Bryan Caplan  

Sumner Gets Blockian

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Life Without Lies... More Evidence for Block...
Walter Block on measuring economic freedom:
[I]t has long been my experience that whenever any person reasonably but not fully sophisticated in economics sees the findings of these studies [of economic freedom], he invariably objects on the ground that his own country is rated far too highly.  My explanation for this phenomenon is that most moderately informed people know the situation in their own nation significantly better than for others.  They are thus intimately acquianted with the machinations of their own politicians, warts and all.  They think that if ever there was a country to which the honorific "economic freedom" does not apply, it is their own.  But they do not realize that other countries are in the same boat, and sometimes a far worse one.
Scott Sumner on measuring Adam Smith's support for economic freedom:

Mark Thoma recently linked to a Gavin Kennedy post that argued Adam Smith did not favor laissez-faire.  I don't agree.  The evidence cited was a one page list of government interventions that Smith favored.  The US, by contrast, has enough government interventions to fill a New York City phone book, if not a small library.  And the US is regarded by the Europeans as "unbridled capitalism."  Even Hong Kong intervenes in far more ways than Adam Smith contemplated.   Of course Smith was not an anarchist, he did favor some government intervention in the economy.  But relative to any real world economy, his policies views were extremely laissez-faire. 

I see this as a common cognitive bias.  The Gavin Kennedy list posted by Thoma certainly looks impressive, but when you think more deeply about the issue it is a trivial set of policies.   I'm reminded of what happens when I discuss Singapore, which usually ranks number two in the world in lists of economic freedom.  People will often respond by telling me about all the ways the Singapore government intervenes.  My response is "so what?"  They could intervene in a 1000 different ways and still be vastly more laissez-faire than the US government.  Laissez-faire is a relative concept, and always has been.  I've read The Wealth of Nations, and Adam Smith is clearly a pragmatic libertarian.


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COMMENTS (15 to date)
Contemplationist writes:

So what do you have to say about this, Bryan?

Daniel Kuehn writes:

I think part of the reason for this sort of response from Sumner is that people are talking past each other.

When libertarians criticize non-libertarians, they think non-libertarians are crazy about all these extra interventions that the U.S. does that Singapore might not do. Generally speaking, I don't think you have to be a libertarian to think that the U.S. intervenes excessively. Those regulations and interventions are there because special interests know how to get them, not because non-libertarians want them. Take a look at Arnold's recent post on "liberal elites" and you get the exact same misdiagnosis.

People who say they are not libertarian usually say that because they think of libertarians as unnecessarily dismissive of the state as an important social institution - and they're thinking about roles that Smith was talking about, roles that the Singaporean state plays, etc. etc. Libertarians point to Singapore and say "maybe it's a little more than I'd want, but that's what real freedom looks like". Non-libertarians look at a place like Singapore and say "that's what a good, responsible, intervening state would be like if it weren't dominated by special interests". They're largely talking past each other - it's like non-libertarians embrace all the numerous American interventions. Just because you don't like it doesn't mean that we do.

Daniel Kuehn writes:

I'd also note that what's important about Smith is that even in the relatively underdeveloped, largely agricultural economy of his day (which arguably requires less intervention), he recognized important principles of public goods, externalities, etc. He might not have explicitly advocated every intervention that modern non-libertarian economists advocate, but we would argue that he THINKS ABOUT state intervention in the same way that we think about it, and NOT the way that libertarians think about it.

Daniel Kuehn writes:

* it's NOT like non-libertarians embrace all American interventions.

Contemplationist writes:

Daniel

You may be correct in that most people don't either know/care/want those excessive interventions. However, the libertarian frustration against progressives is precisely because progressives rarely, if ever, spend an ounce of energy trying to find the myriad web of complex regulations which serve no purpose other than corporate welfare.

ryan yin writes:

Daniel Kuehn,
I'm a bit confused by your statement that Adam Smith "THINKS ABOUT state intervention in the same way that we think about it, and NOT the way that libertarians think about it", on grounds that he "recognized important principles of public goods, externalities, etc." If I heard someone I did not know arguing against a bunch of state interventions, and then allow for some interventions in cases of public good or externality (and only in some cases of those), I would think that person is probably a libertarian. I certainly wouldn't take any of that as evidence that the person was not a libertarian.

I would also say that I find many of the things on that list deeply unimpressive as evidence of non-libertarian sentiments. "Enforcement of contracts"? Police? Taxes and regulations specifically for the purpose of defense? These are standard fare of the "nightwatchman state." And "rights of farmers to send farm produce to the best market" and "free exportation of corn" (albeit except in case of famine)? Isn't that the definition of laissez faire?

liberty writes:

It is only the very moderate progressive that would try to claim Adam Smith is not laissez faire. Proud socialists (of many stripes) consider Smith the ultimate bourgeois laissez faire economist - the one who started the centuries long defense of the capitalist state.

Daniel Kuehn writes:

"If I heard someone I did not know arguing against a bunch of state interventions, and then allow for some interventions in cases of public good or externality (and only in some cases of those), I would think that person is probably a libertarian. I certainly wouldn't take any of that as evidence that the person was not a libertarian."

I suppose I just think the libertarian that takes public good and externality issues seriously is very rare. It's not incompatible with libertarianism, but it's deliberately minimized. Smith's presumption in favor of free trade, a limited state, and the market isn't something that only libertarians embrace. That's not really a "libertarian" idea - it's a classical liberal idea that a lot of people share. Are you under the impression that only libertarians get behind that facet of Smith? If you are then I guess we just agree to disagree on that one. I think it's another case of talking past each other that I think libertarians have really deluded themselves on - the idea that they're the only ones that have faith in the market.

I agree with your second paragraph that most of the list isn't especially distinguishing. It's the discussion of public goods and externalities that is what is really so impressive about Smith, not that he'd advocate public funds for a night watchman or contract enforcement.

It's also important to note the different conditions that Smith was writing in. If I lived in Smith's time I'm sure I would be more of a libertarian too. Context matters. What has always impressed me about Smith is the way he thinks through the issues, not necessarily the conclusions he reaches - which are obviously going to be context-specific.

Mark writes:

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ryan yin writes:

Daniel,
When I hear someone describe themselves as a "classical liberal", I am almost certain that they are a libertarian (though perhaps one who doesn't like the word "libertarian").

It is certainly true that libertarians don't think anything and everything is an externality or a public good, but I wonder who you've been talking to if you think that libertarians are in general against public goods and externalities. (This is true of some libertarians, of course. But then, almost no one thinks there should intervention in all cases of externality -- e.g., the externality caused by unrequited love.) In my experience, the people who are sticklers about "intervention in case of externality" are libertarians -- a non-libertarian will often abandon this position after much argument at all. That they don't necessarily agree with you about what constitutes an externality or a public good (or what's the best intervention in a specific case) doesn't mean they're not libertarians.

ajb writes:

I think the massive litmus tests that separate most modern day progressives from a hypothetical non-libertarian who worries about externalities center on redistribution explicitly for purposes of equalizing incomes and wealth rather than for funding classic public goods. Thus, progressive income taxes on the rich and large welfare for the poor -- NOT Adam Smith. Indeed, the progressive income tax was a central plank of the Communist Manifesto. (Many conservatives would support VERY minimal welfare handouts but not redefining "decent standard of living" to lower middle class levels). Indeed, although the military is a classic public good, most left liberals would prefer to cut the military drastically and to expand the welfare state further. Again, contra Smithians broadly speaking. (Of course, libertarians and anarchists tend to be anti-military as well).

And really, all this debate about Smith is just signalling. Of course, most liberals would never accept Smith's policies, they just point up his deviations from purity to embarrass libertarians.

ryan yin writes:

ajb,
Well put.

Billy writes:

I don't think Sumner is getting "Blockian." Sumner is just being Sumner. Saying that he is being Blockian is reminiscent of your "Hayek said the sky is blue" example.

Daniel Kuehn writes:

ryan -

RE: "That they don't necessarily agree with you about what constitutes an externality or a public good (or what's the best intervention in a specific case) doesn't mean they're not libertarians."

Certainly not - that's why I made sure to mention general impressions only. Externalities and public goods are not what defines a libertarian - nor is dedication to the free market, for that matter. Lots of people accept the logic of public goods and embrace the free market. Some consider themselves libertarian, some don't.

Honestly, now that I think about it I'm not sure what really differentiates a libertarian from others in the classical liberal tradition. I suppose primarily emphasis and self-identification. I think that's often how ideology works - people's actual thoughts are along a broad spectrum. Who they choose to affiliate with ideologically is informed by where they fall on that spectrum, but it's as much attributable to attitude and emphasis as anything else.

James writes:

Daniel Kuehn:

It's not that libertarians don't take public goods problems seriously. We just don't trust people in the government any more than we trust people outside of the government.

If I suggested that you let me withhold a fraction of your paycheck at my own discretion so that I could deal with climate change, protect you from foreign invasion and stabilize the financial system, you'd rightly be very skeptical of such a proposal no matter what you think about public goods and externalities. Libertarians are just people who react the same way whether the person proposing such an arrangement is a politician or not.

If any group seems to disregard public goods problems, it's people who so eagerly embrace political solutions to public goods problems. What non-libertarians nearly always miss is that increasing the power of government always introduces a new public goods problem: The people in the government may use that increased power in harmful ways. Anyone who expends the effort and resources to stop such abuses from happening bears the full cost of such efforts but receives only a tiny fraction of the benefit if they are successful. I've never observed any advocate for more government intervention actually address this.

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