Did you know, Nebraska's official name used to be "The Tree Planter's State?"
Explains Senator Laura Ebke in her fun fact of the day: "Nebraska has had two official state names: the "Tree Planters' State" and the "Cornhusker State" Nebraska was designated the "Tree Planters' State" by legislative action in 1895. Nebraska's claim to tree-planting fame includes the founding of Arbor Day in 1872 by J. Sterling Morton of Nebraska City, the Timber Culture Act of U.S. Sen. Phineas W. Hitchcock in 1873 and the millions of trees planted by early settlers as windbreaks, woodlots and orchards. The 1945 Legislature changed the official state name to the "Cornhusker State.""
Freedom means progress, thus freedom means an environment more adequate to humankind - and there cannot be any other standard for judging environmental quality.
Pierre Desrochers reminds us:
Last month [written in November, 2006] our southern neighbours welcomed the arrival (or birth) of their three-hundredth million citizen. While the news should have been welcomed, a number of environmental activists and journalists viewed it as cause for concern. They had no reasons to, because a rising population in a prosperous economy is entirely consistent with a higher quality of life and improved environmental amenities. As Dan Griswold of the Cato Institute pointed out, even though the U.S. population is today four times larger than it was a century ago, during this time period "life expectancy at birth has grown from 48 to 78 years, infant mortality rates have plunged, a host of deadly diseases have been conquered, and the air we breathe and the water we drink are far cleaner than when we were a less populous country."
The idea that economic growth generates pollution problems, but simultaneously provides the means to clean up most of them and even to improve on earlier conditions, is probably too counterintuitive to be readily accepted by most people. It is nonetheless backed up by much historical evidence. A brief discussion of the causes underlying forest regrowth and improvements in air and water quality in advanced economies can be illustrative in this respect.
Take, for instance, the case of forest cover:
It is a common misconception that deforestation is a recent occurrence, with the bulk of it taking place in the tropical regions of the world in the last five decades. As Williams (2002) points out, possibly as much as nine-tenths of all deforestation occurred before 1950, as people cleared forests for shelter, food, warmth and to create a multitude of implements. Beginning in some European countries in the middle of the nineteenth century, however, these trends have long been reversed in virtually all advanced economies and in some developing economies (including China and India). Among other factors explaining this rebirth of forests in over fifty countries is the fact that farmers and foresters became increasingly efficient in their capacity to grow more food and fiber on ever-decreasing areas, with the resulting abandonment of pasture and cropland paving the way to afforestation and reforestation.
Meanwhile, wood users became increasingly adept at extracting more value out of their input, while development of substitute products, ranging from electricity to plastics and metals, reduced the demand for wood (Ausubel, 2000; Williams, 1989). Rudel et al. (2004) also point out that economic development and urbanization has created better paying non-farming jobs in urban areas, causing a number of agricultural workers to abandon their land. In places with stable or growing populations and little ability to import forest products, continued declines in forest cover spur increases in prices of forest products, causing landowners to plant trees instead of crops or pasture grasses. Disastrous floods in deforested watersheds have also motivated government officials in developing, but now prosperous, countries to implement reforestation programs.
conceiving of the freedom of the INDIVIDUAL quite simply as the absence of personal or social restraints on his behaviour. Crusoe ... is a free man according to this definition ... [which] sees all limitations on a person's freedom as emanating from individual or collective actions by others.
a multi-person environment ("sociogenic liberty," i.e. liberty engendered by the interaction of more than one person).
To this purpose, Harold Demsetz argues:
[W]e may begin by basing the freedom of a society of persons on two conditions: (1) all rights to act are private, which means not to be interfered with by the state, and (2) all persons enjoy the same rights ... [F]or brevity, denote a society satisfying them as privatized. (p.286)
In order to arrive at a reasonably unambiguous model of freedom, we must also grant the assumption that freedom-via-privatization can be achieved without incurring any costs. Why this assumption is required to ensure non-ambiguity, we shall see in a moment.
In this model, all rights are simply assumed to be private, symmetric, known, and respected. No problems of defining and enforcing private rights arise. Each person ... is a Crusoe whose interactions with others are guided by impersonally set prices and whose domain of action is determined by his (acknowledged by others) wealth. The trade-offs available to him are determined by the non-collusive aggregate of wants and preferences, the given state of technology, and the relative abundance of resources. (p. 287)
The above is a neat summary of the mostly unacknowledged assumptions inherent in the politics-and-democracy-averse libertarian vision of markets-as-social-order, i.e. the idea that all human affairs can be settled in the market place, rather than requiring also forms of reconciliation and enforcement other than those attainable by way of bilateral transactions.
In this model,
coercion in Hayek's sense [see Competing for Liberty (3/6) ... ] is absent ... since no one controls price or any other parameter of choice. Perfect decentralization also satisfies Stigler's real-wealth maximization criterion [people (i) have consistent tastes, (ii) make correct cost calculations, and (iii) take decisions that maximise utility]. (p. 287)
Assumed to prevail are
diseconomies of scale (and hence, dispersed ownership of substitutable resources), full information, zero transaction cost, and implicitly, costless privatization. the implied dispersal of these rights deprives any one of the ability to impose costs on others. Zero information and transaction costs imply real-wealth maximization ... Coercion is absent, real wealth is maximized, and rights are private. Perfect decentralization seems very much like a leading candidate for modelling the state of liberty. (p. 287)
But then Demsetz warns:
Extending the definition of freedom to a society of individuals is not straightforward. Individuals necessarily impinge on each other because resources are scarce ... Our [above] definition of individual freedom is inadequate to describe the freedom of a society of persons. (p. 286) [...]
Weaken the assumption that private rights are freely known and respected, and ambiguities immediately cloud the relationship between privatization and freedom. How private is a private rights system that is less than completely enforceable ... How secure must private rights be for us to conclude that we are dealing with a society of free persons? (p. 287)
Now it becomes more difficult to define a society of free persons unambiguously,
because of the the potential trade-offs [that these questions] imply, trade-offs that would be unnecessary if privatization could be defined and secured costlessly. (p. 287) [...]
The connection between privatization and freedom, which can be given fairly clear meaning in the context of perfect decentralization, becomes opaque in the face of positive costs of privatization. Full privatization us not attainable in the face of positive implementation costs, and the degree of privatization that is attainable by persons free to choose is that which privatizes only to the degree that they judge efficient. (p. 289)
No matter whether you subscribe to the small government approach to liberty (with a night-watchman state) or whether you support the idea of a society of free persons
conceived of as relying strictly on private means to define and enforce rights [p. 288]
an important problem that both alternatives fail to resolve: that of defining a state of liberty in a regime of scare resources.
Given that there are costs of improving the reliability of private rights, what degree of certainty in the exercise of private rights characterizes this state? ... [E]ach person will consider what other goals must be sacrificed to improve the reliability of his private rights.
Suppose that persons who populate a society place a very low value on improving the reliability of private rights and a very high value on other goals. Is the state of liberty appropriately characterized by the level of privatization chosen in this society?
What values must a people attach to freedom before their chosen degree of privatization meets the requirements of a state of liberty? Defining the state of liberty in terms of private rights (defended privately or by the state) offers no answer to this question. (p. 288) - emphasis added.
Free choice, the very precondition of free markets, engenders political scarcity, i.e. different strategies that people apply to form an attitude toward freedom that appears to them morally, religiously, or otherwise ideologically desirable and economically and otherwise practically feasible.
Image credit. On what terms are we agreed or allowed to trade. Which types of assets are cleared to be legitimately tradeable? Which ever way we decide, we are likely to face contention on these issues, and ultimately we can achieve freedom only by exerting a fair measure of coercion. Then what is the nature of coercion that is compatible with liberty?
In his magisterial The Constitution of Liberty, Friedrich Hayek writes:
We are concerned in this book with the condition of men in which coercion of some by others is reduced as much as is possible in society. This state we shall describe [...] as a state of liberty or freedom. (p.11)
Hence, freedom and coercion are inversely related.
Furthermore, Hayek emphasises that in talking of coercion he wishes to confine the concept to human action, whereby one human (A) forces another human (B) in such a manner that B becomes, against his own will, a means used to fulfil A's ends. Thus
coercion occurs when one man's actions are made to serve another man's will, not for his own but for the other's purpose. (p.133)
This is contrasted by certain types of enforceable restrictions voluntarily stipulated. Thus, in his paper The Meaning of Liberty, Harold Demsetz notes:
Hayek's attempt to distinguish his notion of coercion from "the terms on which our fellows men are willing to render us service" signifies an effort to associate coercion with costs whose source is not the impersonal workings of the market but in the personal decisions of men. (p. 283)
So, Hayek seems to distinguish between coercion correlated with impersonal power as exerted by outcomes brought about by free markets and coercion correlated with personal power as exercised by, say, a monopolist, who, as the owner of a spring in an oasis, can exercise enormous power over others wishing to survive.
The difference is related to the purpose of suppressing certain forms of coercion in a free society, where suppression is confined only to coercive acts that quash the network of win-win relationships among all citizens that freedom brings about. I shall return to this point at once.
However, reminds us Demsetz:
Stigler asks, What purpose is served by Hayek's attempt to distinguish personally imposed costs from those that are determined impersonally? Costs restrict freedom by restricting the degree to which persons can achieve their goals. Behaviour responds similarly to costs without regard to their source. [...] We make no distinction between the differences in the responses to different naturally caused costs. Why put the human who pursues a monopoly return beyond the pale of nature but not the insect who seeks gratification of a large appetite?
The essential equivalence of costs leads Stigler to argue for defining freedom as wealth. (pp. 284/285)
I do not think that Hayek's characterisation of the relationship between coercion and freedom is contradictory.
"Costs restrict freedom by restricting the degree to which persons can achieve their goals."
However, consider a rich man and a poor man, the former passionately desiring a yacht costing $ 1 billion, which, though he is rich, he cannot afford, while the poor man has no such desire and is reasonably happy with what he can afford. Is the rich man, languishing for a yacht he will never be able to get, freer than the poor man who is content with what he has got?
Lottery winners often complain about the burden of their newly acquired wealth. Rich business men feel an overload of obligations and end up dying from a heart attack. Living on a small wage but with plenty of time at hand, I may ensure to myself a far greater richness of personally valued opportunities than a rich man drowning in commitments.
What is most important is that freedom increases my chances to successfully seek the level of richness of personally valued opportunities that suits me.
In historical stages of advanced freedom, we seem to encounter a condition whereby there is a relatively small, yet sufficient number of wealth creating entrepreneurs who are able to support much vaster numbers of people with less tolerance for risk and less ambition for material advancement.
Incidentally, an entrepreneur may neither be particularly aware of the risks she is taking nor significantly motivated by prospects of enhanced wealth, but simply follow the path that leads her to a level of richness of personally valued opportunities that makes her feel content and excited about life. This may also explain why extremely rich people often continue entrepreneurial activities long after passing the point of diminishing returns from increasing wealth.
While everyone is free to maximise personal utility/psychic income, even in ways that do not maximise real wealth (sellable assets and ultimately purchasing power in an exchange economy), the overall level of real wealth will tend to grow in a free society.
Why? Because those who embark on a course of increasing real wealth purposefully or as a side effect to their activities face incomparably better conditions to do so than under alternative arrangements. The pursuit of productive, value-adding projects enjoys effective protection.
While we, the barbers, do not increase our productivity, over time we get higher wages and enjoy a better standard of living created by the relatively few engaged in productivity-enhancing entrepreneurial activities.
"Behaviour responds similarly to costs without regard to their source."
Granted, some people (buyers) may respond in the same way to an identical increase in the price of timber, irrespective of whether it is due to a forest fire or caused by the emergence of a monopolist.
However, the immediate, nilly-willy identical behaviour of buyers of timber under these differing scenarios is not the point.
If the source of costs is one systematically incompatible with the win-win character of free markets (as is the case with monopolistic usurpation) we have a fundamentally different situation compared to a source of cost that does not suspend the economic order that produces win-win situations.
Thus, we may have to practice coercion, and quite legitimately so, in order to support the working of free markets - for instance, by prohibiting an insolvent entrepreneur from aggressing other entrepreneurs who have demonstrably brought about his demise by winning over his former customers with more attractive prices and better quality.
Coercion of this type and purpose is not inversely related to freedom, to the contrary, it enhances freedom. The reduction of coercion to the highest possible degree (see the first Hayek quote above) then means ruling out behaviour that hinders or destroys the systematic attainment of win-win constellations in human interaction.
This entails three interesting implications: (1) freedom is a consequentionalist enterprise, i.e. she must be defended along consequentialist lines -- we cannot rely on an unalterable set of first principles, but must prove the superior, win-win outcomes ensured by a regime of freedom. (2) For that very reason, freedom is contestable and subject to competing interpretations. (3) Coercion is reduced to the type needed to protect productive patterns of social win-win-interaction and to maximise the range of personal choice in every member of the community. But coercion is present, for up to a point, people will be forced to abide by the laws of the liberty game, whether or not they understand and condone their purpose.
"Why put the human who pursues a monopoly return beyond the pale of nature but not the insect who seeks gratification of a large appetite?"
Unlike Stigler thinks, there are good grounds to distinguish between the monopolist and the insect. We need to ask our fellow citizens to elicit a liberty-compatible kind of behaviour to achieve the win-win type of economic system that we call the free market, while this highly advantageous economic order cannot be engendered by appealing to the behavioural propensities of insects. The latter may be occasionally destructive of the wins we hope to garner from operating in free markets, but they are neither capable of bringing about a win-win economy nor are they of particular relevance to this purpose.
By contrast, humans must be induced to defer to certain restrictions on their personal autonomy, and, if need be, coerced not to violate certain behavioural standards if we wish to achieve sociogenic liberty.
I have just been reading Harold Demsetz' paper "The Meaning of Liberty," contained in his "Ownership, Control, and the Firm - The Organization of Economic Activity, Volume I. Basil Blackwell, 1988"
In this paper, Demsetz addresses a feature of liberty that I find especially intriguing -- namely, the fact that liberty empowers people to generate different visions of freedom. In other words: liberty generates her own indeterminacy and serial and parallel renewal. In which way she remains a living concept, and roots herself in the discourse of an open society. (p.281)
This important condition is insufficiently dealt with in the libertarian literature, whose contributors tend to be more inclined to set out a certain dogmatic conception of freedom and defend it, often with acrimony, outrage and despair, against a world daring to proffer deviant attitudes toward liberty.
Against this Demsetz notes (emphases added by me):
For some libertarians, a free society bars restrictions that others may place on the use of legitimate private rights, counting among such restrictions not only state-imposed limitations but also privately imposed limitations, such as the "invasion" of private air space with smoke and soot from distant private factories. Defining legitimacy, of course, is part of the problem of defining freedom.
For conservatives, a free society bars prostitution, narcotics consumption, and commerce on Sunday, because they view such activities in the same way as libertarians view smoke and soot, as restrictions to which they are legitimately entitled. [...]
Notions of legitimate rights are as varied as are the origins of restrictions to such rights, and the costs of reducing restrictions are as varied as the shades of meanings that different peoples seem tp attach to freedom. This casual empirical observation seems at odds with the belief ... that freedom can be given a precise meaning. (p.281)
For certain purposes, I believe, it is possible and useful to give freedom a precise meaning. However, giving freedom a precise meaning is not the way in which freedom is achieved. She is much rather attained by a complex play of cultural-intellectual exchange and political negotiations among a democratic public, each member of which being entitled to her own position regarding the meaning and implications of freedom.
In fact, a certain openness, incompleteness, and indeterminacy of the meaning of freedom is an essential requirement for liberty to work as best as possible, otherwise she would depend on the prevalence of an intellectual and political elite and the dropping out of the vast majority of free citizens from the level at which admissible freedom is being defined.
The debate about freedom has taken place as if a constitution of liberty could be written on the basis of abstract principles relating to coercion, private property, and so forth. [But this is insufficient, for:] Scarcity implies cost, and cost implies subjective values, and not everyone shares a common set of values. It is therefore possible for different persons to disagree as to whether a course of action promotes or diminishes freedom, and certainly, to disagree about whether it is "worth" its "cost." (p. 291)
So, when you are "free to choose," as your are in historically unprecedented measure in a modern free society, you are free to choose views, values and trade-off-strategies that establish political scarcity in the sense of disagreement concerning admissible forms of liberty, dissonant patterns of (restrictions and rights defining) freedom.
In the measure that liberty promotes freedom of thought, expression, and choice she is required to incorporate institutions and practices that are capable of avoiding conflict-overload and creating a level of social reconciliation (institutions of violence prevention, political compromise, and trust) that compensates for the level on which social reconciliation cannot be expected (personal belief systems).
So, one of the functions of the political system of liberty is to sustain incentives and institutions that make it worthwhile for everyone to tolerate unpalatable ideological commitments and value preferences in others.
Under current law, CBO estimates the deficit will total 2.7 percent of GDP in 2015, drop to roughly 2.4 percent for the following three years, and then begin to rise. By 2025, debt held by the public is projected to reach 77 percent of GDP.
With such deficits, CBO projects that federal debt held by the public would amount to 73 percent or 74 percent of GDP over the next several years—more than twice what it was at the end of 2007 and more than in any previous year since 1950 (see figure below). By 2025, in CBO’s baseline projections, federal debt rises to 77 percent of GDP.
CBO’s estimate of the deficit for 2015 is $18 billion greater than the shortfall it projected in January, mostly because the agency has increased estimated outlays for student loans, Medicare, and Medicaid. In contrast, the projected deficits for the 2016–2025 period total $431 billion less than the cumulative deficit that CBO projected in January. The largest factor underlying that reduction is a downward revision to projected growth in private health insurance spending, which is estimated to lower the net cost of the provisions of the Affordable Care Act (ACA) that are related to insurance coverage and to increase overall revenues from income and payroll taxes (because a larger share of employees’ compensation over the coming decade is now projected to be paid in the form of taxable wages and salaries).
Such high and rising debt would have serious negative consequences for the nation: When interest rates returned to more typical, higher levels, federal spending on interest payments would increase substantially. Moreover, because federal borrowing reduces national saving over time, the nation’s capital stock would ultimately be smaller and productivity and total wages would be lower than they would be if the debt was smaller.
$10 says the only thing we will hear from MSNBC will be something akin to Obamacare bringing the cost of healthcare down.
In Germany, firms of a certain size are required to employ specialised personnel whose task it is to police gender issues, i.e. to enforce a whole range of privileges intended to protect women against the oppression and exploitation they are with certainty assumed to have to face from men in the absence of such guardianship.
The German gender equality officer reminds me of the Blockwart ("snoop") in olden days, whose task it was to ensure amongst other things that on a certain day of the week all Germans were eating a vegetarian dish, so as to save meat for the soldiers at the front. Or make sure that everyone had a portrait of Hitler on the wall and a neat Nazi flag on the birthday of ze Führer.
I never understood why female as well as male business owners should instigate against themselves a deteriorating profit-and-loss-situation by paying men substantially higher wages for a job than women available to do the same assignment equally well. I thought, "dirty capitalists" were supposed to exploit employees rather than themselves. I do understand, though, why mighty special interests would find it useful to present such a preposterous claim as sheer fact.
I know of no way to reduce the prospective enhancement from greater political power-seeking, but I do know ways to reduce the rewards to market-oriented capitalist competition.
And so, like the Flying Dutchman, recreated by light and water in the above image, the myth that women earn less money than men for the same type of work seems doomed to follow a course of eternal persistence in the disseminations of the media.
According to highly acclaimed career expert and best-selling author, Marty Nemko, "The data is clear that for the same work men and women are paid roughly the same. The media need to look beyond the claims of feminist organizations."
"This study leads to the unambiguous conclusion that the differences in the compensation of men and women are the result of a multitude of factors and that the raw wage gap should not be used as the basis to justify corrective action. Indeed, there may be nothing to correct. The differences in raw wages may be almost entirely the result of the individual choices being made by both male and female workers."
Rightly, in my opinion, Arnold Kling is unhappy with the mainstream
ultra-Keynesian treatments of the financial crisis and its aftermath,
all-purpose causal variable is a glut of savings and a dearth of government spending.
By contrast, he favours the explanation offered by Jeffrey Friedman and Wladimir Kraus in their book Engineering the Financial Crisis:
The Friedman-Kraus story is one in which regulators suffer from the socialist calculation problem. With risk-based capital regulations, regulators determined the relative prices of various investments for banks. The prices that regulators set for risk told banks to behave as if senior tranches from mortgage-backed securities were much safer than ordinary loans, including low-risk mortgage loans held by the bank. The banks in turn used these regulated prices to guide their decisions.
In 2001, the regulators outsourced the specific risk calculations to three rating agencies–Moody’s, S&P, and Fitch. This set off a wave of securitized mortgage finance based on calculations that proved to be wrong.
Friedman and Kraus challenge the basic mindset not only of DeLong but of 99 percent of all economists. That mindset is that the socialist calculation problem, if it matters at all, only matters for full-on socialists, not for regulators in an otherwise capitalist system. In the conventional view, regulators can fail for ideological reasons, or because they are manipulated by special interests. But Friedman and Kraus offer a different thesis. When information discovery is vital, regulators, like socialist planners, are doomed to fail because they are unable to mimic the market’s groping, evolutionary approach to learning.
Materially and economically, our culture is made possible by entrepreneurship, yet ideologically our culture is dominated by disdain or at least negligent regard for the entrepreneur.
Materially and economically, our culture is made possible by oil, yet ideologically our culture is dominated by disdain or at least negligent regard for oil - try and find an image in the Internet with a positive message concerning oil.
I am not sure which impresses me more, the enormity of the daring deception at hand, or the thrilling suspicion that our political order is remarkably good at having people let off steam by engaging in cheap talk, while the scapegoat - here the oil economy - is left alone in sufficient measure to do its job, despite its misrepresentation in the political discourse.
I suppose, by a lot of rent-seeking and other forms of political competition, it is possible to achieve in many vital areas of human survival a roughly workable equilibrium between figment and reality, even for extended periods of time.
It may well be that we are facing a precarious balance between the (widely unacknowledged) costs of ideology and the benefits of realism and reality, but humankind always depends on both, myths and facts.
Every culture is based on the most preposterous assumptions that will be gradually revealed in their delusion, and every culture survives only by avoiding too hard a bumping into the limits of reality.
Can it be possible that the marginal cost of producing oil was $110 per barrel in June 2014 and is only $50 per barrel in January 2015?
Here is how: in the first half of June 2014 oil consumption was very high relative to the then-existing world oil production capability. In addition, existing oil production capability is always declining as producing fields deplete. The marginal cost of a barrel of oil under such tight market conditions has to cover the capital cost of developing new resources as well as the operating costs.
Toward the end of 2014 additions to world oil production capability exceeded growth in consumption, meaning additions to production capability were no longer necessary, meaning the marginal cost of producing the last barrel of oil no longer needed to cover that capital cost. Sure, some oil company somewhere had to make the capital investment necessary to develop the resource, but most of those costs are sunk and competition in the market means they cannot make some consumer cover those costs. The market price under today’s looser market conditions only needs to cover the operating costs of production.
"Liberty as method" is a catchword that I have come to use in the course of my studies of liberty; it is meant to signify the fact that those conscious of liberty must compete with many other ideologies, and that to the extent that liberal pluralism admits of rival political views and policies, and their (relative) dominance in government and real life, liberty may still have a decisive role to play as a method of questioning and challenging these rival political beliefs, and thus still be a very influential part of reality, though not overly visible.
For example: to the extent that the classical liberal system of law is being honoured in everyday legal practice, liberty may be rather strongly enmeshed in the goings-on of our society, even though classical liberals may not be very prominent politically ("the paradox of freedom").
Yet, liberty is present as method - and in this way she may be a very important corrective and guarantor of "robust conditions of freedom" - which do not bring about an ideal world of freedom, but still one with substantial liberty in place. Freedom as method may also be an important early warning system, when society is deviating too strongly from the legal requirements ("robust conditions") of freedom.
In arguing this way, my concern is to encourage a more willing participation, intellectually and practically, of those conscious of liberty in politics and the state, so as to be able to advertise and defend freedom not only by denouncing politics and staying away from it, but by taking part in it, learning from it, discovering freedom and her conditions in it.