Immigration might be good, but does it look good?

One claim about liberalized immigration policy is that it will raise the incomes of immigrants and quite possibly natives, but that average incomes of First World countries will fall.

How is this possible? It’s a matter of averaging two groups together. Suppose you have Country A with 100 people each earning $50,000, and Country B with 100 people each earning $10,000. Then, everyone in Country B moves to Country A and earns $30,000 due to their higher labor productivity in Country A. And in this case, Country B’s labor complements Country A’s labor. So the people of Country A see their incomes rise to $60,000. Both groups benefit. But now the average income of Country A has fallen from $50,000 to $45,000, even though every single person is better off. This is an example of Simpson’s paradox.

So there is a political concern that, even if immigration doesn’t harm natives, it could look like it’s harming natives. What’s the solution? One possibility is publishing another set of income figures: not income per person in America, but average income of native-born Americans. (And average household income for households whose heads are natives, and average hourly compensation for native workers; a variety of measures would exist.) This is the “income per natural” idea developed by Michael Clemens and Lant Pritchett of the Center for Global Development.

Is this dishonest? No. The new figures would be published alongside the old ones, not as replacements. And the concepts these figures refer to are relevant: they reflect how well native-born Americans are doing. If people care about the welfare of native-born Americans, surely these numbers matter. Citizenists want to maximize the well-being of native-born Americans, and if they used numbers for all people living in America, they would come to policy conclusions that are not actually optimal for native-born Americans. Clearly that’s a failure for them.

I think natives probably would benefit on net from liberalized immigration, so I think publishing these statistics would politically help supporters of liberalized immigration. But either way, it would help better depict what’s happening to the welfare of natives.

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Empirical Problems with the Hobbesian Account

In two recent posts, my co-blogger Michael Tontchev has been criticizing some of the theoretical underpinnings of Hobbes’ “state of nature”. I would also note the empirical evidence against the notion that property and organization is impossible without a centralized State.

In “The First Property Rights Revolution”, Samuel Bowles and Jung-Kyoo Choi claim that individual property rights emerged thousands of years before States did (p. 1):
Hobbes’ state of nature is a valuable thought experiment, but taken as history (which Hobbes did not) it is deficient…. First, individually-held property rights in land, its produce, and other sources of people’s livelihood emerged with the domestication of plants and animals starting around 11,000 years ago, while in most cases states developed many millennia afterwards. Recognizably modern property rights existed in these newly agrarian societies without the assistance of states. Among fishing people and other sedentary foragers, individual or family-based property rights appear to have existed even before the advent of domestication.

They continue, describing the alternative mechanisms usually employed to secure property rights by pre-State humans (p. 1-2):

The second historical shortcoming of the Hobbesian account is that it is quite unlikely
that Hobbes’ state of nature ever existed. For most of our history as biologically modern humans – roughly the 100,000 years prior to the advent of agriculture – social interactions were organized without the aid of institutions even remotely resembling contemporary states or private property in land or the other sources of people’s livelihoods. They apparently did not, however, suffer the chaos of the Hobbesean [sic] state of nature. Rather, in all likelihood, beginning as early as 100,000 years ago in Africa and later in other parts of the world, these groups were organized in a manner similar to a subset of the modern mobile hunter-gatherers described in historical and ethnographic accounts, their lives regulated by social norms enforced by collective punishment of miscreants.
Indeed, much of the motivation for recognizing property norms is likely genetic, as Jeffrey Evans Stake argues in “The Property ‘Instinct’ “:
Evolutionary theory and empirical studies suggest that many animals, including humans, have a genetic predisposition to acquire and retain property. This is hardly surprising because survival is closely bound up with the acquisition of things: food, shelter, tools and territory. But the root of these general urges may also run to quite specific and detailed rules about property acquisition, retention and disposition. The great variation in property-related behaviours across species may mask some important commonalities grounded in adaptive utility. Experiments and observations in the field and laboratory suggest that the legal rules of temporal priority and possession are grounded in what were evolutionarily stable strategies in the ancestral environment. Moreover, the preferences that humans exhibit in disposing of their property on their deaths, both by dispositions made in wills and by the laws of intestacy, tend to advance reproductive success as a result of inclusive fitness pay-offs.
 
Of course, evolutionary behaviors also guide the State’s legal rules, but it is still significant that humans (and other species, for that matter) possess instincts leading them to behave with greater ingrained respect for property ownership than Hobbes might suppose they would.
 
On a similar note to Stake’s arguments, Bryan Caplan discusses Herbert Gintis’ “The Evolution of Private Property”, and notes that black markets are a significant example of property rights existing not only without government enforcement, but with active government opposition.
 
Finally, it is worth noting that Bowles is a neo-Marxian, and Gintis has Marxist leanings. One need not be a classical liberal to observe problems with the usefulness of Hobbes’ model in the real world.

Reading notes on Hobbes’s Leviathan – Pt. 1

Throughout my schooling, I have encountered numerous times Thomas Hobbes’s claim that life in the state of nature would be “solitary, poor, nasty, brutish, and short.” This has been casually thrown around both by

– teachers giving a cursory justification for the existence of government

– students offhandedly waving away libertarianism by remarking wryly that they, too, want to live in the Hobbesian Jungle (maybe it’s not as bad as we thought?).

Given that I am fairly outspoken in my arguments on economics and political theory, I decided I should pay due respect to Hobbes and his work, so I’m reading Leviathan.

Leviathan

The book is organized into four sections. If I understand correctly, the last two sections are exclusively on religion and the church, so I will not be reading them – plus, my Missner edition doesn’t have them.

The first section explains Hobbes’s views on the nature of human experience – including what is sense, imagination, science, reasoning, understanding, etc. The second is more specifically focused on government.

I’ve made notes to myself in the margin, which I will share here if they are of interest. They will be as coherent as possible without spending too much time making sure they flow perfectly. I will then combine them all into one post to give my response to Hobbes.

Quotes and analysis that are actually related to economics or political theory will be navy blue.

Notes and Thoughts

So far, I find Hobbes to be much more agreeable than expected – perhaps because I have not yet gotten very far into his discussion of government.

Introduction

“great ‘Leviathan’ called a ‘Commonwealth’ or ‘State,’ in Latin civitas, […] is but an artificial man”

I am unsure whether Hobbes is only making a grand introduction or really believes it, but he sets the stage by equating the state to an artificial man. To say that the state is a being of its own is not only frightening, but also misleading – since only individuals can act, and the actions of the state are determined endogenously by the sum of the actions of the individuals over whom it rules.

“To describe the nature of this artificial man, I will consider: First, the ‘matter’ thereof, and the ‘artificer,’ both which is ‘man.’”

Hobbes appears to redeem himself by noting that the state is both made up of people and is created by people.

“there is [a] saying that is not lately understood, […] nosce teipsum – ‘read thyself’ [… it serves to] teach us that for the similarity of the thoughts and passions of one man to the thoughts and passions of another, whoever looks into himself and considers what he does, when he ‘thinks,’ ‘opines,’ ‘reasons,’ ‘hopes,’ ‘fears,’ etc., and upon what grounds, he shall thereby read and know what are the thoughts and passions of all other men upon like occasions.”

It appears that this is a call for introspection – an argument made by many economists in justifying their theoretical foundations. We’ll see whether Hobbes consistently employs introspection when discussing the ruled and the rulers.

“Individually, every thought is a representation or appearance of some quality or other accident of a body outside of us, which is commonly called an object.”

Just a bit of background for Hobbes’s understanding of how people work. Thoughts are representations of outside objects. The origin of thoughts is sense, which is caused by outside objects pressing on sensory organs, which propagate the pressure inwards and cause various motions inside the body. Hobbes often talks of motions in the body causing much of human experience.

“No man doubts that it is a truth that when a thing lies still, unless somewhat else stirs it, it will lie still forever. But when a thing is in motion it will eternally be in motion, unless somewhat else stays it.”

This sounds a lot like Newton’s first law of motion! – and it essentially is (if we add “with constant velocity” to the second sentence). But wasn’t Leviathan published in 1951, when Newton was just about 9 years old and hadn’t come up with his laws of motion? It turns out that Galileo had also described the law of inertia before Newton, and Wikipedia says that “[p]hilosophical ideas relating to inertia had been proposed by John Philoponus centuries earlier, as had Jean Buridan, and according to Joseph Needham, Mo Tzu had proposed it centuries before either of them.” And now we know!

“Imagination […] is decaying sense.”

Just a quote.

“When I am awake I often observe the absurdity of dreams, but never dream of the absurdity of my waking thoughts. Thus, I am well satisfied, that being awake, I know I do not dream, even though when I dream I think myself awake.”

This made me laugh. The logic isn’t necessarily sound, but it certainly is intuitive!

“Some say the senses receive the species of things and deliver them to the common sense, and the common sense delivers them to the fancy, and the fancy to the memory, and the memory to the judgment, like handing of things from one to another, and with many words they make nothing understood.”

Hobbes misses no chance to poke fun at other thinkers. It keeps Leviathan a nice and pleasant read.

“In a discourse about our present civil war, what could seem more unrelated than to ask, as one did, what was the value of a Roman penny? Yet the coherence was manifest enough to me. For the thought of the war introduced the thought of delivering up the king to his enemies; the thought of that brought in the thought of delivering up of Christ; and that again brought the thought of the thirty pence, which was the price of that treason.”

This is interesting. It appears in the section where Hobbes discusses trains of unguided thought and uses this as an example to point out that even in the wild world of the wandering mind explanation for a train of thought could be found. The other type of trains of thoughts is regulated ones.

“in all of your actions consider what you are aiming at as the thing that directs all of your thoughts in the way to attain it.”

This is the essence of human action and using means to achieve ends.

“Sometimes a man desires to know the [effect] of an action. He thinks of some similar past action and the effects that followed it, supposing that like effects will follow like actions. […] Because of the difficulty of observing all of the circumstances, this kind of thinking can be very fallacious. […] The future is but a fiction of the mind, which applies the sequels of past actions to the actions that are present.”

I think this is a good description of empiricism and the scientific method. In predicting the future, we look at the past when the conditions of the object in question were the same as the current ones (controlling variables – ceteris paribus) and we say that the same consequences will follow. Of course, as Hobbes notes, not making sure to look at past circumstances that were the same as the current ones in all regards can lead one to make false conclusions (since there could be other, unobserved factors causing the result we saw in the past).

“Sometimes a man desires to know the [effect] of an action. […] This train of thoughts is called […] prudence.”

“it is not prudence that distinguishes man from beast”

“imagining any thing whatever, we seek all the possible effects that it can produce. […] This second only seems to occur in man”

Hobbes appears to contradict himself. He claims that it is not imagining the consequences of an action that separates man from animal. Yet earlier, he had said that precisely this is what is the difference between the two. Is the difference that his earlier claim included “all possible effects?” I doubt that the “all” is what makes the difference – or what should make the difference. It appears Hobbes is merely contradicting himself.

“Without speech among men there would be no more commonwealth, society, contract or peace than there is among lions, bears, and wolves.”

I’m happy that Hobbes agrees with part of my assessment in my first post on the possibility of cooperation in the Hobbesian Jungle. I note that

“Going back to the importance of a shared language, we can see why cooperation among 1) animals and other animals, and 2) humans and animals is difficult. They have no way to make the case to each other for why they shouldn’t kill each other. Animals cannot make pacts for mutual protection unless it is genetically instilled in them. Humans also cannot face a bear reared on its hind legs and argue for why no, Mr. Bear, you shouldn’t kill me because then you will lose the benefits I can offer you.”

In the post, I propose that cooperation can arise even without the division of labor when there is uncertainty about the future structure of society and when people can mitigate such uncertainty by discussing the future and making the case for cooperative defense. However, without the capacity for discussion, there is no way for people to establish cooperative agreements.

Origins of cooperation and de-facto natural rights in the Hobbesian jungle – Part 1

I love the microfoundations of economics. I love seeing emergent, productive orders arise among individuals who are self-interested and maybe not even fundamentally “good.” That’s one of the reasons why I enjoyed reading David Friedman’s “A Positive Account of Property Rights” [1], which puts forth a theory on how property rights can arise out of the interactions of individuals. I intend to read more of the literature as I have more time.

For now, I’m interested in doing some basic exploration of how it could be possible for cooperation to arise in what I will call the “simple Hobbesian Jungle” – after Hobbes’s understanding of human life as short, brutish, and warlike without the existence of a government.

I wrote most of this post as I was traveling by bus to New York last summer. It began as an attempt to provide microfoundations to fight back against the general belief that humans, left to themselves, could not establish some semblance of peace and stability. As is suggested by the name, the model is very much simplified – meaning it doesn’t encompass the totality of human choices made in the Hobbesian jungle. However, I made the model very harsh to the individual on purpose, so that there would be as little reason to cooperate as possible without outright having everyone destroy everyone else.

As I continued to write, I realized that in its harshness, the world I had created could very well result in stability. Not only this, but this mental experiment led to a realization that it’s possible to explain not only why cooperation arises, but also possibly how the ideas behind morality (don’t kill, don’t steal) get created in the first place. The model also held out some explanatory power for why war could possibly exist and why cooperation fails to arise sometimes. Surprisingly, there are even implications for the question of whether animals have rights.

Let’s dive in.

The simple Hobbesian jungle

Let’s attempt to see how human cooperation could emerge under certain restrictive assumptions that would make it even more difficult than normal for it to emerge. Specifically, why doesn’t everyone suddenly go kill everyone else?

I will model the emergent order through iterated games.

The setup

Imagine a state of existence comprised of atomic, separate, primitive, rational, self-interested men. That is, imagine that we go back in time 20,000 years, and let’s assume away tribes and family relations.

We have a “society” of 50 individuals in a large, closed-off geographical area. These individuals have similar mental capacities, though their physical powers differ in magnitude. At time t=0 they begin by being separated from each other, each owning a certain good or tool that is useful to each of them in varying degrees of magnitude. The items are randomly distributed across the various individuals.

The individuals, by assumption, cannot settle down to create agriculture or establish a division of labor except for in the field of protection services (that’s later). These people, each by himself, roam the countryside at t=0.

There is another assumption – the individuals have omniscience on a limited time horizon. That is, when two people encounter each other, each knows what the outcome of a battle between them would be with 100% certainty. When a battle is concluded, the winner is immediately fully healed and takes the property of the loser. Each possession on the map is valued by all individuals.

At t=0, the individuals may be given an ordinal rank of their fighting capabilities from 1 to 50, with 1 being the weakest, and 50 being the strongest. Each individual is aware that there are 49 other people on the map, and each individual is aware of his ordinal ranking and that of everyone else. The individuals know the rules of the scenario, and go through the following thought process ahead of time: Each person considers every other person and thinks about what would happen in an encounter between them. Let each individual be named as his ordinal rank. In that situation, if 12 were to encounter 17, 12 knows that he would lose in a fight and 17 would win. 17 knows the same information.

Assume away any feelings of morality in these people or any feelings of kinhood. Each individual desires to obtain as many of the goods as possible and also desires to stay alive so that he may make use of the goods. The goods are infinitely durable, and provide a constant level of satisfaction when used in each time step.

Assume that when individuals wander the map they cannot see beyond a limited space around them, and hence may not avoid their peers. People also cannot scout out opponents and cannot escape a battle (although it is theoretically possible that a battle never begins because both parties decide not to fight for whatever reason). In essence, there is a fog of war.

Ready, set, go! First guess

A shallow, first-level analysis of the situation would suggest the following thought process: 50 knows that he can beat any other individual and take his property. 49 knows that he can beat all individuals besides 50. 48 knows he can beat all but two individuals – 50 and 49. This continues until the analysis reaches 1, who knows that he cannot beat any other person on the map and will lose all battles with other people.

Say that 25 meets with 33. What should each actor do in his self-interest? The first instinct might be for 33 to kill 25. After all, it is 100% certain that 33 will gain in the short term without permanent bodily injuries. 25 doesn’t have an option to run, and cannot win a fight in this scenario. It appears that this map is doomed for players to successively kill each other until only 50 is left with all the goods and the highest utility level achievable. Remember that after a given battle is over, the winner is healed immediately by assumption, and hence has no temporary weakness after the battle is over.

Is this what will happen on this map? Remember that individuals by assumption had their omniscience limited to a short time horizon. What is meant is that a person knows the outcome of the coming fight, but does not have perfect information about future social conditions – individuals work under the limited information that we have today in that regard. We may only guess what will happen in the future and support it with evidence. Same goes for them.

A second look

With that in mind, return to the scenario at t=0 between 25 and 33. One obvious outcome is for 33 to win and take 25’s possessions. Are there any alternatives, however? There are. 25 knows that he will lose to 33 in a battle, yet he also knows that 33 would lose to anyone above him. Therefore, it is beneficial for 25 to remind 33 of this fact and to propose an agreement – that they form an alliance for protection. Thus, 25 and 33 agree to not kill each other and to fight together in battle. Why is this beneficial? It is beneficial for 33 because with the help of 25 he can likely take on individuals with a much higher fighting power – say, 37, 42 or even possibly 50. Say that the highest level person they can take on together in battle is 39. Hence, their combined rank is above person 39, but below person 40.

Assume, furthermore, that no person can beat a combination of all of the people below his rank – except for 2, of course (who can always beat 1 in a one-on-one fight).

What social patterns can we predict to emerge?

Let’s look at the lower end of the scale. Individuals below, say, 18, if they encounter each other, know that they stand to gain in the short term by fighting and killing each other off. However, they also know that they might very well be killed soon thereafter by upper-level players. Hence, they have an incentive to band together. If they happen to meet, 12 and 5 might group together, and so would 17 and 16, for example. Players in the middle range, say 18-34, know that they could easily (and with certainty) take on the weaker players and steal their property. However, they also know that people above their rank could kill them and take their property. Hence, it is useful for those players to band together as well. Players in the upper strata of fighting abilities, 35-50, know that at t=0 they are the strongest on the map and that they could take on any individual below them. The lower section of the 35-50 range might fear the upper section, however, so it might decide to group together to protect itself from the very best fighters.

Whenever a person allies himself with someone else, it is less useful for him to ally himself with a weaker person than with a stronger one. However, note that if every player has a personal rule where he decides to only ally himself with a stronger person, then there would be no alliances ever made. In every encounter there is necessarily a stronger player and a weaker player. Hence, while the weaker player may want to ally himself with the stronger one, the stronger one would never want the weaker one under this rule.

We see that for some sort of alliance to come into existence, stronger individuals must ally themselves with weaker ones at some point.

Multiple levels of logic and strategy

Now, two points:

1) It is also clear a person in the 1-17 range, for example, is better off allying himself with a person above his range than a person within the range.

2) A person in the 18-34 range is better off being allied with a person in the 35-50 range than a person in the 18-34 range. Yet even the 18-34 range is better for him than the 1-17 range.

While it might initially appear that people in the 1-17 range will have little use for each other (because they are all relatively weak), these players may also realize that the 18-34 range people have even less use for them. Therefore, 1-17 have a higher chance of an opponent in the 1-17 range allying himself with them than in the 18-34 range. Therefore, it would be useful for people in the 1-17 range to offer each other alliances if they happen to meet. The same goes for 18-34.

Yet what if the initial meetings are from people vastly different in strength from different ranges? For example, what if 12 meets 36? It appears that 36 would not gain very much from allying with 12. However, as was said before, future societal structure is uncertain. 12 might very well employ the following reasoning:

“Sure, 36, you could kill me, because I do not contribute all that much to our joint defense. Yet consider this: Some number of pairs of people, each below 25, have met or are meeting at this very moment. Say that number is X. These people are likely to ally with each other [by the analysis presented previously for people in the same range.] The expected meeting of people in this group is a meeting of players 12.5 and 12.5 (using statistical expectation). Once these people join up, they might be able to take on a player who is ranked 13, 17, or even 20. Therefore, this meeting of the lower ranks increases their power, which shortens the range of variability of power. At time t=1, then, we will have people in lower ranks allying together and bullying people at the lower end of the upper ranks. This lower end, if it meets the growing group of underdogs at t=1, has a chance of joining them, and making an even more powerful group at t=2. As this process slowly wears on, the stronger and stronger players are recruited, and it’s very possible that at t=3 you, 36, will be meeting strong groups of underdogs. Not only this, but you could be meeting people above your rank as well. Therefore, even though I only improve your ranking so that you can beat maybe person ranked 39 or 40, if you do not ally with me, you stand a much higher chance of dying at t=3. We should ally with each other and with any other players that we might happen to meet.” Let this be named argument *.

If 36 buys this reasoning, he will join in. If not, he will kill 12 and take his good. I propose that it is likely for 36 to ally himself with 12.

The tough case

But what if 50 encounters 1 at t=0? The chances of an alliance are much lower. It may even be that 1 offers very little of value to 50, and that 50 decides to kill 1. Remember that fighting has no costs for the group that is predestined to win a given fight (besides the lack of a future alliance).

Hence, the worst-case scenario that we can imagine is that at t=0, 50 meets 1, 49 meets 2, 48 meets 3, and so on with 26 meeting 25. Suppose the cutoff for argument * working is 36 meeting 14. Hence, when players above 37 meet players below 14, * doesn’t work.

What could 1 say to 50 to not have him kill him? Well, note that if 50 kills 1 and 37-49 kill their respective weaklings, that means that in the next round the players left will be 14-50. Furthermore, 14-36 will all have allies (by argument *). Hence, 38-50 are in a very much weakened position at t=1 relative to t=0. Hence, it might be advantageous for 50 to get any help it can at t=0 to protect itself at t=1. [2][3]

Throughout this whole explanation, we must remember that although there are a lot of factors that are constant by assumption (such as knowledge about who would win a battle), the exact social outcome will vary according to the explanatory power of the individuals who bargain with the superiors for inclusion in the “tribes.”

I do not purport to prove that one social arrangement will in fact turn out – it all depends on the powers of the players to convince each other. What I am merely pointing out is various plausible tendencies in the situation. Of course, all of this relies on the individuals realizing that they can call future uncertainty to help them in the first place.

Conclusions for Part 1

In this conclusion section, I will cheat a little bit and point out some of the ideas on which I stumbled after the end of the simple Hobbesian jungle.

The first thing to note is that even in a winner-takes-all, no division of labor or trade, amoral world with no attachments or regret you can have cooperation arise. I have not by any means proved that it will result in sunshine and utopia for everyone. Yet I have shown that uncertainty about future social order could be a driver of social cooperation for the provision of protection.

In future posts, when we strip away some of the assumptions, we will see that different complications introduced in the model will decrease and increase incentives for cooperation – what the net direction will be, we will see (though I expect it will be in the positive direction).

An important note to make is that cooperation was allowed to arise in the model because the players shared a language. If they had no capability to convince each other, they would not have been able to develop this system of mutual protection, but instead would have most likely ended up killing each other, and 50 indeed would have won (although, perhaps, slavery might have arisen instead… That’s another interesting dynamic for another time).

This puts forth a possible explanation for early warring tribes. Without communications, even if they had good intentions, they might not have been able to get them across. Assuming away good intentions and focusing only on self-interest, they still might have been able to develop some mutual protection relationship, yet the language barrier prevented this from happening.

So we see that defense is one of the possible drivers of cooperation. Looking ahead, another driver is tasks that can be completed together more easily than separately (separate from the division of labor). I’m thinking of things like, say, rolling large logs. A man might not be able to do it by himself, yet can achieve the goal with 3 other men. Upon further consideration, defense is in fact a subset of this “cooperative strength.”

The other possible driver of cooperation, we see, will be the division of labor. In our Hobbesian jungle, this was assumed away to simplify the model. Yet upon a first glance, there appears to be a strong case for why the division of labor would be conductive to peace instead of war. Varying levels of talent mean that people have comparative advantages in the production of different goods. Not only this, but specialization allows for an increase in productivity of the laborer. As such, if they can communicate, Hobbesian strangers might prefer to trade instead of to fight.

Taking cooperative strength and the division of labor together, we begin seeing how property rights, at least the concept of self-ownership, might have emerged.

Going back to the importance of a shared language, we can see why cooperation among 1) animals and other animals, and 2) humans and animals is difficult. They have no way to make the case to each other for why they shouldn’t kill each other. Animals cannot make pacts for mutual protection unless it is genetically instilled in them. Humans also cannot face a bear reared on its hind legs and argue for why no, Mr. Bear, you shouldn’t kill me because then you will lose the benefits I can offer you.

The language barrier hinders both the possibilities for cooperative strength and the division of labor. If animals were to wake up tomorrow and be able to communicate completely fluently with each other, we would see more cooperation. If they could also engage in the division of labor, they would start off on the path to creating human-like societies. However, they do not possess these capabilities (beyond their simple abilities to communicate). As such, avoiding conflict and protecting one’s self from animals make having a meaningful society with them impossible. The stronger has always dominated the weaker. Yes, we can keep pets, and even live peacefully and happily with them, but this is only after having “enslaved” them and forced them to fit into our society after extensive “brainwashing” (training) – to put the affair in human terms. The question of animals’ rights extends beyond understanding “don’t hit or kill,” but also to recognizing property boundaries (which will be discussed in future posts). As such, until animals can properly understand these concepts, they remain subordinate to humans and their property (I suppose some select animals, such as some primates, could be excepted).

In future posts, I look forward to making the Hobbesian jungle a little more realistic.

Notes and References:

[1] http://www.daviddfriedman.com/Academic/Property/Property.html

[2] Another reason 50 might choose to team up with a very weak player is to serve as signaling. While players might choose to team up, they could in theory, at any time, turn on each other. 50 choosing to ally himself with 1 sends a signal that he will restrain himself from killing weaker players and will cooperate well with others. Not a perfect signal – true – but 50 could find a way to make it appear legitimate.

[3] At some point in the discussion, someone might bring up the possibility of everyone teaming up into the same team and being one big happy group. But then, the hypothetical continues, why wouldn’t the best 49 players decide that 1 is useless and take him out? (Another version is that they decide 50 is too powerful by himself and decide to off him). This certainly may happen, yet it’s also possible that 2 will realize that if 1 is killed off, 2 is the remaining weakest player – and the next person on the chopping board. And so he might be agreeing to a slippery slope. So might 49 in the case of killing 50. By backwards induction, more and more players might get killed over time. This would create a disincentive to implement such a “kill the worst (or best) player” policy as long as the players have enough foresight to realize the consequences of their actions.

A Bad Argument Against Secession

In the United States, there have been recent calls for secession of various states, including some in the South. A common response to proposals for Southern secession is that most Southern states receive more in federal spending than their inhabitants pay in federal taxes. (For examples, see the Google search results for the phrases “secession” and “more than they pay”, “The Sanctimony of the South” by Gram Slattery, and “What seceding from the U.S. will cost you”, among many others).

The argument is that, since these states are fiscally dependent upon the federal government, they would be foolish to secede, and, according to Mr. Slattery, engaged in “sanctimonious whining” to even argue for doing so.
The problem with the argument as stated, and a significant problem at that, is that there exist other benefits and costs to secession besides those related to fiscal transfers to and from the central government. Fiscal transfers are only one issue among many, and there is good reason to think that, despite losing fiscal support from the federal government, seceding states could benefit heavily from secession. Some reasons are as follows:

  1. Tax haven status: Free from the United States federal tax system, states could choose to become tax havens for wealthy individuals and corporations. Such could offer substantial benefits to the local populations from revenues on the relatively low taxes imposed on foreigners moving in, increased local investment, and other benefits of immigration (see the item on “immigration policy”).
  2. Regulatory policy: Various businesses might wish to incorporate in the United States due to familiarity with its legal system, language, and business culture, but wish to avoid onerous regulations. States which seceded and proposed more friendly regulatory systems could benefit substanitally from foreign investment. For some, this invokes the image of smog-spewing factories located just outside the US border, but if the secession were on amicable terms, the seceding state could agree to impose some kind of Pigovian tax on pollution and remit funds to the US government as compensation for cross-border emissions.
  3. Immigration policy: Many right-leaning Southern states might impose restrictive immigration laws upon seceding. Indeed, I would not support such policies. However, seceding states could instead decide to expand legal immigration, possibly as part of a strategy to ease their fiscal burdens and repopulate dying cities. Former New York City Mayor Michael Bloomberg actually suggested that the federal government allow increased legal immigration to Detroit to encourage economic development. Seceding states could pursue such policies freely. A variety of benefits to immigrant-receiving areas exist, including windfalls in the value of developed land, increased division of labor, revenues from immigration taxes, and numerous others.
  4. Other economic and non-economic benefits of increased autonomy: The freedom to conduct “policy experiments” is quite valuable. States with residents opposed to the War on Drugs could decriminalize or legalize drugs without the fear of federal intervention. Liberal states in the Northeast could secede and impose all kinds of policies that would otherwise stand no chance against Republican opposition in Congress. Residents of seceding states might appreciate their greater individual influence over issues previously handled by a central government.
It is also worth noting that one of the states with a prominent secession movement is Vermont, which pays a fair amount more in federal taxes than it receives in spending. It would be amusing to see the anti-secessionists accuse Vermonters of greed instead of foolishness for wanting to leave!
Certainly, a host of other issues would arise, such as how to handle federal infrastructure and land, how immigration and trade between seceding states and their mother countries would work, and the possibility of mutual defense agreements, among others. But such issues have been resolved in previous secessions, including the one which created the modern United States. To merely bring up the “fiscal transfers” argument as though it ends all debate on the matter does gross injustice to an important issue.

A Question on “Limited Government” for the Political Left

When we use the words “limited government,” we usually have “conservative” ideas in mind that relate to making the government smaller [1]. However, the phrase taken literally doesn’t necessarily imply this. Instead, it relates to a system of government where there are limits on governmental power.

When we ask people whether they are in favor of the literal interpretation of “limited government,” almost all will undoubtedly say they are. After all, who in the world favors unlimited government?

My question for the political left, then, is “If you favor literally-limited government, what do you think the limits on the government’s power in economic affairs should be?” That is, what boundaries should the government never cross in controlling people’s lives in terms of coercively interfering in voluntary economic agreements?

Since the dimensions along which the government can interfere in economic life are varied, here are some sub-questions to get juices flowing (though they are by all means not all the questions to ask oneself). Answer these as if you could personally choose the restrictions on a “just’ government.

– Is there an income tax rate above which the government should never go – a tax rate above which the government could be considered tyrannical to the individual in question? How high is this tax rate?

– Should the government ever be able to confiscate the capital equipment of a company that is not harming anyone? (To make this easier, let’s suppose that the question is limited to times during which we are not at war with other countries.) What about wealth taxes on company or individual wealth? If yes to one question and no to the other, what is the philosophical difference between the two? If yes to either, how much is the maximum that should be able to be confiscated from a company or individual?

– Should the government be able to force companies to lower or increase their prices? By how much? Should the government have total power to set any price at any level it wishes? If not, then what are the limits?

– Should there be a limit on the percent of GDP government at all levels consumes? How much? What if “the public” demands more? Do we tell them “no”?

– Should there be limits on regulatory powers of government? If so, what should they be?

Last sub-questions: what if government were to overstep the boundaries you set out above? Would you condemn it as unjust? What if “the public” wants it to overstep the boundaries? Would you stand in the way of the majority getting what it wants (at least in principle if not in action)?

These questions are just examples of the type of things we should be asking ourselves to determine what the limits on government ought to be. While answering them, remember the initial question: How do we limit the government’s power in economic affairs? We know there must be boundaries – where do we draw them?

As a bonus, try not use the phrases like “whatever is necessary to achieve X,” since this is not really a very binding limitation but varies with the whim of the public or politicians. As such, things like “living wage” or “fair share” shouldn’t be part of your answer. Instead, try to focus on specific actions the government should not be allowed to perform.

I do not mean to pick only on the left – the right has plenty in which to find fault. I just find that the left and the right suffer from different sins. While the right tends to be inconsistent in their reasoning (sometimes terribly so), the left tends to be vague. In asking these questions, I am legitimately curious to know what limits members of the left think the government should have placed on it in the realm of trade.

Notes

[1] I put “conservative” in quotes because I’d argue that many conservatives do not espouse conservative ideas. This is one of the reasons I dislike the term conservative – it’s vague and historically inconsistent.