Bryan Caplan  

Policy All the Way Down

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Ken Rogoff Interview... Except Seasteading...
Are policy reformers naive?  Both libertarians and public choice economists (and especially libertarian public choice economists) often say so:  "The policies we have are a rational response of political actors to the institutional incentives they face.  The only way to change policy is to change the institutional incentives."  Over at the Distributed Republic, Jason Lyles applies new labels to this old dispute:

Libertarian thinkers can be plotted on many axes. Presently, the axis I am most concerned with is Policy Libertarianism vs. Structural Libertarianism.

Policy Libertarians (PLs) include the vast majority of the most visible organizations and writers in the modern libertarian movement: the Reason Foundation, the Cato Institute, the Ron Paul campaign, the LP, the Constitution Party, most libertarian economists (e.g. Milton Friedman), and single-issue organizations like Students for a Sensible Drug Policy. PLs, as their name suggests, focus their energies on inventing and advocating a list of policies that governments should follow. For example, you can find policy libertarians opposing liberal eminent domain laws, fighting for lower taxes and deregulation, supporting cultural tolerance, opposing invasive police searches, and advocating the rest of the familiar libertarian manifesto.

Structural Libertarians (SLs) are much rarer in modern times than PLs, although the opposite used to be the case. Structural libertarians include Patri Friedman, Mencius Moldbug, David Friedman, Murray Rothbard, all libertarian Public Choice economists, Lysander Spooner, and the classical liberals that libertarians have adopted as intellectual ancestors. SLs often have the same moral and policy beliefs as PLs, but they focus their energies on the alternative ways to structure a government and the effect that government structure has on its incentive to adopt good policy.
At first glance, what Lyles calls the SLs seem a lot more realistic: To change policy, you've got to change institutions, right?  Unfortunately, institutions themselves are a kind of policy.  They arise because previous institutions create incentives for change, and endure because current institutions create incentives for stability.  Or as we economists like to say, "Institutions are endogenous."

Suppose, for example, that the SL advocates more federalism in order to get more libertarian policies.  Isn't this more "realistic" than advocating drug legalization?  Hardly.  The level of federalism is low and stable for a reason - when there was more federalism, political actors have incentives to reduce it; now that's low, political actors have little incentive to change it.  Alas, it's policy all the way down.

P.S. Even if I'm wrong about this, the SLs still need the PLs.  After all, unless the PLs are right that existing policies are bad, what's the point of working for structural change?


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TrackBack URL: http://econlog.econlib.org/mt/mt-tb.cgi/1303
The author at The Seasteading Institute Blog in a related article titled Structure and Policy, Reform and Blank Slates writes:
    I have mixed feelings about this, and I think I've found a distinction that makes things clearer: There are two contexts in which we can think about structure. [Tracked on January 8, 2009 2:23 AM]
COMMENTS (10 to date)
ThomasL writes:

Bryan,

A quick terminological question. By federalism are you using the traditional definition of federated government--in context, more state autonomy--or federalism in the modern sense of strong central government--ie, less state autonomy.

In context I take the traditional meaning, but I thought it was worth clarifying.

Zac writes:

So if federalism is low and stable, and changing it is just like changing other policy (doesn't change institutional incentives), wouldn't the people who advocate it fall into the category of PLs? I don't see how the distinction is meaningful so long as you can say government is policy all the way down, so I think this PL/SL distinction is a little flawed. There, I think, are two important distinctions within libertarianism:

1) Anarchism vs Minarchism. I think this is the real distinction Lyles wants to make, given he names 4 anarchists as examples of SLs and all the PLs and associated organizations are fairly mainstream, ideologically, in comparison. You can still phrase this in a PL/SL dichotomy, you just have to qualify it by saying that the only meaningful structural change is the abolition of government.

2) Consequentialist vs deontological libertarianism. You can be a consequentialist anarchist or a deontological mincharist or vice versa, but the approach to the argument is usually much different. I consider this to be the major bisection in libertarianism because it completely changes the nature of discussion.

cvd writes:

Is there any evidence that the PLs strategy is working? Have they ever actually meaningfully shrunk government?

To reverse Professor Caplan's final question: what's the point of working for policy changes if simply altering policies will never actually result in meaningful reduction in the size of government.

The PLs may get small wins here and there, but they have a 0% chance of winning the war. The SLs are the only ones who have any chance of stopping and reversing the ever-expanding state.

Troy Camplin writes:

Hey, what would you call someone like me, who is trying to change the world views of people by changing the culture itself through the arts and humanities? Superstructural libertarians?

Blackadder writes:

Is there any evidence that the PLs strategy is working? Have they ever actually meaningfully shrunk government?

Sure. Milton Friedman, for example, was instrumental in eliminating the draft. Charles Murray's work helped pave the way for Welfare Reform. The world over the last few decades has seen a lowering of many tariff barriers, deregulation, and privatization of industry, etc.

Structural libertarians, on the other hand, have little to nothing to show for their efforts.

cvd writes:

And eliminating the draft did what, exactly, to reduce the size and scope of government? Same with welfare reform.

We're still "at war." Entire industries are on welfare. Government, meanwhile, is bigger than ever.

Of course structural victories are much less likely. On the other hand, if a structuralist victory occurs, it will actually be a meaningful victory. Policy victories, like those you've cited, are mere speed bumps on the road to ever-larger government.

Jacob writes:

Zac,

Most structuralists are anarchists, but they don't have to be. Libertarian dictatorship is a perfectly valid libertarian structure, though in practice dictatorships tend to have pretty spectacular and ugly failure modes.

The "private city-states" model that Mencius and others use isn't strictly anarchic.

Maybe the bloggers here are right and a libertarian world ultimately depends on convincing enough people to appreciate libertarianism. However, we should still spend time thinking about what structure the government should have in a world full of libertarians to make that libertarian world last as long as possible. As Patri notes in his Dynamic Geography essay, the United States was founded by some pretty libertarian people, but constitutional democracy was an insufficient structure to maintain libertarian government for very long.


I am also interested in structures that provide incentive for the government to govern well. Most anarchists think private law providers fit this bill. The incentives of our current government seem confused and ad hoc. The bureaucracy has incentive to maintain and grow its size. The whole blob is highly irrational. It does a few things well, society is not collapsing, but it seems like there is a lot of waste and a lot of unjust infringement on personal freedom.

I am interested in sort of a radical, prescriptive version of Public Choice. I picked up a few books of articles presented at Public Choice conferences, and they seem to be mostly cutesy little mathematical models that fit the author's preconceived intuition about the current governmental system, which it takes as given. Perhaps I am just missing the good stuff.

I am confused, undereducated, and just following interesting thought paths. It is possible others have walked these trails before me, but they seem under-trodden.

pmp writes:

Bryan, you're wrong that it's "policy all the way down."

If I advocate expanding the House of Representatives from 435 to 1000, that's a structural change. Maybe it will have net statist effects, maybe it will have net libertarian effects.

Either way, it is not explicitly libertarian or statist prima facie.

Patri Friedman writes:

Bryan's point is correct to some degree, but shouldn't be taken too far. Sure, changing structure is a policy, and the same forces that make it hard to get good policies make it hard to change to good structures. But the fact remains that changing a policy and changing structure are two very different policy changes, with potentially very different effects. I think the distinction is meaningful.

Structural libertarians, on the other hand, have little to nothing to show for their efforts.

Think of PL and SL as different points on the risk/return tradeoff. SL is more of a long shot, but if it works, it will have a far greater effect. (as cvd said).

My problem with most SL is that proposals for implementing it are not just longshot, but impossible. My own proposal is difficult, but at least not impossible. In fact, my disillusionment with libertarianism, and my coming up with the idea of seasteading, is partly based on the idea that current, non-libertarian policy is obviously a robust equilibrium. I mean, things are the way they are for a reason. We have high taxes for a reason. Changing the structure of an existing system, as Bryan says, is a policy change.

Which is why we need a frontier and a fresh start.

Patri Friedman writes:

However, we should still spend time thinking about what structure the government should have in a world full of libertarians to make that libertarian world last as long as possible.

I think this is an important and oft-missed point. The economic analysis of law tells us that the mapping from laws to outcomes is highly complex. Given a set of libertarian outcomes, it is far from clear what laws to create. It is even farther from clear what set of institutions to create to get pretty good laws. See my dad's book _Machinery of Freedom_. There is no objective libertarian answer to the question "If someone steals $X from me, how much can I take back if I catch him?".

So even with unanimity on libertarian goals, we need to think about structures to meet those goals.

A similar issue comes up when thinking about seasteading. It is very important that seasteading is not just a way for me to create one libertarian country. Instead, it is a way to create many competing libertarian (and non-libertarian) countries. This is because not only are there many different goals people have for a society, but even for a given set of goals, no one knows what the best set of rules or institutions to bring about those goals is. We need experimentation to determine it empirically.

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