Libertarianism, Liberalism

Why I am a Bleeding Heart Libertarian

I wouldn’t have written such a self-centered post but for the fact that Matt listed me as the main exemplar of contingent (“weak”) BHL –the view that support for libertarian institutions is only contingently related to their effect on the poor and vulnerable. I can understand why Matt portrayed my views as such, but I think the portrayal is inaccurate.

I start with the premise, noted by David Sobel in his comment to Matt’s post, that surely no political philosophy cares only about the poor and the vulnerable. Many of these discussions (no doubt under the influence of Rawls) give the impression that all that matters is how political arrangements affect society’s worst-off. In my view at least, institutions should be arranged to allow everyone to pursue their personal projects, and libertarian institutions do the best job at achieving this goal relative to alternative arrangements.  By “libertarian institutions” I mean here institutions that allow all kinds of mutually beneficial arrangements, which include exchanges in private markets and government-induced correction of market failures, along with constitutional constraints on the power of government to avoid government failure.

Now I also believe that libertarian institutions help the poor as a class. This is part of what I said above about the market doing the best job at enabling personal projects: in a libertarian society the poor improve their chances of flourishing, assuming the truth of standard economic theory. My position reads something like this: “I support libertarian institutions because I believe that they enable everyone, including the poor, to pursue their personal projects.” The normative premise is that persons should be allowed to pursue their  projects; the empirical premise is that the market enables persons to do this better than feasible alternative arrangements.

Suppose, for the moment, that the empirical premise is true.  Do I support libertarian institutions for contingent reasons? Well, yes, if by that one means that I take into account reliable social theory in my evaluation of institutions. But I don’t think anyone is entitled to support institutions using only non-contingent reasons (as G.A. Cohen points out, one is entitled to support a non-contingent principle of justice, but not a non-contingent rule of social regulation, an institution.) So the poor figure in my justification of libertarian institutions as a subset of those whose personal projects are enhanced by those institutions. This means that part of the reason for my justification of libertarianism is that libertarian arrangements benefit the poor. To deny that the poor do not figure in the justification implies the (to me implausible) view that justice should care only about a subset of persons to whom those institutions apply.

Now suppose that someone asks the question that worries Matt: would you support libertarian institutions if they worsened (or failed to improve) the chances of a significant subset of persons to pursue their personal projects? The answer is no. Those institutions (in that hypothetical world governed by different laws of economics) would fail my test. It is true, then, that the laws of economics play a crucial role in my defense of libertarian institutions. It is false, however, that I would support those institutions if they harmed the poor and vulnerable. I don’t know if that is enough to put me in Matt’s category 3.

This idea can be expanded in a number of directions, some of which would show my disagreements with left-wing liberals. The most important of these is my rejection of the luck-egalitarian principle according to which the talented don’t deserve their gifts and for that reason must compensate others. But I think this is enough for now.

  • “The most important of these is my rejection of the luck-egalitarian principle according to which the talented don’t deserve their gifts and for that reason must compensate others.”

    You can certainly go that route, but it doesn’t really address the core liberal critique of your position.  You state:

    “[In]n a libertarian society the poor improve their chances of flourishing, assuming the truth of standard economic theory.”

    To which “standard economic theory” are you referring? The one that assumes perfect information, no friction and completely rational decision makers, or the one where a comprehensive definition of a “rational” decision maker is elusive and where these decision-makers base their decisions on imperfect, indeed asymmetric, information? Is your “standard economic theory” the one where unions push wages above the marginal revenue product of labor, or the one where unions serve to counter-act the ability of managers to use their asymmetric information to push wages below the marginal revenue product of labor?

    If your conclusion about the efficacy of a “libertarian society,” is based on the version of “standard economic theory” that’s taught to first-semester Econ students, then your conclusion is based on a premise that’s know to be false. If, on the other hand, your version of “standard economic theory” is the version in which the multitude of simplifying assumptions have been relaxed, then the assumption about “standard economic theory” no longer suffices to support the conclusion of maximal economic efficiency.

    • Fernando Teson

      Like I said: if Milton Friedman in Free to Choose (and many others) are wrong and markets do not help the poor, then I would have to change my views. Those new views would have to take into account this alternative economic theory plus the costs of invasion of freedom and many other factors. I’m not sure which institutions I would support in that alternative universe.

      • I’m always fond of people beginning a comment with “Like I said,” as if I, somehow, managed to not comprehend what you’d said in the first place.

        First, neither “Free to Choose” nor “The Road to Serfdom” actually articulate, to the extent that one would normally expect a rigorous theory to articulate, the specifics of the “standard economic theory” upon which their political arguments are based, so appealing to either one doesn’t really answer my question. Moreover, if you’re going to invoke either Friedman or Hayek via an appeal to authority, then I’m quite likely to ask you to explain the fact that both of them supported the economic “reforms” in South America during the 1970’s. If that really is your notion of “liberty,” then I, most emphatically, want no part of it whatsoever.Second, when you invoke the phrase “standard economic theory,” you are, by the very nature of what a “theory” is, invoking an “alternative universe.” This is true of all theories, regardless of their explanatory power. Newtonian Mechanics is a very fine model of the physical universe, but there are phenomena we’ve observed that Newtonian Mechanics cannot explain. That’s why Prof. Einstein came up with the Theory of Relativity.Thus, any argument that assumes the efficacy of any theory starts out in an “alternative universe” vis-a-vis the universe in which we actually live. Period.  There is no way to begin an argument by assuming that any particular theory is true without reaching a conclusion that departs from reality.

        Third, when I asked which “standard economic theory” you’re invoking, I’m not positing some wildly “alternative theory”. Within that rubric of “standard economic theory”, there really is a rather wide variety of ideas about how markets work. Each of them invokes a number of simplifying assumptions, and nearly all of these simplifying assumptions are known to actually be false.

        These assumptions directly attach to the concept of “market efficiency.” For example, if we relax the assumption of perfect information, then markets are no longer maximally efficient. In the absence of perfect information, preferences are not accurately transmitted through the price mechanism, a circumstance that leads to what is often referred to as “sticky prices” and/or “sticky wages.”

        Thus, the extent to which any variation of “standard economic theory” supports the conclusion that markets are maximally efficient is inversely proportional to the number of simplifying assumptions that form the basis of that variation. At the same time, the extent to which any variant of “standard economic theory” constitutes an “alternative universe” is directly proportional to the number of these simplifying assumptions.

        In other words, invoking “standard economic theory” results in an equivocal argument. The variation of “standard economic theory” that most strongly supports the conclusion that markets are the most efficient means to assist the poor is also the variation of “standard economic theory” that departs the most from reality.

        I should point out that none of this means that we should discard markets altogether. When you talk about the “costs of invasion of freedom and many other factors,” what you’re effectively saying is, despite the fact that markets are not maximally efficient in terms of allocating resources, they do, overall, represent the means of allocating resources that least impinges on the broader concept of “liberty.”

        That does, however, open up the word “liberty” to a very nuanced interpretation, which, in turn, opens the door to asking the government to assist in rectifying ways in which markets are known to be inefficient at allocating resources.

        This is the core of the liberal critique of the central BHL thesis, and one which, after months of reading this blog, is a critique I’ve yet to see any of this blog’s principal authors address in any but the most superficial ways. The longer I have to wait before I see a reasonable response to this critique, the more the opportunity cost of reading this blog does up.

        • Damien S.

          Also, Milton Friedman supported (invented) negative income tax, and Hayek supported social insurance…

          Jeffrey Sachs argues we want society to aim for efficiency, fairness, and sustainability.  “Free markets” aren’t capable of any of those on their own — efficient only in ideal circumstances, and don’t even aim at the other two.  Doesn’t mean we throw away markets entirely, means we use corrective pricing and redistribution and regulation and other tools, and don’t try to use ‘markets’ in areas they’re not suited for.  (E.g. privatizing government services, which simply replaces a government agency with a contractor, with no increase in competition but an increase in profit loss and regulatory capture and corruption.)

          • “Milton Friedman supported (invented) negative income tax”

            And it was Ronald Reagan who both supported the Earned Income Tax Credit and signed it into law; the EITC being an actual implementation of a negative income tax.

            Friedman and Hayek understood the limits of theory. Their arguments were far more nuanced than an argument that takes “the truth of standard economic theory” as one of its axioms. Indeed, if you read them carefully, their arguments actually start from a notion of liberty, and then proceed to select an economic theory based on how policies based on the various theories conform to the notion of liberty that they’re advancing.

            Event that argument has its problems, but it’s at least an argument that doesn’t beg the question. It is, unfortunately, an argument that leads to bad Economics, because, then, we’re no longer choosing theories based on their ability to explain observed reality.

            You can be an Economist seeking to explain what we observe, or you can be a political philosopher seeking to use Economics to support your philosophy, but you cannot really be both.

          • Damien S.

            EITC was signed into law in 1975.  Not Reagan, though he did sign a 1986 expansion of it.  (Also several tax increases, to partially make up for his budget-busting tax cut.)

          • You’re right. Reagan expanded it in 1986. My bad.

  • CFV

    Fernando,

    “Do I support libertarian institutions for contingent reasons? Well, yes,
    if by that one means that I take into account reliable social theory in
    my evaluation of institutions. But I don’t think anyone is entitled to
    support institutions using only non-contingent reasons (as G.A. Cohen points out, one is entitled to support a non-contingent principle of justice, but not a non-contingent rule of social regulation, an institution.)”

    This paragraph is confusing.  There are three different remarks: you (a) don’t think that anyone is entitled to
    support institutions using only non-contingent reasons; (b) institutions are rules of social regulation; and you say that others (i.e.: G.A. Cohen, although I believe this is mistaken) have said that  (c) you are not entitled to support a non-contingent rule of social regulation, an institution.

    One problem is that rules of social regulation are contingent, in the sense of being fact-sensitive. A related problem is that if rules of social regulation (institutions) are fact-sensitive, therefore, contingent; then (c) is false: you are entitled to support institutions by using only contingent reasons, and (a) and (c) contradict each other.

    • Fernando Teson

      Carlos, thanks for this. You are right, the paragraph is confusing, especially (c). I guess the only thing I want to say is that support for social rules of regulation is necessarily fact-sensitive, which is the reason why Cohen accuses Rawls of impermissibly blending the pure notion of justice with the fact-polluted difference principle (you disagree with Cohen here, or with my reading of him?) In other words: one can ONLY be a contingent supporter of INSTITUTIONS (libertarian or otherwise).  The interesting question is: what would be a n0n-contingent libertarian position? Well, suppose I say that people have natural rights to liberty and property. Then , following the Cohenian logic, I would support institutions where that pure natural-rights view would have to be compromised in the real world –for example, by allowing government-induced correction of market failure. But I’m not sure about this; above all, I’m not sure I agree with the Cohenian logic. Libertarianism, after all, is a view about the proper role of the state, so any stated libertarian view would have to be perforce “contaminated” with the facts.

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