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Digging Out the Fundamental Difference

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Arnold writes:


I think it's fair to say that one has to believe either one of the following statements:

1. The U.S. political system is fundamentally different from the Soviet system; or

2. The U.S. political system is only superficially different from the Soviet system.

Bryan sounds like he is arguing for (2). In that case, he ought to be aware of the difficult hole he is digging himself into.

Let me dig myself out. Of course they are fundamentally different. Communist regimes murdered millions of their own people, and starved far more to death, and the U.S. government did not. That's fundamental. Nevertheless, my claim is that Arnold does not correctly identify the reason why the U.S. and Soviet governments acted so differently.

So what is it? Put simply: The people who set U.S. policy are not Communists, and the people who set Soviet policy were. But why aren't leading U.S. politicians Communists? Because the U.S. is a democracy AND most American voters are not Communists. If the median American voter were a Communist, we would have had Stalinist famines and purges by popular demand.

Arnold and I got onto this subject because he said that you need government to prevent rule by warlords, and I objected that government is rule by warlords.

This does not mean that all warlords are equally bad. But statements like "To break a warlord equilibrium, you need government" only confuse us. In contrast, once you recognize all governments as warlords, you can focus on the deeper questions: Why are some warlords so much better than others? How is this stable? And if you can predictably elicit good behavior from a monopoly, why couldn't competition do as well or better?


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COMMENTS (19 to date)
KenF writes:

This is mere idle speculation. A thought experiment. There is no fire behind it, not even a hint of a call for anarchic revolution. We might as well be discussing the sociopolitical structure of Middle Earth. Oh well. Merry Christmas!

daveg writes:

Why are some war lords so much better than others?

If the war lord leads by force then it is only the decision making ability of that warlord, including his ability to motivate and lead his subjects, which makes him better or worse than any other warlord. Singapore vs. Mozambique.

If the country is a democracy, however, the goodness of the “warlord” depends on the ability of the collective people to make decisions, which is a bit scary. And if this is the case should we not be very careful who we let in as we will be bound by and live under their decision making, no?

I have another way to view a country that might be less "offensive" to some of the people in this blog. A country is a contract - a contract made by many parties. We all agree to be bound by the rules of the contract. We don't hate other people who have different contracts, but we prefer to live under our contract.

Inevitable one contract will turn out to be more productive than another contract. Nothing surprising there. When this occurs, however, you should not allow other to "break" their old contract and join the new contract. That is like taking the profit away from the person who negotiates a favorable contract, which creates many bad incentives.

The correct response is for other countries to modify their contract to reflect the more profitable model. That keeps the incentive for people to improve their “national contract”.

Wanting to preserve and live under your countries contract is not about hate or dislike of different people. It is just the desire to keep the fruits of a well designed contract. No one on this blog should have a problem with that. I mean this is a economics blog, isn’t it?

daveg writes:

BTW, why isn't all the econmic activity being created by the illegal immigrants in AZ creating additional tax revenue to cover the costs of educating the non-english speakers?

Illegal entry blamed for English fines

By Paul Davenport

THE ASSOCIATED PRESS

Tucson, Arizona | Published: 12.20.2005

PHOENIX — Republican officeholders critical of a federal judge's decision to fine the state heavily if it doesn't improve programs for students learning English are pointing a finger of blame at illegal immigration.

The judge's order in a 13-year-old lawsuit would impose daily fines starting at $500,000 and rising to $2 million on the state if the Legislature fails to adequately fund programs for an estimated 160,000 children attending Arizona public schools.

Arizona has become the busiest entry point on the southern border for illegal immigrants, and concerns related to illegal immigration are being increasingly voiced in connection with public-policy issues ranging from health care to identity theft.

Meanwhile, candidates from both major parties have identified illegal immigration as a leading issue in 2006 statewide races in Arizona.

Several key state officials reacted to U.S. District Judge Raner C. Collins' order by saying they'll work to improve the programs but also by declaring that it shouldn't be forgotten that illegal immigration — while not a primary legal issue in the school-funding case itself — is a root cause of the problem facing the state.
"There's a legitimacy to the argument that if people had not broken the law to get into our country that the taxpayers of our state wouldn't be having to absorb the financial burden of trying to educate those children," said Senate President Ken Bennett, R-Prescott.

But AZ should have a huge budget surplus due to all the tax revenue being generated by the economic adtivity of these hard working immigrant who come here to work and not consume public resources and benefits, no?

What is going on here?

I don't blame the immigrants. I blame the companies for creating this "externiality." The owners and managers should go to jail.

Link

Barkley Rosser writes:

I think one way to parse the debate between you two guys (Arnold and Bryan) is to keep in mind the substantial change that happened in the USSR when Stalin died. Stalin was a paranoid dictator who murdered millions. His successors were responsible for the deaths of some thousands in some countries, but after they offed Beria, there were no more mass murders within the Soviet Union. There was political oppression, and dissidents got put in jail, but politics came to be more normalized.

Heck, although it was not multi-party popular democracy, it should be kept in mind that leaders were actually elected by committees or bodies beneath them. Gorbachev was elected Chairman of the Politburo by a vote of 4-3, with Gromyko putting him over his more traditionalist rival, Moscow mayor, Victor Grishin.

James writes:

Mention Somalia to an ancap and you get honest recognition that this is a possible consequence of anarchy, but one that we see as acceptable since it's not much worse than governments in the surrounding regions, and in our opinion not terribly likely. But mention a bad government to a minarchist and the response is "Well, that government is different..."

The real touble is that Arnold wants to argue for the state based on the evidence that the US government, right this minute, is better than a worst case version of anarchy. Sure it is, but this doesn't prove the pro-state conslusion.

Defining government as the set of attributes (such as institutional arrangements, rule of law, stability...) that you happen to like about some cherry-picked sample governments and comparing that to anarchy that you define as what you fear would happen under anarchy doesn't really prove the pro-state case. It just shows that government, version X is better than anarchy, version Y. Does Arnold not realize that once people submit to a government, that government no longer has to conform to their version of an ideal government? It can become as bad as all of the governments that they ruled out of their cherry-picked sample.

Better is to look at the range of possible acts that people can do to people and decide which are better and which are worse. Then look at what kind of arrangements make those acts more likely to happen. For example, under what arrangements are people more likely to have their things taken from them, or forced to live according to others' edicts, or killed? Sure, those things could happen under nearly any arrangement, but they happen favor more frequently when people are dealing with a state than otherwise.

Dan Landau writes:

The whole discussion is based on the mistake of looking at political outcomes as if they were determined by the same rules and constraints as economic decision making. This is false.

If there is not a monopoly government, political questions are settled by violence. Negotiations only take place within the constraints imposed by relative capabilities for violence. There will be negotiations only if both sides believe the cost of fighting would exceed the benefits.

In violent conflicts, ceteris paribus, there are enormous economies of scale. Thus the tendency toward geographic monopoly is very strong. This is a good thing because competing “governments” would produce instability of taxes, regulations, and property rights. This makes any investment in fixed capital very risky.

This was Hobbes’ point, monopoly government is better than competitive “governments.”

James writes:

Dan,

The tradeoff is that with monopoly government, you get no exit option if the monopolist creates worse circumstances than would exist under a multitude of competing governments. I don't believe this treadeoff is worth the cost. If I did, I'd be in favor of a world government. Otherwise, I'd be guity of an inconsistency.

Brian -- Let's assume that Arnold agrees with you that the U.S. government is not qualitatively different from rule by enlightened warlords. What then? As a practical matter, how would a PPA (private protection agency) protect me from the U.S. government? How many clients to you think a PPA would need to have? How much of a premium would it need to charge?

James writes:

Christopher Rasch,

I can't speak for Bryan, but here goes.

Asking "...how would a PPA protect me from the US government?" is like asking how people will eat when the government isn't running the agriculture and food services industries. There won't be one single centrally planned model. One way of protecting you from the US government is to convince the state that it really should leave you alone for moral, practical or public relations related reasons. In all criminal cases and tax cases, the specific purpose of the defense team is defend people from the government in just this way. Another way of protecting you from the US government is to insure you against predatory seizures through the legal system. Companies exist even in the here and now that provide such forms of insurance against legal damages. Yet another way of protecting yourself from the state is to keep your assets in accounts that the US government can't mess with. Such "offshore" accounts also exist even now and are known to be effective for keeping the US government from getting into people's belongings. That I only include these examples of possible ways of being protected from the state is not to imply that no others exist. So some level of protection from the state isn't impossible or unaffordable.

But I suspect you want to hear that PPAs just aren't tough enough to fend off the state, insure you against damages or whisk you off to safety if the state really decides to come after you. I'm really not sure, but suppose that PPAs can't realistically protect you against a sufficiently determined government due to the fact that governments are just too good at hurting people. So what? Is this an argument in favor of governments?

I'll say this another way. If there is some flaw common to both anarchy and state, then that flaw is not a reason to favor one or the other. Well, if PPAs can provide an adequate defense against an organization with more than 250 million supporters, then the relevant question is who can do it at a lower cost, the state or the PPA. Since the PPA doesn't have to pay for Medicare benefits and unnecessary foreign adventures, I'm quite sure it can do the job more cheaply.

If PPAs can't provide an adequate defense against an organization with more than 250 million supporters, then the question to ask is whether or not the state can and will do so and how much it will cost. We get a glimpse of the answer from how little the US government did to protect the Americans whose heads got cut off by a comparatively small band of terrorists not long ago. So if the inability or unwillingness to defend against a determined enemy is a mark against PPAs, then it is every bit as much a mark against the state.

Edgardo writes:

Take a look at Konrad & Skaperdas, "The Market for Protection and the Origin of the State", CESifo 1578, October 2005.

paul writes:

I think the fundamental difference is whether or not one can reasonably justify a “monopoly on retaliatory force.” I am tired of the assertions made by “limited government advocates” that for some reason the institutions that provide law and enforcement are special, different and should be exempt from voluntary choice (market forces). Why wouldn’t people tend toward an equilibrium state of protection agencies just like they do in all other goods and services that people provide? In fact we see nations that tend to respect property and individual rights cooperating with other nations. Those nations that don’t are less likely to cooperate.

Brian is right Arnold is not right.

Roger M writes:

Bryan writes If the median American voter were a Communist, we would have had Stalinist famines and purges by popular demand. I disagree completely. The writers of the US Constitution intended the checks and balances, distribution of power, etc., to protect the country from the dictatorship of the majority and protect minority rights. Should a Stalin get elected President, I would expect the US military to fulfill its oath to protect the Constitution by removing the man from office. In addition, you have the State National Guards who would defend their citizens.

Tom Anger writes:

"Government is rule by warlords." Well, you can call it that, if you like, but government is a more stable alternative to the clash of warlords. Moreover, as Bryan admits, not all "warlord" governments are the same. Why, for example, is the American government more benign than a communist dictatorship? Bryan thinks it's because the median voter in the U.S. happens not to be a communist. That's not it at all. The reason is simple: Our founding "warlords" set up some rules that, initially and for a long time, prevented America from becoming a dictatorship, communist or otherwise. With the erosion of those rules over the past 70 years we have become a quasi-socialist administrative commisariat.

Rafal Smigrodzki writes:

Bryan asks:

"Why are some war lords so much better than others?"

I offer a simple answer: Because their subjects are better. That is, better at resisting force, less gullible, less fixated on short term winning, more honest, cooperative, educated, and last but not least, less envious of their more successful fellows.

Conversely, bad warlords emerge where the populace is fearful, greedy, chauvinistic, violent, and perhaps most importantly, envious.

Over long periods of time the latter populations can under the right circumstances evolve into the former, and in a virtuous cycle, some of their warlords evolve into statesmen, while institutions spring into being to (hopefully) prevent backsliding.

Which is why I'd like to ask the question:

What is needed to educate statist citizenry to become anarcho-capitalists?

Rafal

Deb McAdams writes:

One warlord is better than a lot of warlords because a lot of warlords fight each other.

A leviathon may replace many warlords with one warlord, and that warlord may be bad, but it still ends the wars.

Once you've ended the wars, you can start talking about the best way to ensure that your leviathon is a good as opposed to a bad warlord.

Chris Bolts writes:

I don't blame the immigrants. I blame the companies for creating this "externiality." The owners and managers should go to jail.

And who's to say that the AZ government is not recording the tax revenues paid by the businesses because it knows that the taxes paid by illegals will either be underreported, overreported, or not reported at all and instead is keeping the revenues for themselves? It's sounds like a conspiracy theory, but you raise a good point in your post. If we have all of these taxpaying citizens coming to AZ, then where is all of the tax revenues going? All of the aforementioned situations can create opportunities where the government robs its citizens of desparately needed revenues to help fund English education (even if the students are the children of illegals, the students themselves should not bear the burden of their lawbreaking parents and should be given the same benefit as those children who came here legally). I don't believe that a judge knows the exact amount it would take to properly teach a child English, but as long as the court has mandated the state government to pay it should pay.

As for the Bryan-Arnold debate, I think Arnold's other post with the World Bank Study includes some important facets as to what makes certain governments more effective than others. And while Bryan's warlord/government link is intriguing, it leads to some much deeper and complex philosophical questions: are human beings inherently prone to go to war? If so, is the only way that we can organize ourselves as a species is to beat another race of individuals and have them submit to our form of government? If the only way we can achieve the results in the second question by reverting to our behavior in the first question, can human beings ever truly achieve peace? Or, is it that in order for us to attain a faux peace we will appoint certain warlords who at least share our values and does not want to upset the status quo, but when it is, we will allow the warlord to act swiftly to keep the faux peace?

Half Sigma writes:

A lot of "leaders" on the left are communists with a small "c." Justice Brennan was clearly a communist, just read his opinions.

James -- Thanks! I agree with you that we can't predict exactly how PPA's, should they come to be the dominant providers of security services, will behave. But I'm concerned that Brian is committing the fallacy that many statists commit, which is to compare the current imperfect, but real, government to idealized PPA's. Compared to idealized PPA's, of course, the government comes off lacking. But real PPA's are likely to have problems of their own, perhaps problems as bad as current governments.

That's why I'm trying to get him to define in greater detail how he thinks PPA's will work, to put numbers on his claims. Brian claims that PPA's can provide government services at a lower cost. How much lower? Brian's guesses are almost certain to be off the mark somewhat (perhaps a lot), but I think trying to come up with a reasonable model for how much a PPA might cost is likely to be more fruitful than definitional arguments about whether the U.S. is ruled by warlords or not.

Note that I'm sympathetic to PPA's. I would love to be able to buy the services of PPA's that could reasonably protect me from the U.S. government and other parasites. The market for such services seems quite thin at the moment, however, and I'd like to see more discussion about the practical problems about starting such services in the current environment.

Edgardo -- Thanks for the link! Looks fascinating.

rakehell writes:

“If the median American voter were a Communist, we would have had Stalinist famines and purges by popular demand.”

But weren’t the worst famines and purges directed against minority ethnic groups such as the Ukrainians and Jews? The Constitution, ala the Fourteenth Amendment theoretically ought to protect against such abuses, even if the median voter was a Communist.

As for PPAs, I have to concur with Dan and Rafel. I thought this issue was settled when people discussed how mercenaries make for poor soldiers. People have an identity with place and are willing to hazard their lives to defend it. Thus is born the territorial state.

PPAs are not normal business organizations, but rather grifters in a confidence game. Every rational actor will break their contract to provide mercenary services if the shots start landing too close. Only a mark would hire one with the belief that he is going to get real security.

Think also how civilian control of the military has long been an issue for weak states, e.g. states divided along ethnic or clan lines. Money can’t buy off people who have the military power to take what they want and no other loyalties constraining them.

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