I’ve finally gotten around to replying to at least some of the objections in the comments sections of my equality posts (here, here, and here) and of Bryan Caplan’s ri-postes (here and here).
I’ll reply later to Heinrich and Sorens. Sufficit diei.
Tag Archives | Left and Right
How Inequality Shapes Our Lives, Part 3
Bryan Caplan has replied to my reply to his reply to my inequality post.
Others have weighed in as well; see David Heinrich, Jason Sorens, and Libérale et libertaire. I plan to address those too; but let me focus on Bryan’s latest reply for now.
In his first reply, Bryan had argued that if consumers/tenants/workers (let’s say proles for short) were “willing to pay a premium for equal treatment” in the form of higher prices/rents or lower wages, then firms would “have every reason to offer it”; hence we should conclude that proles must “prefer the existing double standard to the extra costs of equality.” I had responded that this reply in effect “focuses on the ways in which free markets would solve the problems,” which is irrelevant since in our actual nonfree market “housing and labour markets, for example, are skewed in oligopolistic and oligopsonistic directions respectively.”
Bryan now responds that while he grants that markets aren’t free, he thinks that fact is irrelevant, since oligopolistic and oligopsonistic firms (let’s call them oligo-firms for short as well, so I won’t have to keep repeating the full cumbersome phrase) still respond to incentives: “Even a government-created monopolist still has a clear incentive to cut prices when its costs fall, and raise prices when its costs go up.”
I find Bryan’s response puzzling, since I’d never denied the obvious microeconomic truth he thinks I’ve neglected. But let me take a stab at guessing what he has in mind: my guess is that he thinks our disagreement is over whether oligo-firms would offer more egalitarian contracts if the proles were willing to pay more. But I don’t necessarily disagree with Bryan about that. (I think matters are a bit more complicated than Bryan does, since I take inequality to be in many cases a consumer’s good for firm managers; but I don’t assume that their demand for it is inelastic.) Let’s assume that oligo-firms would indeed offer more egalitarian contracts if proles were willing (or able) to pay more; and let us further draw the inference that proles’ unwillingness (or inability) to pay more explains the inegalitarian character of existing contracts. How does that constitute an objection to my position?
After all, my whole point is that governmental privilege on behalf of the oligo-firms explains why the proles are faced with the unpalatable choice between inequality and monetary loss. If I would rather be punched in the face than pay you a million dollars not to punch me in the face, that may explain why I’m getting punched in the face, but only relative to the background conditions that explain why these are my only options. Ignoring those background conditions makes Bryan’s position sound all too much like the next-best-alternative defense of sweatshops.
The same point applies to Bryan’s next remark:
Firms, landlords, and employers offer skewed contracts to make it harder for customers, tenants, and workers to screw them. And most customers, tenants, and workers happily accept these contracts because they sensibly prefer lower prices, lower rents, and higher wages to formal equality.
With the exception of the word “happily,” I have no dissent to express from this doctrine. But again it seems to miss the point. Oligo-firms have an interest in not being screwed by proles, and proles likewise have an interest in not being screwed by oligo-firms. How, then, given this mutual screwage-aversion, does it come about that the contracts are skewed to reflect one side’s screwage-aversion to a far greater extent than the other’s. It’s not clear to me what Bryan’s answer is to that question; my answer, of course, is that the range of alternatives for consumers, tenants, and workers has been artificially narrowed by government regulation.
This brings me to Bryan’s third point. In his original reply he’d maintained that “existing government policy tilts market outcomes in the direction that he [= Roderick] misguidedly favors.” To this I’d replied that while “there are various regulations that purport to help the weaker party to the contract … those regulations in practice actually tend to help the stronger party instead.” Bryan’s rejoinder: “Tell me how tenant protection laws actually benefit the average landlord.”
Here Bryan wins on a technicality; I can’t answer his challenge as phrased. But let me say why.
What I wish to claim, more precisely, is that regulations that purport to help the weaker party generally fall into one of two categories: either a) they actually benefit the stronger party instead, or b) to the extent that they do benefit the weaker party they are outweighed in their effects by other regulations, so that the overall effect of regulation is to benefit the stronger party.
When it comes to regulations purporting to protect consumers and workers, I can think of lots of examples of both (a) and (b). When it comes to regulations purporting to protect tenants, I can think only of examples of (b); there may be examples of (a), but none comes to mind offhand. (Suggestions, comrades? Rent control is an example of a purportedly pro-tenant policy that actually hurts tenants, but it hurt landlords too as far as I can see.) So by asking for specifically (a)-type examples in the specific case of tenants, Bryan has posed a challenge I don’t know how to answer. But I call this only a technical victory, because it’s easy enough to give (b)-type examples for tenants, and both (a)-type and (b)-type examples for consumers and workers.
(Incidentally, it’s an interesting question why the existence of (a)-type examples is so much more widely accepted among libertarians for the case of consumers than for the case of workers. Most Rothbardians, for example, accept Gabriel Kolko’s case (summarised here) for the claim that regulations purporting to protect consumers from business interests have actually had the opposite effect and intention (even if such Rothbardians often haven’t fully assimilated the implications of this thesis); but the rather similar claim that regulations purporting to protect workers have likewise had the opposite effect and intention (as Kevin Carson describes in his latest C4SS study) is met with incredulity by most Rothbardians. I’m not sure why that is.)
“Under laissez-faire,” Bryan insists, “service providers, landlords, and employers would be free to adopt double standards more lopsided than current law allows.” Certainly, if what Bryan means is that no law would forbid them from doing so. Likewise, no law forbids me from selling toothpicks for a thousand dollars each. (Actually, for all I know some law does forbid that! But certainly under laissez-faire there’d be no such law.) Still, in another sense I’m prevented from selling toothpicks for a thousand dollars each because no one will buy them at that price. Likewise, I claim, in a freed market firms might offer contracts as onerous as they liked, but they’d have a lot harder time finding takers.
(A final note: since some of my left-libertarian comrades seem to be convinced that Bryan is Satan, I’d like to draw their attention to some pieces of Bryan’s that they will think more kindly of: here, here, and here.)
More to come ….
How Inequality Shapes Our Lives, Part 2
My friend Bryan Caplan has a response to my recent post about inequality. I’m preparing to leave town for the Alabama Philosophical Society and so probably won’t have a chance to reply in detail until I get back. (This also applies to the comments section of my previous post, which I haven’t had a chance to look at.) But three short points just for now:
a) Bryan’s response focuses on the ways in which free markets would solve the problems I point to if they were really problems. But the whole point of my position is that we don’t have a free market! Left-libertarians have pointed out in detail the ways in which the housing and labour markets, for example, are skewed in ologopolistic and oligopsonistic directions respectively. By ignoring these analyses rather than refuting them, Bryan in effect assumes the problems out of existence; he might just as well say “taxes can’t really be too high, because if they were, consumers would just switch to a rival protection agency with lower fees.”
b) The fact that workers can shirk, that tenants can be delinquent, etc., is beside the point. We already know upfront that each party to a contract can potentially screw over the other. The point is that, given that context, the contracts are then skewed to favour one side. That skewing isn’t counterbalanced by the other side’s capacity for delinquency, because each side has that capacity, and one side has the favourable contract in addition.
c) Yes, there are various regulations that purport to help the weaker party to the contract; but left-libertarians have argued in detail that those regulations in practice actually tend to help the stronger party instead. Maybe we’re right about that and maybe we’re wrong, but as far as I know, Bryan hasn’t addressed those arguments, and we can hardly be expected to pretend we haven’t made them.
Koched to the Gills
Predictably, what Jesse Walker has to say about the Kochs is more interesting than what the corporate-liberal media have been saying.
C4SS in the MSM
Congratulations to Ross Kenyon, whose latest C4SS piece has been picked up by the Christian Science Monitor!
Three Shalt Thou Count
The debates in the comments section of my Koch post have gotten me thinking about the different ways in which vulgar libertarianism operates. I think there are three.
1) First, there’s the use of libertarian slogans as mere rhetorical covering for corporatist policies. This kind of vulgar libertarianism is standard Republican territory, and in this case “vulgar” acts as an alienating adjective (scroll halfway down); this sort of vulgar libertarianism is not libertarianism at all, any more than counterfeit money is money, a decoy duck is a duck, or a fake Rembrandt is a Rembrandt.
2) Next, there’s the mistake of thinking that libertarian principles justify various big-business-favourable features of the present economy that are actually the result of government privilege rather than market factors (or are so to a greater degree than is realised). This mistake is often made by people who sincerely advocate libertarian policies that would in fact (if we left-libertarians are right) undermine big business more than such advocates realise – and who would continue to advocate them even if they realised this. In this kind of vulgar libertarianism, “vulgar” isn’t alienating; the policies being advocated are genuinely libertarian, but those advocating them have blundered into making their product look less appealing (to ordinary people) than it actually is. In such cases vulgar libertarianism is less like a decoy duck than like a sick duck.
3) The third kind of vulgar libertarianism is a bit more complex. Here the problem is that even if one is advocating the right policies, mistaken views about the likely results of those policies can lead one into mistakes about what counts as a reasonable transitional step toward liberty. For example, suppose that I overestimate the extent to which Megacorp’s success is due to market factors rather than government privilege, and so I mistakenly predict that Megacorp will do much better in a freed market than it is doing now (whereas in fact it would do much worse) . Then I will tend to regard a policy that greatly lowers Megacorp’s tax burden without much lowering anyone else’s as a step in the right direction, and will be inclined to advocate it – whereas if I recognised the extent to which Megacorp is the beneficiary of direct and indirect subsidies at the expense of ordinary taxpayers, I might instead regard the policy as an increased subsidy. Thus conflationist beliefs lead to corporatist practice. (This would be an instance of application thickness.) By contrast with case (2), then, I end up endorsing objectively corporatist policies in addition to libertarian ones; though in contrast with case (1) the libertarian commitments remain sincere. Here the duck is so sick that it’s starting to mutate; how mutated the duck has to get before it no longer counts as a duck is a tricky question.
The boundaries among these three varieties aren’t hard and fast; perhaps they’re best thought of as regions of a spectrum, with (1) and (2) at opposite ends and (3) in the middle. Part of what I’ve been arguing in the Koch case is that it’s a mistake to infer from the Kochs’ not being at (2) that they must be at (1); I find a position closer to (3) at least as plausible a reading, especially given Charles Koch’s declaration that his recent activism is driven by a desire to see some concrete social change in his lifetime. (Admittedly, to the extent that the Kochs’ own economic interests have helped smooth their path from (2) to (3), their (3)-ness may be classified as a bit further toward (1) than would otherwise be the case.) I also find (3) a plausible diagnosis of some libertarian anti-immigration arguments.