David Friedman: A Consequentialist Theory of Anarcho-Capitalism (1h47m)

This episode features a lecture by economics professor David Friedman from 2013. He looks at anarcho-capitalist political theory from its consequences in the economy and to society. Purchase books by David Friedman on Amazon here.

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Controlled Choice Isn’t School Choice

I recently heard the term “libertarian paternalism.” It was presented in an article about health care, specifically doctor-patient relationships, as a strategy for helping patients choose among the various best options the doctor recommends. There were many good points in this article about personalizing medicine, but that term made me cringe. Taken literally, “libertarian paternalism” means the free will to select among the choices that some authority figure determines is in your best interest. I don’t like this term, mainly because it’s an oxymoron. The dictionary definition of “libertarian” is a person who believes in the doctrine of free will. To add a caveat that limits free will to options chosen by some allegedly omniscient actor rubs me the wrong way. And yet, we see this contradictory and demeaning idea enacted in many areas of life, especially education.

The comparable term in education is “controlled choice,” or the idea that someone will pre-select among the best options and then allow an end-user (e.g., a student or a family) to choose from among those established options. At the student level, controlled choice might look like a teacher announcing a unit on US presidents and then letting the learner pick which one to research. Central planning, even when seemingly well-thought-out and with good intentions, ultimately restricts free will.Or it could look like a lesson on mammals in which a teacher allows the child to pick the elephant group, the bat group, or the whale group. In this environment, the teacher (or curriculum developer) decides what the child will learn but allows the child some discretion. It’s a lot like reading a choose-your-own-ending book: It can make the story more enjoyable, but only if you are interested in the overall theme. We can contrast controlled choice at the learner level with self-directed education in which the child is fully in control of what, how, when, and with whom she learns.

At the macro level, controlled choice manifests in policies that allow families some degree of choice over their assigned district school, as long as it meets a district’s overall enrollment distribution goals. My city, Cambridge, Massachusetts, was one of the first to enact this type of controlled choice program in 1981 as a way to let families choose among the city’s various public elementary schools through a ranking system, as long as each school met its preferred socioeconomic distribution quota. The goal was economic integration and improved academic performance, particularly for disadvantaged students, while retaining some choice beyond a zipcode school assignment.

Controlled Choice Programs Results

But new research reveals that controlled choice programs in many urban districts have not achieved their intended goals of socioeconomic integration or the narrowing of achievement gaps between high- and low-income students. An in-depth analysis by David Armor of the Cato Institute finds that not only were intended goals not reached but also that unintended consequences, including “white flight,” were widespread in controlled choice districts. Armor concludes:

Most larger school districts that have implemented controlled-choice plans have experienced (or are experiencing) demographic changes like those experienced during race-based busing, meaning the loss (or “flight”) of white and middle-class families. Moreover, there is ample evidence that economic diversity is not producing academic benefits for poor children in these districts. In other words, controlled choice can bring much pain and controversy for little or no educational gains, at least as measured by test scores.

Central planning, even when seemingly well-thought-out and with good intentions, ultimately restricts free will. Concerned that when given real freedom individuals will make the wrong choice, those with power often seek to limit—or control—choice. It is true that freedom means the freedom to make bad choices, but that isn’t a compelling reason to curb one’s freedom to choose. It’s also important to note that what constitutes a “bad choice” is subjective. Individual freedom means toleration of individual choices. As the Nobel prize-winning economist F.A. Hayek wrote in The Constitution of Liberty:

What is im­portant is not what freedom I per­sonally would like to exercise but what freedom some person may need in order to do things bene­ficial to society. This freedom we can assure to the unknown person only by giving it to all.

Hayek goes on to say that the essence of real freedom is humility. He wrote:

All political theories assume, of course, that most individuals are very ignorant. Those who plead for liberty differ from the rest in that they include among the ignorant themselves as well as the wisest.

Controlled choice, libertarian paternalism, or any number of similarly discrepant terms suggest that appointed wise ones should have the power and influence to coerce others through policy or decree. Those of us who truly believe in the doctrine of free will should recoil at attempts to add qualifiers to its promise.

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The Gods Whose Sacrifices We Neglect

The old gods have a lot to teach us.

Sure, we all know that the Greek pantheon – Zeus, Hera, Aphrodite, Hades, Ares, Athena, Artemis, Demeter, Dionysus, and the rest – don’t *really* exist.

But there is a reason people chose these characters to personify their understanding of the world. As psychologist Jordan Peterson points out, each god (in all of his or her power and pettiness) represents some of the fundamental human drives or attributes – sex, intelligence, wrath, independence.

The old Greek pantheon is a sophisticated way for understanding the complex human mind, which is home to many powerful needs and drives that sometimes act like personalities.

Like the gods of legend, these “gods” of our personality don’t like people who spurn them. And it doesn’t take a long look into Greek mythology to know that the gods do awful things to people they don’t like. Afflictions of madness, afflictions of lust, transformation into animals – it’s not pretty.

Aren’t fighting for your rights, your ideas, or your self-respect? You are neglecting Ares (the god of war) and he will exact his sacrifice someway. Usually this will look like a gradual building resentment, with an explosion of anger toward someone who doesn’t deserve it at a time it’s not called for.

Aren’t honoring or expressing your own sexuality? You may be offending Aphrodite (who brought about the downfall of Heracles – so not someone to be messed with). She’ll have her due, in uncontrolled, warped, or frustrated desire.

Aren’t preserving your independence and purity? Giving in to the crowd? Surrendering what makes you unique? In a sense you are offending the virgin goddess Artemis, who is perhaps the scariest of them all (she’ll turn you into a stag and have your own hounds kill you).

It’s all imagination, I know. But I still find it interesting to think of my own drives or needs as personalities. With personalities, at least we can bargain. We can make the sacrifices that all good Greeks knew to make. And we can remember that neglecting any of the gods has terrible consequences.

Originally published at JamesWalpole.com.

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Christopher Coyne: Why Humanitarian Action Fails (46m)

This episode features a lecture by economics professor Christopher Coyne from 2014. He discusses the sometimes disastrous unforeseen consequences of poorly-planned humanitarian interventions around the world. Purchase books by Christopher Coyne on Amazon here.

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The Roots of Inertia

Why don’t low-skilled workers try harder to better their condition?  While this might seem a neoliberal question, it weighs on Barbara Ehrenreich’s mind:

I was baffled, initially, by what seemed like a certain lack of get-up-and-go on the part of my fellow workers. Why didn’t they just leave for a better-paying job, as I did when I moved from the Hearthside to Jerry’s?

She starts with some textbook economic answers.  There’s transaction costs:

Part of the answer is that actual humans experience a little more “friction” than marbles do, and the poorer they are, the more constrained their mobility usually is. Low-wage people who don’t have cars are often dependent on a relative who is willing to drop them off and pick them up again each day, sometimes on a route that includes the babysitter’s house or the child care center… I have mentioned, too, the general reluctance to exchange the devil you know for one that you don’t know, even when the latter is tempting you with a better wage-benefit package. At each new job, you have to start all over, clueless and friendless.

And information costs:

There is another way that low-income workers differ from “economic man.” For the laws of economics to work, the “players” need to be well informed about their options…

But there are no Palm Pilots, cable channels, or Web sites to advise the low-wage job seeker. She has only the help-wanted signs and the want ads to go on, and most of these coyly refrain from mentioning numbers. So information about who earns what and where has to travel by word of mouth, and for inexplicable cultural reasons, this is a very slow and unreliable route…

Soon, however, she appeals to industrial psychology.  Employers win workers hearts and minds – what Ehrenreich calls, “the co-optative power of management, illustrated by such euphemisms as associate and team member.”  And don’t forget learned helplessness:

Drug testing is another routine indignity. Civil libertarians see it as a violation of our Fourth Amendment freedom from “unreasonable search”; most jobholders and applicants find it simply embarrassing…

There are other, more direct ways of keeping low-wage employees in their place. Rules against “gossip,” or even “talking,” make it hard to air your grievances to peers or-should you be so daring-to enlist other workers in a group effort to bring about change, through a union organizing drive, for example. Those who do step out of line often face little unexplained punishments, such as having their schedules or their work assignments unilaterally changed. Or you may be fired…

The big picture, though, is that the capitalist system breaks workers’ spirits:

So if low-wage workers do not always behave in an economically rational way, that is, as free agents within a capitalist democracy, it is because they dwell in a place that is neither free nor in any way democratic. When you enter the low-wage workplace-and many of the medium-wage workplaces as well- you check your civil liberties at the door, leave America and all it supposedly stands for behind, and learn to zip your lips for the duration of the shift. The consequences of this routine surrender go beyond the issues of wages and poverty. We can hardly pride ourselves on being the world’s preeminent democracy, after all, if large numbers of citizens spend half their waking hours in what amounts, in plain terms, to a dictatorship.

The obvious response to all of these stories, however, is: “Why don’t the same factors prevent high-skill workers from trying to better their condition?”  Let’s consider each in turn.

Transaction costs.  While high-skilled workers have fewer problems with transportation and child-care, they also have much more specific skills.  This seriously impedes job search.  To find a new job, most nuclear engineers – and many professors – would have to not just sell their homes, but move to a new city.  The high-skilled are also more likely to be in two-earner families, which makes relocation doubly disruptive.

Information costs.  Firms often publicly advertise low-skilled wages.  This is much less true for high-skilled jobs.

Hearts and minds.  High-skilled workers seem much more likely to identify with their employer – and to define themselves in terms of their work.

Learned helplessness.  Again, the indignities required for starting a high-skilled job probably exceed those for low-skilled employment, especially if you’re a government contractor.  Once hired, however, the petty indignities high-skill workers endure are admittedly lower.  (Here’s why).

The capitalist system. Almost no employer cares for kvetching, but high-skill workers probably feel freer to speak up on the job.  Off the job, however, they are probably more worried about offending bosses, co-workers, or clients.  Who cares what a waiter posts on Facebook?  In any case, why should lack of voice reduce enthusiasm for exit?

So why then don’t low-skill workers try harder to better their condition?  All of Ehrenreich’s answers prove too much.  The better story is simply that there is a distribution of desire to better your condition.  In short, human beings have heterogeneous ambition. Some burn to rise; others take life as it comes; most lie somewhere in the middle.  And though mere desire hardly ensures success, ambition usually works in the long-run.  The more you want to better your condition, the better your condition eventually tends to become.

Like Ehrenreich’s story, my story explains why low-skill workers seem “stuck.”  Unlike her, however, I can also explains why high-skill workers seem mobile.  In short, what my “heterogeneous ambition” story lacks in Social Desirability Bias, it makes up for by explaining mobility and inertia, rather than inertia alone.

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What Liberty Allows for and What it Demands

Liberty allows for recklessness, but it demands accepting its consequences; it does not repress vices, but it encourages the development of virtues; it tolerates diversity, but it excludes it from ventures based on unanimity; and it does not condemn self-love, but it flourishes in the love of one’s neighbor.

In other words, liberty does not fight against things that are morally neutral, it does not respond to evil with greater evil, and it is a necessary condition of doing good. Thus, there is no good reason whatever to give up on it, but there are infinite good reasons to use it ever more fully.

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