an April Fools article:
The democratic process relies on the assumption that citizens (the majority of them, at least) can recognize the best political candidate, or best policy idea, when they see it. But a growing body of research has revealed an unfortunate aspect of the human psyche that would seem to disprove this notion, and imply instead that democratic elections produce mediocre leadership and policies.
The research, led by David Dunning, a psychologist at Cornell University, shows that incompetent people are inherently unable to judge the competence of other people, or the quality of those people’s ideas. For example, if people lack expertise on tax reform, it is very difficult for them to identify the candidates who are actual experts. They simply lack the mental tools needed to make meaningful judgments.
As a result, no amount of information or facts about political candidates can override the inherent inability of many voters to accurately evaluate them. On top of that, “very smart ideas are going to be hard for people to adopt, because most people don’t have the sophistication to recognize how good an idea is,” Dunning told Life’s Little Mysteries.
He and colleague Justin Kruger, formerly of Cornell and now of New York University, have demonstrated again and again that people are self-delusional when it comes to their own intellectual skills. Whether the researchers are testing people’s ability to rate the funniness of jokes, the correctness of grammar, or even their own performance in a game of chess, the duo has found that people always assess their own performance as “above average” — even people who, when tested, actually perform at the very bottom of the pile.
It turns out Dunning is legit. Here’s a PDF of his paper, “Unskilled and Unaware of It: How Difficulties in Recognizing One’s Own Incompetence Leads to Inflated Self-Assessments.”
Seasteading, Blueseed, and Charter Cities in the FT
Imagine a network of self-sufficient communities floating in oceans beyond the reach of international governments, capable of setting their own laws, norms and social rules. Led by pioneering individuals, these societies could become a blueprint for a new way of life – one that is more equitable, tolerant and entrepreneurial.
Vive la compétition !
Facing a difficult re-election campaign, French President Nicolas Sarkozy recently threatened to pull France out of a 27-year-old open borders agreement between nations in the Schengen Area unless the European Union tightens restrictions on immigration. At the same time, he declared, “I want a Europe that protects its citizens. I no longer want this savage competition,” advocating a “Buy French” law under which government spending would favor domestic industries. In doing this, Sarkozy is basically reviving old-school mercantilism, which says France can improve its economic position by paying more money at home for goods that could be produced much more cheaply abroad.
Although this is not the first time a politician has resorted to such tactics to win votes, protectionism has been out of fashion in the last few decades among neoliberal European leaders, who have generally accepted the arguments in favor of increased trade and globalization. Judging by Sarkozy’s surge in the polls since the speech, however, it seems like voters may no longer want open borders and free markets in France, where populist stirrings are trumping the conventional economist’s view.
Read more…
When In Rome: a Theory of How to Change Moral Sentiments
It is easier to get people to opt into a society with different norms than it is to convince them to change their behavior while everyone else remains the same. Grafting new rules on top of old institutions is a perilous journey. There’s lots to talk about in Jonathan Haidt’s fascinating book, The Righteous Mind, but I was struck by Haidt’s own story. He didn’t notice how impoverished the typical secular urban moral palette is until he lived in India. Writing about his first study there, he admits:
But these experiments taught me little in comparison to what I learned just from stumbling around the complex social web of a small Indian city and then talking with my hosts and advisors about my confusion. One cause of confusion was that I had brought with me two incompatible identities. On one hand, I was a twenty-nine-year-old liberal atheist with very definite views about right and wrong. On the other hand, I wanted to be like those open-minded anthropologists I had read so much about and had studied with, such as Alan Fiske and Richard Shweder. My first few weeks in Bhubaneswar were therefore filled with feelings of shock and dissonance. I dined with men whose wives silently served us and then retreated to the kitchen, not speaking to me the entire evening. I was told to be stricter with my servants, and to stop thanking them for serving me. I watched people bathe and cook with visibly polluted water that was held to be sacred. In short, I was immersed in a sex-segregated, hierarchically stratified, devoutly religious society, and I was committed to understanding it on its own terms.
It only took a few weeks for my dissonance to disappear, not because I was a natural anthropologist but because the normal capacity for empathy kicked in. I liked these people who were hosting me, helping me, and teaching me…Rather than automatically rejecting the men as sexist oppressors and pitying the women, children, and servants as helpless victims, I began to see a moral world in which families, not individuals, are the basic unit of society, and the members of each extended family (including its servants) are intensely interdependent. In this world, equality and personal autonomy were not sacred values. Honoring elders, gods, and guests, protecting subordinates, and fulfilling one’s role-based duties were more important.
I had read about Shweder’s ethic of community and had understood it intellectually. But now for the first time in my life, I began to feel it. [pp 101-102]
No amount of arguing could have led Haidt to adopt these attitudes. No deduction from moral principles in a reflective equilibrium could have led to these intuitions. They had to be lived and then felt. Not that this suite of moral sentiments presents a better way of life. But it does show how people can change. In a world of robust competition between jurisdictions, we should see a variety of different ways of life. That variety is a good thing. But if anything like a free society can flourish amid the competition, it will be because people have opted into it and have grown accustomed to its norms and values. That will be the larger force for change. Arguing for people in Chicago or Los Angeles to adopt those attitudes today one by one doesn’t stand a chance.
Esther Dyson on Charter Cities
And, as we are seeing worldwide nowadays, national governments are difficult to overturn and also difficult to (re)build. Democracy does not always lead to liberty or good outcomes.
So, perhaps cities are the right place and have the right scale for massive social change. This does not mean that national governments are irrelevant, or that they no longer hold life-and-death power over people’s lives; but cities make more of a difference in people’s daily lives. Especially in a world where many of the big things – trade, technology, legal regimes – are globalized, most of the small things are actually happening in cities. By 2050, seven out of ten human beings will live in cities, up from about 50% now and barely 14% in 1900…
But cities still often operate in a pre-market way. They mostly build their infrastructures themselves, and innovations do not spread easily, owing to a lack of incentives and, for that matter, much of a market…other than when one city hires managers from another.
On the other hand, cities are increasingly behaving like companies, becoming intimately involved in their citizens’ quality of life, and, in an increasingly mobile world, competing for “customers.” Despite registration systems such as those in Russia and China that restrict movement, people can come and go from cities much more freely than they can cross national borders. Meanwhile, cities can be both more flexible and more arbitrary, and compete on terms not available to legislatively restricted national governments.
Paul Graham on the Benefits of Competing Jurisdictions
Ultimately it comes down to common sense. When you’re abusing the legal system by trying to use mass lawsuits against randomly chosen people as a form of exemplary punishment, or lobbying for laws that would break the Internet if they passed, that’s ipso facto evidence you’re using a definition of property that doesn’t work.
This is where it’s helpful to have working democracies and multiple sovereign countries. If the world had a single, autocratic government, the labels and studios could buy laws making the definition of property be whatever they wanted. But fortunately there are still some countries that are not copyright colonies of the US, and even in the US, politicians still seem to be afraid of actual voters, in sufficient numbers.
The people running the US may not like it when voters or other countries refuse to bend to their will, but ultimately it’s in all our interest that there’s not a single point of attack for people trying to warp the law to serve their own purposes.
Whole thing here. David Hume noticed the same beneficial effects competing sovereigns gave to the inventors of Europe. When an invention was banned in one country, entrepreneurs were welcomed by a competitor. Vested interests had less power to thwart progress. As Hume wrote in 1742:
Nothing is more favourable to the rise of politeness and learning, than a number of neighbouring and independent states, connected together by commerce and policy. The emulation, which naturally arises among those neighbouring states, is an obvious source of improvement: But what I would chiefly insist on is the stop, which such limited territories give both to power and to authority…where a number of neighbouring states have a great intercourse of arts and commerce, their mutual jealousy keeps them from receiving too lightly the law from each other…
Let A Thousand Nations Bloom 
