Statistics, Democracy, and Rights

Most policy arguments revolve around the use of statistics and conversation about how much better our future will be if we pass this law or that law. The conversation is almost always "Will banning guns make us more or less safe?" or "Will legalizing drugs turn more people into addicts?" but never "Do people have the right to ____ and if so, is it right to take ____ away?" Politicians are enamored with improving the world so long as the benefits outweigh the cost, and even this may be a little too generous of an assumption for the intentions of many. For the most part, people are okay with this process, and many people love it so much that they want to make it easier.

Most politicians are convinced that, if only they have enough power, they can shape the world into a better place. When they are in power politicians aggressively seek to expand their scope of influence in order to fulfill their anointed vision of the future. Their opponents do their best to slow down or prevent what they see as harmful legislation, and inevitably both sides cry foul against the other. Without fail, the majority party will complain that the minority is stopping progress mandated by the people, while the minority party will whine that majority is abusing their power. It does not matter which political party is in the majority or minority, these roles are bipartisan.

It is certainly ironic that both parties complain so bitterly about the behavior of the other, when it is no different than how they would act if the positions were reversed. Even if it is ironic it should not be surprising because that is the game politicians play when people worship the god of democracy. There is nothing particularly effective or ethical about democracy, it is simply majority rules when reduced to its simplest form. Nobody would voluntarily submit to living in such a society where their actions were governed by the whims of the majority, but somehow we have found ourselves in nearly that very position. By failing to adequately defend our liberty on the basis of inalienable rights, we now must prove our points based on utilitarianism and consequentialism. The necessity of these approaches signify that true believers in liberty have already lost the deontological, principled, argument for liberty. That is to say the principled argument for liberty has been largely conceded and liberty's defenders have largely been relegated to less than ideal statistical arguments.

Here lies the biggest threat to liberty, that many no longer believe in liberty as an inalienable right. Instead they view it as something nice, worth preserving, but only so long as it suits their vision of society. If people use their liberty in a way which does not please others those offended think they ought to be able to take it away. This idea is morally wrongheaded, it is this type of consequentialist ethics which inevitably leads to the systematic destruction of personal freedom. Accepting this unethical framework means that the ends always justify the means, and that people have the moral authority to exert power over other people if they see the consequences as positive. Perhaps the biggest flaws of political consequentialism is that it requires centralized decision making, which is impossible because of the decentralization of knowledge, and allows for only one vision for the future. In essence consequentialism, when applied politically, will destroy individual freedoms and never attain its desired results.


Despite this gloomy diagnosis of the state of our world, there is still much hope. As more and more people begin to realize that the government is giving them a raw deal they stop believing exclusively in utilitarian arguments. They stop believing because the results are never as good as the initial promises. People are beginning to realize that by forfeiting their rights to the legislature in search of safety and security they receive neither. Though it was through the use of statistics which many of our rights were taken away, the results speak for themselves, and statistics will be part of the damning evidence which helps us get our rights back. But statistics must not be relied upon completely when arguing on behalf of everyone's freedom, because our freedom does not come from statistics, they come from God, our humanity, nature or whatever else people may believe they originate from.

The next time you argue on the side of freedom, prove what a bad deal government is and back up your points with statistical and utilitarian arguments. But remember to never neglect the principled stance, remind people that our rights are not contingent on the latest statistics, opinions of the majority, or anything else. Our rights come from within ourselves, from nature, from our humanity, from God.

Misinterpreting Justice

State interventions are often ironically justified in the name of justice. In reality there are few things less just or merciful than the wealth redistributing efforts of the state and its initiation of violence against its citizens. The clamoring by progressives and so called conservatives for more government intervention is supposed to make our communities more just and merciful, but it simply isn't. The concept of social justice has distorted the true meaning of justice, based on individual action, and mercy and distorted it to a sweeping view of the necessity of intervention in the name of equality. What is merciful about having the state intervene in the affairs of your neighbor on your behalf and having their property distributed to whom you see fit? How can this approach be considered the most moral and merciful in our society today? These are questions I cannot answer on behalf of those who believe it, but I believe I can point out at least one source of their error.

Most confusion around the true meaning of justice and mercy comes from a misunderstanding of rights. Those in favor of restricting freedoms and redistributing wealth confuse illegitimate positive rights for legitimate negative rights. Despite their best wishes there is no right to health care, owning a home, cell phones, or other amenities. In what seems like a cruel twist of fate for those in favor of positive rights, attempting to guarantee access to essentials even as simple as food and water through government redistribution inevitably destroys the surplus of the commodity they saw as a fundamental human right. By attempting to enforce a positive right to a good or service, government actually makes the good more scarce by removing the productive market from the economy. 

Those in favor of negative rights understand that it is only by the guarantee of secure property rights that the very things which supporters of positive rights advocate came into existence. It is important to remember that the natural state of humanity has always been poverty. For around 6000 years even the richest kings did not enjoy the luxuries which many of us now find routine. The socialist, fascist, communist, or welfare state did not produce this level of prosperity. Those types of governments have destroyed and continue to destroy the prosperity which has been created by productive individuals exercising their liberty. 

Unfortunately the message of liberty will continue to be looked down upon by social justice types, until popular fallacies such as positive rights are dispelled for the myths that they are. This is why it is so important to spread the message of liberty in diverse ways to diverse people. It will certainly seem incomprehensible to many that the only way the win the war on poverty is to end the war on poverty, but the facts are clear and they are on our side.

    

Taking Liberty for Granted

With rumors of Obama intending to use an executive order to deal with gun control the pro gun lobby is in an uproar and for good reason. Not only would such an order chip away at the second amendment, it would also be a frightening display of executive power... or would it. 

With legislation such as the NDAA, which grants the president authority to place American citizens on a kill list, this potential flexing of executive muscle should not be all that surprising. Once we have conceded the authority to take away freedoms from groups of people to the government, it is only a matter of time until our freedoms are on the chopping block.

Pro-Gun Conservatives showcase their hypocrisy towards liberty with their stances on the Drug War, Gay Marriage, and many others. When conservatives advocate policies which restrict what substances you can use(drug war) or who you can enter into personal contract with(gay marriage), they should not be surprised when the other side presents legislation which limits what objects you can own(gun control) and what financial contracts you must have(health care). 

The point is this, all our freedoms are connected. Liberty takes many forms, not all of which we may approve of. But if we wish to preserve our own liberty we must crusade for the liberty of others. We cannot pick and choose which areas we want to be free in, rather it is of paramount importance that we campaign for the entire cause of liberty. The freedom to live our lives without government interference should not be taken for granted. 

Those interested in preserving their rights to own firearms would be wise to champion liberty in its entirety. This means fighting against tyranny in all its forms and restoring the rights of people to do things you might not agree with but aren't harming others. A voluntary society should be the goal of everyone, especially those currently protecting the second amendment, because it is the only way to guarantee the rights we all desire. 

Why Liberty? A Mostly Economic Perspective

I have put off this post over the last few days, as i mulled over how I wanted to structure my thoughts and what exactly I wanted to write about. After some internal deliberation I decided that, rather than try and writing a long, thorough, and likely boring post, I would produce several short "Why Liberty?" pieces. I will write these as I feel inspired and right now I am inspired to consider liberty from a mostly economic perspective.

Why Liberty?

Economics teaches several lessons about the importance of liberty. Liberty, in the form of voluntary exchange and property rights, is the core of a working economy. An economy can only exist so far as individuals have the liberty to enter into voluntary exchange with one another. The more liberty is taken away from people the smaller the productive economy will be forced to be, the same goes for taxation as it is always a burden on the voluntary economy.

Liberty allows us to take advantage of our individual strengths and skills by specializing in an area where we have a comparative advantage. Liberty also enable us to pursue the areas which we most enjoy. So long as others are willing to reimburse us for our labor we can pursue any profession we please. Only a productive voluntary economy can sustain the massive entertainment and art industries to which we have become accustomed.

The price system is also a result of individual liberty and voluntary exchange. The price system is the fascinating mechanism that allows us to compare the values of billions of different products simultaneously. In the absence of liberty the price system can no longer share all the information which individuals need to make economic decisions. Wage and price controls distort the signals of a price system and inevitably cause distortions in an economy. These distortions direct funds into areas of the economy which are not sustainable, inevitably leading to unemployment, boom and bust cycles, and malinvestment which must eventually be liquidated. The current economic crisis is the result of the manipulation of interest rates, which communicate the time-preference of money in an economy,  and other economic interventions which distort the price system. 

Liberty is the cure our economy needs. The economic restructuring necessary after a period of price system distortion can only be accomplished by allowing the price system to resume functioning freely. The tragedy of this economic restructuring is not that some people will inevitably lose their jobs and see losses in their investment portfolios. The tragedy is that the economy was distorted in the first place and that politicians insist on making the day of reckoning even worse, by stealing away more and more liberty. The alternative to allowing liberty to resume is to continue to live in a distorted, lethargic, and unsustainable economy.  

We would be wise to choose liberty!

The Knowledge Problem: Foundational Economic Theory Part 2

Part 2...

Paul Krugman is the veritable face of modern scientistic, as Hayek would say, economics. His mathematical approach to economic study has drawn great praise and criticism throughout the economic community. He was the winner of the 2009 Nobel Prize in Economics for his contribution of statistical models related to New Trade Theory and New Economic Geography. Krugman and I have something in common, we both have a love for Science Fiction and our favorite book series is Foundation by Isaac Asimov.

Isaac Asimov

In the Foundation series, Asimov introduces the science of psychohistory, which is capable of predicting the actions of large aggregates of human beings long into the future. Psychohistory closely resembles the same type of thinking displayed by central economic planners around the world today and throughout modern history. Krugman had this to say about Foundation and psychohistorians when interviewed about his love for Science Fiction 

“I read Foundation, back when I was in high school, when I was a teenager, and thought about the psychohistorians, who save galactic civilization through their understanding of the laws of society, and I said ‘I want to be one of those guys.’ And economics was as close as I could get.” 

Krugman's infatuation with psychohistory reflects his economic outlook on the ability to control and predict mass action through mathematical calculation and policy implementation. The psychohistorical approach to human action holds that as populations increase the calculation and manipulation of aggregate human action becomes easier, which conflicts directly with Hayek's notion of the decentralization of knowledge.

Ben Bernanke, the Chairman of the Federal Reserve, is considered to be one of the world's top scholars on the Great Depression. As a student of monetary policy he has devoted much of his life to understanding the working of an economy and the way monetary policy influences the business cycle. As one of his generation's top students of the Great Depression few could have asked for a better man to be in charge of the United States monetary system during the recent financial crisis. But despite his lauded expertise of the Great Depression Bernanke was completely unable to anticipate, prevent, or cure the Great Recession with any effectiveness. 

What was to blame for Bernanke's failure to deal effectively with the Great Recession? He is certainly a very smart and knowledgeable person of both monetary theory and history, so that should not be blamed. It was not the facts which caused him to blunder so badly, we are all presented with the same reality, rather it was his faulty methodology and misunderstanding of the the discipline of economics which doomed him. There were those, who are not considered the foremost scholars on the Great Depression, who predicted the collapse of the housing market and resulting recession. Are these individuals smarter or more gifted than Bernanke? Did they know some secret information which Bernanke didn't? The answer to both of those questions is simply 'No', the difference is they operated from a different methodological framework. Their framework gave them the insight to understand that the impact of monetary manipulation by the Federal Reserve and economic policies by the Federal Government create artificial bubbles in the economy. Those who predicted the collapse of the housing bubble were playing the game the right way, and they properly understand the impossibility of manipulating an economy. 

Austrian Business Cycle Theory follows praxeological methods to determine that economic manipulation is unsustainable because the behavior induced by the policies is artificial. This artificial behavior cannot be sustained long term because it requires ever increasing subsidy to maintain. When the subsidy is inevitably no longer big enough to prop up the artificial boom in the economy it must correct and resume its natural form. The Austrian method does not come to this conclusion by looking at data but rather through a method of logical deduction. By following necessarily, A Priori, true steps the resulting theory must inevitably be true.

The fault within scientistic methods of economics is that neglect the humanity of the subject which they attempt to quantify. By treating human beings as nothing more than particles they ruin their entire perspective. Unlike phenomena from the physical world human beings are motivated internally. That means that each human being acts in accordance to his own set of values, and because each person is different every person acts based on different values. Adam Smith criticized the view of human beings as economic subjects in an excerpt from his book The Theory of Moral Sentiments, referred to as The Man of System. Smith contrasts and even spells out the consequence of such economic manipulation. Of the Man of System he writes:

He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might choose to impress upon it. If those two principles coincide and act in the same direction, the game of human society will go on easily and harmoniously, and is very likely to be happy and successful. If they are opposite or different, the game will go on miserably, and the society must be at all times in the highest degree of disorder.

The Knowledge Problem: Foundational Economic Theory Part 1

This first blog entry is excerpted from my Senior Humanities Thesis at Warner Pacific College. The purpose of this post is to share the foundational economic theory upon which Realizing Liberty will be written. This post is Part 1 of 2, which will share my thoughts on the nature of economics and the current conflict within the discipline. It is based on this perspective that I will offer my commentary on the social, economic, political, religious, and other issues of today.

Economics is a social science which studies how humans deal with scarcity. Economists wish to understand how people act in response to having more wants than they have the faculty to satisfy. They do this by analyzing the production, distribution, and consumption of goods and services within an economy. Economists attempt to understand how it is that people economize their resources to satisfy their wants and needs. Some economists attempt to understand behavior on a macro-economic level, using statistics of aggregate data to explain the functioning of an economy. Other economists employ a micro-economic approach, focused on understanding and explaining the ways in which individuals make economic decisions.

Today, economists face very much the same fork in the road which anthropologists and other social scientists have had to choose between in the past. The question boils down to the very nature of the economic science and the methodology which should accompany it. Is economics a hard or a soft science? Does data reveal economic models or are economics laws self evident? Is economics an inductive or deductive discipline? How an economist answers these questions will inevitably reveal the style of economics they prefer and how they interpret the dual roles of knowledge and ignorance within the discipline.

According to the Mises Institute:

"The economist should not mimic the behavior of the natural scientists, because the social sciences involve human beings. Human action is characterized by intentional behavior, which involves the rational use of means to achieve desired ends. The very subject matter of economics—capital goods, money, wage rates, etc.—is not defined by physical or chemical properties, but instead by the mental or subjective attitudes that human minds take toward these things. Consequently, the proper method for an economist is to start with self-evident axioms—such as that people try to achieve the highest satisfaction at the lowest cost—and logically deduce conclusions from them.”

This perspective contrast with the alternative presented by the Mises Institute:

"Like the physicist, the economist (if he wants to be scientific) should construct a precise model that yields quantitative predictions about economic variables, such as GDP and unemployment. Then the economist should test those predictions against the actual data as collected by statistical researchers. At any given time, the best explanation or "theory" of a certain economic phenomenon is that model which yields the best fit between predictions and actual data."

The implications of these two different methodological approaches are distinct and important. Within the first approach economics is bound by certain self evident laws which cannot be proven or disproved by empirical study, Immanuel Kant referred to such laws as Synthetic A Priori. By the second approach economic laws do exist but not in the same way, rather theory and models which most closely resemble reality are counted as valuable economic tools and used to explain human behavior. The micro perspective of the first approach contrasts with the macro approach of the second.

Ludwig Von Mises

The limits of economic calculation has been debated most notably by Friedrich Hayek, the winner of the 1974 Nobel Memorial Prize in Economics. Hayek's approach to the field of economics was radically different from the one implemented by those which he so often debated. Hayek's basic premise was that the economic policies advocated by the 'scientistic' economists were an impossibility because they did not and could not possess the necessary knowledge necessary to implement their plans. According to Hayek, “The curious task of economics, is to teach men how little they know about that which they imagine they can design.” By Hayek's perspective, his opponents were attempting things far beyond the limits of their knowledge. The complexity of the economic system precludes complete understanding and the planning which could accompany it.

If the economic system is so complex, how then are largely ignorant individuals better equipped to make economic decisions? The simple answer is through price system. The issue of the economic calculation problem was first addressed by Hayek's mentor Ludwig Von Mises in 1920, in his article “Economic Calculation in the Socialist Commonwealth”. Mises points out that a working price system is necessary for the efficient allocation of the capital goods, and that when centrally planned a economy will lack this necessary element. The economic calculation problem is that those in charge do not and cannot possess the knowledge necessary to produce and distribute goods efficiently. Only a decentralized price system based on private property and free exchange can determine the proper allocation of economic capital. Because economic value is subjective to each actor in an economy there is no way of anticipating what should be produced, at what cost, and in what quantity. Economic planners encounter the limits of the science of economics when they attempt to control the production and distribution of goods and services. This scientistic approach, according to Hayek, is The Pretence of Knowledge. The reality of the nature of economic is that no statistical model even with the most advanced mathematical calculus being ran by the most powerful super computer can substitute for the knowledge produced by a functioning price system.

Figure 1.0

More recently, Thomas Sowell has illustrated the historical reality of the economic calculation problem in his book Basic Economics. He gives the specific example of the how in 1913 Russia was an exporter of produce, but once the economy became centrally planned was forced to import large amounts of food to prevent starvation. This happened despite lands which were so fertile that Hitler wanted to bring the raw soil all the way to Germany during World War II. Sowell also critiques the results of central planning in his book Vision of the Anointed. Sowell makes the case that the effect of central economic policies is impossible to predict and often contradicts the intended consequences. Leaders who believe themselves anointed to solve the worlds problems suffer from a fatal ignorance of what the actual effect of their policies will be. This reality was recently illustrated in regards to the American Recovery and Reinvestment Act, passed in 2009, and the claimed unemployment figures with and without the plan compared to reality (Figure 1.0).

Continued in Part 2...