Bastiat Prize For Writers Who Promote a Free Society
Don’t miss the submission deadline, June 30th. You can find details, rules and entry forms at BastiatPrize.org. This year’s contest includes an additional $3,000 prize for the best online writer. (That includes bloggers!)
“Started in 2002, the Bastiat Prize was inspired by 19th-century French philosopher Frédéric Bastiat’s compelling defence of liberty and eloquent explanations of complex economic issues. Judges have included former UK Chancellor Lord Lawson, Pulitzer prize-winning author Anne Applebaum, former Bastiat Prize winner and best-selling author Amity Shlaes, Lady Thatcher and Nobel laureates James Buchanan and the late Milton Friedman.”
Thinking Like a Dandelion
In the July issue of Wired (not yet available on-line), editor Chris Anderson has a thought-provoking excerpt from his new book Free: The Future of a Radical Price. Anderson talks about inventing the future of TV on YouTube, which is informative in its own right, but I think the general drift of his essay ought to apply to innovating new forms of government as well. In fact, I think it opens up a fresh way to conceive the problem, especially for those who are derisive of this blog’s aims.
To increase innovation, Anderson extols the power of experimentation amid abundance:
When scarce resources become abundant, smart people treat them differently, exploiting them rather than conserving them. It feels wrong, but done right it can change the world. The problem is that abundant resources, like computing power, are too often treated as scarce.
In this model innovation on a revolutionary scale occurs in two steps. First, we see a drastic decrease in the cost of one factor of production–the cost of physical force before and after the industrial revolution, to take one example. Compared to the past, this new cost now becomes minuscule–so small, in fact, that it is now virtually free. It then ushers in a vast wave of experimentation, abundance creating a hitherto unimaginable field for trial and error, massively scaled. As Anderson notes, the true potential of computing was not unleashed until engineers in the 70s decided to “waste transistors,” devoting less computing power to information processing and more to graphics and animation. The upshot was an accessible user interface and the Mac. The losers were those who continued to treat transistors as a scarce resource. Scarcity thinking fails in a world of abundance.
This scattershot strategy mimics the success of the dandelion: hundreds and hundreds of seeds fail to germinate, but a few find a new niche environment in which to thrive. As Cory Doctorow writes (and Anderson quotes):
The disposition of each–or even most–seeds isn’t the important thing, from a dandelion’s point of view. The important thing is that every spring, every crack in every pavement is filled with dandelions. The dandelion doesn’t want to nurse a single precious copy of itself in the hopes that it will leave the nest and carefully navigate its way to the optimum growing environment, there to perpetuate the line. The dandelion just wants to be sure that every single opportunity for reproduction is exploited!
In the case of government, it’s time for everyone to start thinking like dandelions. To do so, we have to start treating what was formerly scarce as abundant. It is true, politics has not yet passed into the equivalent of an industrial revolution. We have yet to see a massive decrease in the cost of one factor in the production of public goods. In fact, just the oppostite seems to be happening. And admittedly, experiments in living can be costly, too. It’s tough to conceive of “wasting” governments and constitutions like engineers wasting transistors. Aubundance is not quite here. But that can change. The examples in computing, industry, and communications should inspire, not just libertarians and anarcho-capitalists, but communitarians and progressives alike. So let’s focus less on trying to perpetuate one copy of what we believe is the best society and instead work on ways to decrease the costs of producing societies. The results will be better than we can imagine. Markets have moved economies from mass production to mass customization. What will move governments in the same direction?
[Update: Anderson’s Wired article is now online here.]
When State Governments Compete for Doctors
Over the last few years, Texas has become an attractive state in which to practice medicine. It has high reimbursement from insurance companies, no state income tax, a low cost of living, and since 2003, a cap on non-economic damages for physicians. An amendment to the Texas state constitution was passed to enact the change in policy. Though other states also have caps on damages, Texas has the most far-reaching physician-protecting policies in the country. The result has been decreases in lawsuits and malpractice insurance premiums, and an increase in the number of doctors practicing in the state.
A report by the Texas Public Policy Foundation (pdf) summarizes the results.
- Prior to tort reforms passed in 2003 by the Texas Legislature, frequent lawsuits against physicians and hospitals and escalating jury awards to plaintiffs drove doctors and insurers from the state, leading to physician shortages and higher costs for doctors and patients.
- Between 1996 and 2000, one of four Texas doctors was sued. In the 10 years following 1989, the average medical malpractice verdict skyrocketed from $472,982 to $2,048,541. The percentage of such awards attributable to noneconomic damages, which are intangible injuries like pain and suffering, increased from 35.7 percent to 65.6 percent. Between 2000 and 2003, 13 of the state’s 17 medical insurance carriers pulled out of Texas.
- Pre-reform, medical malpractice rates were rising 15 percent to 20 percent per year. Texas Medical Liability Trust (TMLT), the state’s largest medical malpractice insurance carrier, has now reduced rates the last six years. For the first five years, rates were reduced across the board for all specialties: 12 percent in 2004; 5 percent in 2005; 5 percent in 2006; 7.5 percent in 2007; and 6.5 percent in 2008. For 2009, all specialties will receive a rate decrease, but the reduction will vary by specialty and territory, with an average decrease of 4.7 percent. According to TMLT, the cumulative premium savings realized by policyholders since January 2004 will exceed $275 million. Since the passage of medical liability reform, TMLT insured physicians will have saved $380 million in decreased premiums, once this latest round of rate cuts and dividends is implemented.
- In May 2003, there were 35,723 in-state medical doctors. Today, there are 46,632, a 30.5 percent increase.
- From May 2003 to September 2008, the number of medical doctors practicing in the counties of Bexar, Dallas, El Paso, Harris, and Travis increased 25.9 percent, 22.6 percent, 14.6 percent, 24.3 percent, and 28.3 percent, respectively.
- As of October 31, 2008, the number of pending applications to practice medicine in Texas was 2,191. Texas ranks 18th (1 = best) in the Pacific Research Institute’s 2008 U.S. Tort Liability Index, which ranks states’ tort laws and tort costs. Texas is ranked 5th in the category of monetary tort loss but 46th in the category of litigation risk. In PRI’s last tort index (2006), Texas received the top overall ranking.
According to the American Medical Association which cites the Texas Medical Board and the Texas Department of Insurance, the number of specialists has dramatically risen since 2003…
…and insurance premiums have significantly decreased.
Speaking from personal experience, as I’ve come upon the final steps of my medical training, I sought out jobs in Texas for its physician-friendly policies. I interviewed with two practices in the state of Texas, both of which told me the reforms have been greatly beneficial. The head of one of the groups said that their insurance premiums had dropped by 75% and lawsuits had dropped by 90% since 2003.
The Texas experience is one example of how differences in policy between states has resulted in differences in outcomes and flows of people across political boundaries. In this case, a state government competed against other state governments, and based on its own endpoints, won.
Secessionists In The Wall Street Journal
From the Wall Street Journal, Jack Molloy
There’s a good round up by Paul Starobin in the WSJ of the various secession movements around the U.S. Some of these movements–like those in Alaska, Texas and Vermont–focus on state lines, but it’s interesting to see that the idea of the city-state also enters the into mix, as well as the idea of the “mega-region.” The nut:
Devolved America is a vision faithful both to certain postindustrial realities as well as to the pluralistic heart of the American political tradition—a tradition that has been betrayed by the creeping centralization of power in Washington over the decades but may yet reassert itself as an animating spirit for the future. Consider this proposition: America of the 21st century, propelled by currents of modernity that tend to favor the little over the big, may trace a long circle back to the original small-government ideas of the American experiment. The present-day American Goliath may turn out to be a freak of a waning age of politics and economics as conducted on a super-sized scale—too large to make any rational sense in an emerging age of personal empowerment that harks back to the era of the yeoman farmer of America’s early days. The society may find blessed new life, as paradoxical as this may sound, in a return to a smaller form.
I wish I could be as optimistic as Starobin. Things do fall apart, but the center often holds. The article doesn’t acknowledge the centripetal forces pushing untold millions of people into the patronage of the USG. Tea-parties today, I say, but more Labor Day celebrations tomorrow. That’s my bet. As the government increases the pie that is the federal budget, more and more coalitions will form to claim their piece of it. They will be small in number, relative to those who will carry the burden, but they will be well-organized and highly motivated. The budget will become a veritable scrum over who can plunder whom. And so with time these distributional coalitions shall accumulate. The race will not go to swiftest, nor wealth to the discerning, nor favor to ability. Nay, I say unto you, it will go to the followers of the One-Party. One-party state sclerosis shall set in. Stagnation will ensue. And Starobin’s hoped for devolution will grow less and less likely, as the best and the brightest increasingly stake their careers on the chance to suck on one of the 350 million teats that is the USG.
Still, it’s nice to see the topic of secession broached in the WSJ.
Man Arrested For Writing Complaint Letters to Town
I’ve often heard good things from people who’ve taken the time to write a complaint letter to a private company about its goods and services. Companies often, but not always, like this kind of feedback. Governments, not so much. Evidently a man in Pennsylvania was arrested for writing a town too frequently to complain about its services. From a Pittsburgh news channel:
Pappert lives across Union Street from a Bridgeville concrete plant. The dust, the noise, the idling diesel trucks all combined to cause him to complain to the borough. He wrote letter after letter — hundreds of them — and he left voice mail messages for the borough manager. In one message, Pappert said, “I’m asking you as a Bridgeville resident of 56 years to resign and get off of your position. Do the right thing.”
Instead, Pappert got arrested on a harassment charge and was convicted.
Universities, Anarchism, and Control
Via Rad Geek I came across this old piece by Roderick Long: A University Built by the Invisible Hand. The story:
As for its founding, nobody ever really started the University — it just sort of happened. The University of Bologna arose spontaneously, through the interactions of individuals who were trying to do something else.
In the 12th century, Bologna was a center of intellectual and cultural life. Students came to Bologna from all over Europe to study with prominent scholars. These individual professors were not originally organized into a university; each one operated freelance, offering courses on his own and charging whatever fees students were willing to pay. If a professor was a lousy teacher or charged too much, his students would switch to a different professor; professors had to compete for students, and would get paid only if students found their courses worth taking.
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But being a foreigner in Bologna had its disadvantages; aliens were subject to various sorts of legal disabilities. For example, aliens were held responsible for the debts of their fellow countrymen; that is, if John, an English merchant, owed money to Giovanni, a Bolognese native, and John skipped town, then innocent bystander James, if James were an English citizen, could be required by Bolognese law to pay to Giovanni the money owed by John.
The foreign students therefore began to band together, for mutual insurance and protection, into associations called “nations,” according to their various nationalities; one “nation” would be composed of all English students, another of all French students, and so on.
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In time the different “nations” found it useful to spread the risk still more widely by combining together into a larger organization called a universitas. This was not yet a university in the modern sense; the closest English equivalent to the Latin universitas is “corporation.” The universitas was essentially a cooperative venture by students; the professors were not part of the universitas. The universitas was democratically governed; regular business was conducted by a representative council consisting of two members from each “nation,” while important matters were decided by the majority vote of an assembly consisting of the entire membership of the universitas.
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Once the universitas had been formed, the students now had available to them a means of effective collective bargaining with the city government (rather like a modern trades-union). The students were able to exercise considerable leverage in their disputes with the city because if the students decided to go on “strike” by leaving the city, the professors would follow their paying clients and the city would lose an important source of revenue. So the city gave in, recognized the rights of foreign students, and granted the universitas civil and criminal jurisdiction over its own members. Although the universitas was a purely private organization, it acquired the status of an independent legal system existing within, but not strictly subordinate to, the framework of city government.
How did the universitas of Bologna become the University of Bologna? Well, after all, this new means of effective bargaining with the city could also be used as a means of effective collective bargaining with the professors. The students, organized into a universitas, could control professors by boycotting classes and withholding fees. This gave the universitas the power to determine the length and subject-matter of courses, and the fees of professors. Soon professors found themselves being hired and fired by the universitas as a whole, rather than by its individual members acting independently. At this point we can finally translate universitas as “University.”
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The professors were not completely powerless; they formed a collective-bargaining association of their own, the College of Teachers, and won the right to determine both examination fees and requirements for the degree. A balance of rights thus emerged through negotiation: the obligations of professors were determined by the students, while the obligations of students were determined by the professors. It was a power-sharing scheme; the students, however, continued to act as the dominant partner, since they were the paying clients and collectively carried more clout.
This quasi-anarchistic setup was eventually brought to an end when the city government took over and began paying professors directly from tax revenues, thus converting the University of Bologna into a publicly-funded institution. Whether we interpret this move as public-spirited altruism or as a cynical power grab, in either case the result was that professors became dependent on the city government rather than on the students, who lost their earlier leverage as power shifted from the student body to the Bolognese politicians.
While Long describes it as “an example of how the spontaneous-order mechanisms underlying market anarchism … can operate in a university setting”, given the ending, I have a different take. It seems a classic example of the phenomenon of spontaneous order arising, working for awhile, generating power worth controlling, and then taken over and centralized. The almost inevitability with which this seems to happen to anarchic systems is rather depressing, and it seems to me that it behooves us to understand it if we wish to change it. What shall we call this phenomenon? The word that comes to my mind is “hardening”, which conveys the brittleness and lack of flexibility of a centralized system, but I’m open to other terminology.
Now, for the general case of political power, I have a theory and a solution. But while this is the most important area, it is not clear to me whether other examples of hardening such as the Bolognese ones are merely reflective of operating in a hardened political environment, or whether they would arise even in a dynamic political system. If this were Adam Smith University in Seastead City, would it have reached the phase where students and professors were each unionized, and then stopped? Or would it have continued to harden from there? Would the balance of rights between the two unions have been a stable and efficient system, or would it be better if it did not even harden to that degree?
The Bureaucrash Crash and Structural Activism
Rad Geek has a good post about the recent de-radicalism of Bureaucrash by the CEI, including Xaq Fixx’s statement on his exit as Crasher-In-Chief. I wore a Bureaucrash “Enjoy Capitalism” jacket today, and Xaq did one of the earliest TSI interviews, so I have some warm feelings towards / sadness about the passing of the movement. But I agree whole-heartedly with Rad Geek & Brad Spangler’s analysis of the conflict between the world of culture and activism and the think-tankian world of DC and the CEI – so much so that I’m going to gratuitously bold my favorite phrases. First Brad:
The demand that radicals abandon radicalism shows a profound ignorance of the dynamics of social change as they manifest in the real world of politics. The continuing crisis of accelerating descent into ever-increasing statism that Young Republican types point to and use to shrilly demand you fall in line behind their at-best-merely-nominally “small government” reform efforts is itself proof that what they ask for doesn’t work.
It’s easy to see why the libertarian movement has been ineffective. Libertarians often roll over for this sort of demand that they let themselves be co-opted by the “small government” statists and thus share in their guilt. In doing so, they fail to hold the radical libertarian banner aloft. In abandoning the project of revolution, political pressure for reform also gets sabotaged.
Effective reform efforts tend to be “conservative” ruling class responses to radical challenges to the status quo. If the tiny minority who *could* be effective radicals capable of building such a radical challenge to the status quo allow themselves to be hectored into acting like reformists, no political pressure for reform materializes and reform doesn’t happen either.
Just to twist everything to my own particular worldview because I’m an egocentric reality distortion field, let me re-interpret that final sentence. “If the tiny minority who could radically alter the status quo allow themselves to be hectored into being “reasonable” and “thinking small” and “working with what we have “and get sucked into the morass of politics and the mirage of reform, their energies will be wasted instead of being directed towards seemingly crazy solutions that might actually work.”
And then Rad Geek:
I’d just want to stress, in addition to what Brad has to say, that the kind of co-optation and self-vitiation that Brad talks about aren’t just tendencies, and they aren’t just the work of some clever set of minimal-statist manipulators. I think that they are built in to the electoral-reformist project itself, necessarily and always — that they are structural limitations that you will always face if your politics is hitched primarily to influence the state or trying to gain a base of power within the state. The process itself only admits of certain outcomes, and the process itself also tends to consume those who put themselves into it.
Yes! Yes, yes, yes! And a thousand times, yes!
Look, it isn’t that trying to influence the state is a priori wrong for some special philosophical reason having to do with trying to with it being immoral and trying do good through an evil system or some other crap I could imagine Ayn Rand saying. It’s wrong because it doesn’t work. Because a characteristic of modern democracy is robustness against activism. Because its flaws stem from hard-to-alter systemic factors.
If you want to fix it, you gotta change those factors. And you can’t do it by participating in the system, nor are politicians gonna help you. You need to bring to government the ultimate solution: the market. The ultimate incentive: competition. You need to Let A Thousand Nations Bloom.
Reason: Local government as postmodern pluralism
Welcome to the New–and Private–Neighborhood: Local government in a world of postmodern pluralism is a Reason Magazine article from a few years ago which displays just the type of crazy thinking we love around here, applying the logic of competition and market forces to local government. The author, Robert Nelson, is the author of Private Neighborhoods and the Transformation of Local Government. He begins by describing the rise of private community associations:
In 1965 less than 1 percent of all Americans lived in a private community association. By 2005, 18 percent—about 55 million people—lived within a homeowners association, a condominium, or a cooperative. Since 1980 about a half of all new housing units in the U.S. have been built within such associations; in California, the figure now is at least 60 percent. Such communities can be as small as a single building or as large as an entire city, but they’re often about the size of a neighborhood.
And then connects it to postmodernism, which I’m not sure I believe:
This shift came as we entered the postmodern era, a time of increased suspicion toward the conventional narratives of scientific and economic progress. There is less convergence of basic beliefs about the best forms of society and less expectation of such a convergence. Instead, there is a preference for pluralism—for multiple, overlapping identities and communities through which individuals can find meaning and comfort.
I wish I thought that in the current era there was a preference for pluralism and a lack of expectation that we’ll all agree about the best form for a society. But unfortunately while that may be Change I Want, it isn’t Change I Can Believe Is Happening, given how DC continues to vacuum power and control of money from the rest of the country.
Regardless of preferences, there is the question of whether local, state, or federal governments most need improving. In the past I have argued that local government is the worst place to privatize, because government works best when it is small, and most tax and regulatory burden is at the federal level. But Nelson makes a good point that the scope of local government consists of the most easily privatized activities:
Relegating a large part of U.S. local government to a private status would reflect the fact that much of what local governments do is business-like. The federal government spends most of its funds on two functions: national defense and redistribution of income. Whatever the Constitution might say to the contrary, state governments in many respects evolved in the 20th century to become the federal government’s administrative apparatus, controlled by significant federal funding and requirements. Local governments, however, engage in a much different set of activities—picking up the garbage, policing the streets, running the schools—that could be and often still are provided privately in other circumstances.
Nelson has unfortunately not encountered seasteading, or he would know the solution to his lament about how fixed territory makes exit difficult:
The unit owner in a neighborhood association is not only a customer but an investor—indeed, his home often constitutes a significant portion of his total financial assets. In an ordinary business corporation, mergers, acquisitions, and divestitures are a routine part of life; stockholders who disapprove of the way a corporation is managed can exit the organization simply by selling their shares on Wall Street.
The territorial aspect of a neighborhood complicates such processes of entry and exit. In a private community, a split of one group from the association would require a large supermajority vote and perhaps unanimous consent. In the public sector, such a rift would amount to an act of secession. Most states have provisions for “detachment” from the municipal corporation, but few detachments have occurred over the years, due in part to the high transaction costs associated with getting the state government’s approval.
However he correctly points out that even with difficult exit, there is still competition. Furthermore, we can improve competition by making boundaries more flexible, which brings about a feudal-like system where neighboring associations compete for border territories:
In principle, the industrial organization of local government could be determined by a process of competition in the marketplace. Indeed, some students of urban affairs believe that a key to improved delivery of local public services rests in much greater flexibility among municipal boundaries.
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The best way to resolve such tradeoffs, Oakerson argued, would be through an evolutionary process driven by competition among governmental forms within an overall framework of metropolitan governance.
He brings in Charles Tiebout‘s Pure Theory of Local Expenditures (which deserves its own post), and Bruno Frey’s Functional Competing Overlapping Jurisdictions, which sounds an awful lot like a rediscovery of market anarchism by a Swiss economist. And finally, he ties it all together into something that should sound quite familiar to readers of Let A Thousand Nations Bloom:
Put together these trends and speculations—the rise of private communities and Dell governments, the push for more-flexible municipal boundaries, the possibility of FOCJ-style governance—and what picture of the postmodern political order emerges? We’d have a world where the size and functions of local government would be determined by a trial-and-error process of competition. Different institutional forms would contend with one another; rather than following a central administrative plan, the nature and tasks of local government would be determined by a private market. The “governments” themselves would be more private than public, facilitating a routine flow of mergers, breakups, divestitures, and other organizational rearrangements.
Speculating more boldly, we might see the total privatization of American local government. Postmodern local government would fall under a brand-new legal category: the exercise of a collective private property right in the manner of a private club. We would return, in effect if not exact form, to an older model, under which local “governments” were private institutions operating for many centuries under the same basic legal status as private business corporations. Radical though it sounds, such a revolution is already quietly emerging in thousands of condos, co-ops, and homeowners associations across the United States.
Sounds fabulous to me! All we need is a place with a lack of pre-existing power structures and a terrain suitable for a routine flow of not just organizational but geographical arrangements. Hmm…
20,000 Nations Above the Sea
Brian Doherty has penned an in depth profile of Patri and the Seasteading movement for the July issue of Reason. You can check it out here.
The Wind In Their Sails
When the Swedish Pirate Party was founded in early 2006, the majority of the mainstream press were skeptical, with some simply laughing it away. But they were wrong to dismiss this political movement out of hand. Today, the Pirate Party accomplished what some believed to be the impossible, by securing a seat in the European Parliament.
With 5602 out of 5664 districts counted the Pirates have 7 percent of the votes, beating several established parties. This means that the Pirate Party will get at least one, maybe two of the 18 available seats Sweden has at the European Parliament.
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The turnout at the elections is 43 percent, a little higher than the at the 2004 elections. This would mean that roughly 200,000 Swedes have voted for the Pirate Party. This is a huge increase compared to the national elections of 2006 where the party got 34,918 votes.
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At least partially, The Pirate Party puts its increased popularity down to harsh copyright laws and the recent conviction of the people behind The Pirate Bay. After the Pirate Bay verdict, Pirate Party membership more than tripled and they now have over 48,000 registered members, more than the total number of votes they received in 2006.
News story on TorrentFreak. A single representative in the European Parliament is a negligible amount of political power, but represents a significant mass of disaffected people. This is the sweet spot for seasteading, as a group that is too big will be able to actually influence domestic politics, while a group that is too small will not have enough members with the pioneering spirit to go start a new country.
Let A Thousand Nations Bloom 
