On p. 272 of Anarchy, State and Utopia, Nozick writes the following:

Economically well-off persons desire greater political power, in a nonminimal state, because they can sue this power to give themselves differential economic benefits.  Where a locus of such power exists, it is not surprising that people attempt to use it for their own ends.  The illegitimate use of a state by economic interests for their own ends is based upon a preexisting illegitimate power of the state to enrich some persons at the expense of others.  Eliminate that illegitimate power of giving differential economic benefits and you eliminate or drastically restrict the motive for wanting political influence.  True, some persons will thirst for political power, finding intrinsic satisfaction in dominating others.  The minimal state best reduces the chances of such takeover or manipulation of the state by persons desiring power or economic benefits, especially if combined with a reasonably alert citizenry, since it is the minimally desirable target for such takeover or manipulation.  Nothing much is to be gained by doing so; and the cost to the citizens if it occurs is minimized.  To strengthen the state and extend the range of its functions as a way of preventing it from being used by some portions of the populace makes it a more valuable prize and a more alluring target for corrupting by anyone able to offer an officeholder something desirable; it is, to put it gently, a poor strategy.

What does this say about the outrage that has been expressed about the bailouts directed at Wall Street?  What does this say about questions about the scale and scope of state activity in general? How does it impact the way one must think through the BHL project?

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  • http://profiles.google.com/jtlevy Jacob Levy

    My concern about this line of argument– widespread among libertarians if not usually so well-put– is that it assumes away the existence of power in potentia.  The value of the state as a “prize” is a function of all of the things that it could do, not all of the things that it is currently doing.  We think dynamically and about potentials in economics: opportunity costs, unrealized demand, temporary shortages that induce more production and supply, and so on.  But we (sometimes) think very statically about politics.  Or to put it differently, we’re positive about the operation of markets but normative about the operation of politics.

    States will be provided in response to demand for them as surely as drugs are provided in response to demand for them.  Rent-seekers won’t stop seeking and just forget about the sociological possibility that a larger state could serve their ends.

    • Emmanuel

      Maybe Nozick’s point is not that rent-seekers will stop seeking. He says that “The minimal state best reduces the chances of such takeover or manipulation of the state”. Isn’t this a kind of probabilistic argument? perhaps it would be much harder for potential rent seekers to create, say, a department of agriculture from scratch (“especially if combined with a reasonably alert citizenry”) rather than capture the already existing one? 

      • http://profiles.google.com/jtlevy Jacob Levy

        The “reasonably alert citizenry” just gets parachuted in.  Where does it come from?  And if we had it, wouldn’t that change the rest of the analysis?  If everyone were already a libertarian, then maybe we could safely allow a more-than-minimal state on the grounds that the “reasonably alert citizenry” wouldn’t let anything through that didn’t have an awfully good reason.

        There are plenty of kinds of rent-seeking that don’t require the creation of big and expensive new bureaucracies.  Little tweaks to intellectual property law that will be implemented mainly by the courts can have huge rents attached to them.  And there are plenty of ways to make strategic use of state inaction– we powerful people make sure that the police and courts will never enforce the property rights or rights to be free from violence of those less-powerful people.  Inaction can be captured as well as action.

        And– here the bleeding-heart comes in, as do some Hayekian and public choice arguments– the rents with very narrow classes of beneficiaries, the kinds of things that do the most damage to the generality of the rule of law, are pretty easy to conceal.  Creating a political climate that’s very unfriendly to highly visible things like a broad-based tax-and-spend income support, but very friendly to obscure things like rent-seeking through tort law or IP law, has both unfair distributive consequences and unattractive rule-of-law consequences.  

         But in general, I think “starting from scratch” wouldn’t be much of an impediment even to big visible programs.  Once the public fisc apparatus of the modern state is in place, once the taxing and spending powers are available and known to be available, a whole lot of things can be started or restarted very quickly.

        • http://www.facebook.com/people/Rick-DiMare/100000504645309 Rick DiMare

          “The ‘reasonably alert citizenry’ just gets parachuted in.  Where does it come from?”

          Jacob, groups like BHL, and others who scrutinize law, economics and philosophy simultaneously, may be it.

          And as I see it, a reasonably alert citizenry only has a chance to effect change because of the unique American legal concept called “judicial review,” the idea that the judiciary and prior Supreme Court interpretations of the Constitution trumps unconstitutional laws promulgated by Congress, or favors the individual where Constitutional conflict warrants: http://www.youtube.com/watch?v=d8UlOJZSrqU&feature=youtu.be

          • 3cantuna

            Except that Constitutional limits are essentially mythical creatures serving a religious function in keeping mass dissent at bay. 

          • http://www.facebook.com/people/Rick-DiMare/100000504645309 Rick DiMare

            This is generally true, but only if there’s no actionable Constitutional conflict to which courts can respond, and no such conflict exists while we’re tacitly consenting to the quasi-public central bank in its capacity as money issuer (of Federal Reserve notes).

            However, when depositors make a proper legal demand for TreasuryDirect currencies under McCulloch v. Maryland (1819), banks become vulnerable to various kinds of law suits, and a Constitutional conflict certainly does exist if the U.S. incorporated bank were to obstruct depositor access to TreasuryDirect general or TreasuryDirect coin-only bank accounts.

          • http://profiles.google.com/troycamplin Troy Camplin

             Constitutional limits do actually work — but only if there is a constitutional culture. If the people of a culture believe in the limits, the limits exist. If they do not, the limits do not exist. There is thus a religious function, but not the one you imply. The limits are true if people believe in them. When they stop believing in them, the written constitution ceases to matter.

          • Emmanuel

            Mr Levy’s next point (which I anticipated when I was writing my first post but I was playing devil’s advocate and merely trying to be more charitable to Nozick) was that if the reasonably alert citizenry [like, say, the people who write (in) this blog] really exists [which we can't just assume (as Nozick did) that it does to such a great extent as to be able to act as a counter-weight to, potentially, quite powerful special interests and/or the rationally ignorant citizenry], we wouldn’t need the de jure minimal state to fend off special interests as no government which endorsed special interests would survive the democratic scrutiny of people like you, Mr Zwolinski and, I assume, most people in here (i.e. the “reasonably alert citizenry”).

          • http://profiles.google.com/jtlevy Jacob Levy

            By the way, my point here was in part that the alert citizenry gets parachuted *into the theory,* appearing out of nowhere.  Nozick certainly doesn’t ask whether the sort of society envisioned in Part III would generate the kind of norms and views that he seems to depend on people having.  Contrast Rawls’ Political Liberalism, which is in a real sense all about the conditions of stability, and about how the just social order he envisions could reproduce itself.  

          • http://www.facebook.com/people/Rick-DiMare/100000504645309 Rick DiMare

            I don’t know enough about Nozick or Rawls to comment, but after what you’ve said, it looks like I’ll be adding a few books to my backlog, along with Tomasi’s new book.

            The point I was trying to make is that libertarian “utopia,” as far as it is achievable, is not possible through a central planning top-down approach, or politically, by enlisting Ron-Paul-like BHL advocates, but only through a ‘reasonably alert citizenry’ at the grass roots level that is demanding TreasuryDirect currencies at local banks, suing banks if they fail to cooperate, then legally demanding and/or suing employers and the IRS if they fail to treat their labor as property, not income.

            In other words, an alert citizenry, in my view, is not a force that only has political or philosophical aspirations, but one that is actually doing the work required to achieve self-ownership. It all starts with the individual mind and the real intentions contained in it (and nature is not easy to fool).

    • Larry Holt

      Doesn’t that argument actually strengthen Nozick’s case? 

      Consider the example of self-service gasoline, now virtually ubiquitous in the US (excepting NJ and Oregon I believe).  Mandatory full-service gasoline is a fairly clear-cut example of the state being used for illegitimate economic interests. 

      Nozick clearly anticipates the potential for abuse or rent-seeking here. To my mind, any conception of the state which doesn’t rests on a shaky foundation.

    • Eselpee

      My experience of libertarians is that they are theoretical rather than practical, but this question is very well put, Jacob – and this is the very question I follow BHL to answer  (I just don’t know the jargon to ask it in ‘your language’). 

      What is the actual effect of rent-seekers* mucking about in the perfect balance of libertarian economics – unless the government (a rent-seeker in itself) steps in to protect the “renters(?**)”? It is they least who can afford or protect themselves from the consequences; it is they who pay the price. I fear the libertarian theory does not adequately address this issue.

      * enriching oneself by increasing one’s share of a fixed amount of wealth rather than trying to create wealth

      **class of people who were once refered to as serfs and are now the “working poor”

    • http://profiles.google.com/troycamplin Troy Camplin

       Rent-seekers also do a cost-benefit analysis before rent-seeking. If you can make the cost higher than the benefit, rent-seeking will stop.

      I agree that we need to take a dynamic approach. How, then, can we make rent-seeking costs higher than the benefits?

  • Kevin Vallier

    With respect to the BHL project, Nozick’s concern could lead us to do two things: (i) applying BHL principles according to these empirical considerations or, more radically, (ii) demoting the importance of political rights vis-a-vis economic rights that restrict the growth of the state. I’m game for both moves.

    In general, the quote combined with Jacob’s comment reminded me of Tyler Cowen’s claim that “the libertarian vice is to assume that the quality of government is fixed.” Libertarians often assume that we will have a harder time protecting an extensive state against rent-seeking than limiting the state’s power generally.  But if the quality of government can be improved, then protecting an extensive state against rent-seeking might be relatively easier and so more worth pursuing.

    Tyler’s ’06 post: http://marginalrevolution.com/marginalrevolution/2006/08/the_libertarian.html

    • http://www.facebook.com/people/Rick-DiMare/100000504645309 Rick DiMare

      “Libertarians often assume that we will have a harder time protecting an extensive state against rent-seeking than limiting the state’s power generally.  But if the quality of government can be improved, then protecting an extensive state against rent-seeking might be relatively easier and so more worth pursuing.”

      I suspect this explains why so many libertarians lean toward anarchy, and this is understandable given that policy options to improve government have been limited prior to the advent of electronic money, which finally provides us with the opportunity to create a kind of title recording system for money (to thwart Nozick’s “illegitimate power” seekers, much like title recording systems disempowered unscrupulous auto and home sellers from selling the same car or house multiple times).

    • 3cantuna

      For a man held in such high intellectual regard as Cowen– he consciously avoids fundamental economic principle whenever he must choose between it and empirical cutesiness.  The question of government or market is not about degrees of government “quality” in the sense that Cowen uses the term (drained of economic meaning).  Of course state money and force could be used to build architecture:  how about an exact replica of the pyramids as they stood thousands of years ago? Wow, what gleaming astonishing quality!  Surely the state is great if it can do that. Maybe it can even put a man on the moon! 

      Aesthetics and technical competency are not the keys to quality in a social sense.

      But what of the use of resources, labor and time?  Should the project have been done at all? Was it ensued most reasonably by social measures? Was it done efficiently in context of social demand and scarcity?  These are the real questions of quality. Whether to even do pyramids, and if so, with what and in what way. These answers cannot be provided through the mechanism of expropriation- the government. The price mechanism– that enables economic calculation to take place– that gives some kind of rationality to resource allocation and use in a world of scarcity and billions of people with competing demands – is obliterated by expropriation. No useful prices emerge when there is no real exchange of property. Politics can never take the place of what the market can do.

  • http://www.realadultsex.com figleaf

    “Economically well-off persons desire greater political power, in a nonminimal state, because they can sue this power to give themselves differential economic benefits.  Where a locus of such power exists, it is not surprising that people attempt to use it for their own ends.”

    The issue being that even with a minimal state persons who’ve made disproportionately-large fortunes in entirely unobjectionable-to-libertarian means may choose to maximize their profits by advocating for or even creating “non-minimal” states.

    Imagine if, for instance, in a minimalist state a group of extremely well-to-do industrialists provided as much financial backing for rent-seeking machine patronage as some people today provide financial backing for (nominal) libertarianism.  Given sufficient financial incentives the same opportunists who now write for the Cato Institute or the Weekly Standard could and almost certainly would write no less passionately (and certainly out of no less, um, principle) for a hypothetical pro-patronage Nero Institute.

    In fact one needn’t even be economically well-off to create one’s own non-minimalist state.  It can be done on the cheap if one is sufficiently motivated and capable of inspiring and/or plain-old hiring followers.  To the best of my knowledge both the Libyan army and the Libyan state were pretty minimalist before Col. Gaddafi launched his coup.

     So.

    I’m still not sure how Mr. Nozick proposed squaring the circle of a minimalist state that can withstand persistent, entirely self-interested, profit-motivated campaigns by private citizens to both create and wield non-minimalist states.

    We’d absolutely, unquestionably be better off with a minimalist state.  But we’d also be better off if we could leave our valuables in our unlocked cars. 

    By what mechanism does one propose to maintain a minimalist state in the face of persistent and enormous financial opportunities to subvert it?

    figleaf

    • Eselpee

      Yes, Figleaf! I look forward to the responses to this…..

  • http://bubblesandbusts.com/ Woj

    “Eliminate that illegitimate power of giving differential economic benefits and you eliminate or drastically restrict the motive for wanting political influence. ”
    Although Nozick correctly points out the reduction of motive, an aspect that is not addressed (in this instance) relates to the cost of pursuing political influence. As it relates to Wall Street today, the motive is clearly great but the costs of employing the lobbyists, lawyers, accountants, etc. needed to gain illegitimate power are significant as well. 

    I’m not positive on this, but my initial view is that minimalist state would also severely reduce the costs to obtaining political influence. On the whole this is almost certainly beneficial, however the effect of lower costs would somewhat counteract the minimized desire to pursue illegitimate power. 

    • http://www.facebook.com/people/Rod-Engelsman/822499328 Rod Engelsman

      Those costs may seem great to you or me, but to a corporation they’re a very good investment. Very, very, good. I’d have to dig up the source but my recollection is that it has been calculated at something like a 28,000% ROI. No exaggeration and no missing decimal points.

  • http://pulse.yahoo.com/_HSKXAWKADVEXMD6SG7DRBB7H3I Silly Wabbit

    The libertarian blogosphere and even some more mainstream conservatives have taken to talking about “true free markets”- a condition of no cronyism or state intervention in the “free market”. 

    In my mind I delineate the market actions of the state between “interventionist” activities (like bailouts, subsidy etc.) and “architectural” activities (infrastructure, the legal code etc.). The first category of actions gets a lot of people incensed (generally with good reasons) and may provide an entre into libertarianism for many people. Generally, I think that libertarian philosophy deligitimizes the first category very well but struggles with the second. Scale and scope enormously complicate the moral foundations of much libertarian philosophy. 
    By way of example let’s say that a small town of 10,000 people wants transition away from the energy grid provided by a massive transnational corporation(TNC) and, through democratic decision making, decides to use public money to invest in a local energy infrastructure  by approving a 2% tax hike(a majority approve of the measure but some disprove). Let’s say that the community will get 20% of the town’s total energy needs from locally produced solar power. Now, my impression is that a lot of libertarians would object to the above solution.   After all, certain members of the community are subject to a 2% tax hike and the state comes and robs them of 2% more of their money. So this clearly oversteps the libertarian “scope”. 
    However, what about issues of scale? Is it more libertarian to have localized yet public organizational structures or is it more libertarians to have transnational private organizational structures?
    I’m not trying to be mean or anything and I think this blog is awesome. But there are some serious questions to consider when morally pure libertarian philosophy meets morally ambiguous social complexity………

  • 3cantuna

    For a man held in such high intellectual regard as Cowen– he consciously avoids fundamental economic principle whenever he must choose between it and empirical cutesiness.  The question of government or market is not about degrees of government “quality” in the sense that Cowen uses the term (drained of economic meaning).  Of course state money and force could be used to build architecture:  how about an exact replica of the pyramids as they stood thousands of years ago? Wow, what gleaming astonishing quality!  Surely the state is great if it can do that. Maybe it can even put a man on the moon! 
     
    Aesthetics and technical competency are not the keys to quality in a social sense.
     
    But what of the use of resources, labor and time?  Should the project have been done at all? Was it ensued most reasonably by social measures? Was it done efficiently in context of social demand and scarcity?  These are the real questions of quality. Whether to even do pyramids, and if so, with what and in what way. These answers cannot be provided through the mechanism of expropriation- the government. The price mechanism– that enables economic calculation to take place– that gives some kind of rationality to resource allocation and use in a world of scarcity and billions of people with competing demands – is obliterated by expropriation. No useful prices emerge when there is no real exchange of property. Politics can never take the place of what the market can do.

  • MARK_D_FRIEDMAN

    I think context matters here. The sentence that precedes the lengthy passage quoted by Prof. Boettke is: “Since inequalities in economic position often have led to inequalities in political power, may not greater economic equality (and a more extensive state as a means of achieving it) be needed and justified in order to avoid the political inequalities with which economic inequalities are often correleated?” I think this sentence makes it pretty clear that Nozick is not offering a consequentialist/institutional design justification for the minimal state.

    Rather, he is meeting the egalitarian on his/her own ground and saying, in effect, even were I to concede that attempting to equalize economic outcomes (by means of a more extensive state) is a worthy goal, the larger-than-minimal-state will be captured by the wealthy and turned to their advantage. So, expanding the reach of the state will be counterproductive, even from an egalitarian perspective. 

    Having said this, I must confess that I can’t quite make sense of the argument that Nozick is trying to rebut, which seems circular to me. So, I’m not sure what Nozick has really accomplished here, but I don’t think he was offering an affirmative argument for the minimal state.

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