John Holbo's Critique of Libertarianism

For those of you who haven't been following along at home...John Holbo is a liberal philosopher over at the Crooked Timber website.  He's kind of a tricky guy...but in a fun way.  For example...he tricked me into believing that he supported allowing people to sell their votes.  It turned out that he really didn't support the idea...but I enjoyed our discussion nonetheless...especially when he shared his critique of pragmatarianism.

Holbo's most recent trick was to pretend that he was a Bleeding Heart Libertarian (BHL)...I’m a bleeding-heart libertarian!  He didn't trick me this time though because I had already read on the BHL website that he was planning on doing a guest post.  Learning that he was scheduled to write a guest post was the highlight of my day.  Not trying to take credit here...but a while back I had encouraged him to write a post on the BHL project.  Unfortunately, I can't really say it was the highlight of my day when I finally got a chance to read it.

Did he go in there with guns blazing?  Yes...very yes.  Holbo was spraying snarky bullets everywhere.  Fortunately, he stuck around to respond to many of the comments and the subsequent discussion was far more constructive.  You can read more of the discussion on Jacob Levy's really admirable response...Further to Holbo.

Despite the snark, I gotta give Holbo props for jumping into the lion's den...so to speak.  But the fact that he was invited to write a guest post in the first place...reflects extremely well on the BHL project.  And honestly...I would be willing to bet $20 that the Crooked Timber blog would not invite Peter Boettke, Steven Horwitz, Gary Chartier, Andrew J. Cohen, or Jessica Flanigan to write a guest post there.  This came to mind when I read this comment in response to Holbo's post on the Crooked Timber website...

While I agree with the cheering here, it was a great minefield over there. I kinda agree with the commenter there that says something about guests pooping on our doorstep. So… I am looking forward to the upcoming Libertarian guests here on CrookedTimber. - seth

Ok, so enough back story...and onto my response to Holbo's critique.  I'm not going to pull any punches...it was light on specifics and heavy on paranoia.  This makes it a bit difficult to respond to.  So I've just been gathering a bunch of passages from here and there...and I honestly kind of doubted that I'd really ever organize them and it would just end up as one of my many unpublished drafts.   

Today though, a liberal shared this comment in response to a post of mine...

We know what causes recessions (at least big ones). The income gap produces a small class of very wealthy people who engage in high risk nonproductive "investing", also called bubbles, leading to inevitable collapse, especially if there is little regulation.
See Reich's "Aftershock". It goes into detail - head of joaquin

My response used pretty much the same passages that I had gathered for Holbo.  So the content is the same but my style and tone would be different.  Before I copy and paste my response though...here are a few comments from Holbo that were somewhat specific...

That's an excellent way to put it. Libertarianism as device for locking in your gains. Like regulatory capture. Nice. - John Holbo

Hume22, there are really two separate issues here: one, being consistent in my hermeneutics of suspicion; two, being consistent about justice. Frankly, I'm better at one than two. You can question my motives all you like. I can take it! But I tend to be a hypocrite regarding the high bar of justice. Like most American liberals, I worry more about the American middle-class than about impoverished Africans. It's hard for me to justify that. (I could say something about 'politics is the art of the possible' but that wouldn't fool you, would it? Didn't think so.) - John Holbo

So here's my response.  What I personally say isn't as important as the sources themselves.  Hopefully Holbo will take the opportunity to read each of them thoroughly...Lachmann's essay is especially great for understanding how markets redistribute wealth, Mitchell's paper is the best in terms of understanding regulatory capture and Krugman's article is outstanding for understanding the race to the top.

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We take 10 steps forward...and then one step back...and you use that one step back as an excuse for government intervention. Does the government prevent us from taking one step back? Sure...but it also prevents us from taking 10 steps forward. That's not a recipe for progress.

... an increase in the power of the State ... does the greatest harm to mankind by destroying individuality which lies at the heart of all progress... – Gandhi

How do you become wealthy?

In other words, people will start buying something in large numbers if it solves a big problem for them. But most first-world problems—needing an easier way to record your favorite TV programs or keep track of what’s in your fridge—just aren’t that pressing. In developing countries, on the other hand, technology can transform lives. - Christopher Mims, How a $20 tablet from India could blindside PC makers, educate billions and transform computing as we know it

You're blaming the wealthy for the income gap here in America but you tragically fail to understand that they are narrowing the gap between America and developing countries...

These improvements have not taken place because well-meaning people in the West have done anything to help--foreign aid, never large, has lately shrunk to virtually nothing. Nor is it the result of the benign policies of national governments, which are as callous and corrupt as ever. It is the indirect and unintended result of the actions of soulless multinationals and rapacious local entrepreneurs, whose only concern was to take advantage of the profit opportunities offered by cheap labor. It is not an edifying spectacle; but no matter how base the motives of those involved, the result has been to move hundreds of millions of people from abject poverty to something still awful but nonetheless significantly better. - Paul Krugman, In Praise of Cheap Labor

Rising wages in emerging markets and higher shipping costs are also closing the cost gap between developing markets and the United States. - Scott Malone and Ernest Scheyder, Outsourcing Losing Its Allure As China Costs Soar

Do you think Americans are the only ones who benefit from American innovation? The world benefits from American innovation just like we will benefit from the world's innovations. And you'll be able to thank the greedy capitalist pigs. Except...who these people are is constantly changing...

These economic facts have certain social consequences. As the critics of the market economy nowadays prefer to take their stand on “social” grounds, it may be not inappropriate here to elucidate the true social results of the market process. We have already spoken of it as a leveling process. More aptly, we may now describe these results as an instance of what Pareto called “the circulation of elites.” Wealth is unlikely to stay for long in the same hands. It passes from hand to hand as unforeseen change confers value, now on this, now on that specific resource, engendering capital gains and losses. The owners of wealth, we might say with Schumpeter, are like the guests at a hotel or the passengers in a train: They are always there but are never for long the same people. - Lachmann, The Market Economy and the Distribution of Wealth

As protected firms become less innovative, a country’s overall economic growth may suffer. This is because, as Schumpeter emphasized nearly a century ago, economic growth thrives on “creative destruction.” In a healthy economy, new firms constantly arise to challenge older, less-innovative behemoths. - Matthew Mitchell, The Pathology of Privilege: The Economic Consequences of Government Favoritism

But have you ever asked yourselves sufficiently how much the erection of every ideal on earth has cost? How much reality has had to be misunderstood and slandered, how many lies have had to be sanctified, how many consciences disturbed, how much "God" sacrificed every time? If a temple is to be erected a temple must be destroyed: that is the law - let anyone who can show me a case in which it is not fulfilled! - Nietzsche

The problem is that you're not thinking things through...

But matters are not that simple, and the moral lines are not that clear. In fact, let me make a counter-accusation: The lofty moral tone of the opponents of globalization is possible only because they have chosen not to think their position through. While fat-cat capitalists might benefit from globalization, the biggest beneficiaries are, yes, Third World workers. - Paul Krugman, In Praise of Cheap Labor

If you think things through then you'll understand that any step back in the private sector can be offset by 10 steps forward in the public sector. How? Simply by allowing taxpayers to use their own taxes to reward the government organizations that are doing new and better things with society's limited resources.

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Let me add a few more things...

In Krugman's article he begins by talking about people scavenging on garbage heaps.  Here's a photo I took in Afghanistan of a mother and her son on such a garbage heap...

...which ties into...

Women employed in factories are the only women in the labouring rank of life whose position is not that of slaves and drudges; precisely because they cannot easily be compelled to work and earn wages in factories against their will. For improving the condition of women, it should, in the contrary, be an object to give them the readiest access to independent industrial employment, instead of closing, either entirely or partially, that which is already open to them. - J.S. Mill  

The basic idea is that an entrepreneur could set up a factory in Kandahar and offer the Afghan mother one new option.  If her new option, working in a factory, is better than her currently best option, scavenging, then it stands to reason that she would choose to work in the factory.  

As well might it be said, that of two trees, sprung from the same stock one cannot be taller than another but from greater vigor in the original seedling.  Is nothing to be attributed to soil, nothing to climate, nothing to difference of exposure - has no storm swept over the one and not the other, no lightning scathed it, no beast browsed on it, no insects preyed on it, no passing stranger stripped off its leaves or its bark?  If the trees grew near together, may not the one which, by whatever accident, grew up first, have retarded the other's development by its shade?  Human beings are subject to an infinitely greater variety of accidents and external influences than trees, and have infinitely more operation in impairing the growth of one another; since those who begin by being strongest, have almost always hitherto used their strength to keep the others weak.- J.S. Mill, The Negro Question

Much of Holbo's paranoia surrounded racism...but a sound understanding of how markets work...the idea of solving problems and offering people better options...dispels any basis for such concern...

The great virtue of a free market system is that it does not care what color people are; it does not care what their religion is; it only cares whether they can produce something you want to buy. It is the most effective system we have discovered to enable people who hate one another to deal with one another and help one another. – Milton Friedman

Let's imagine that a person who was racist against everybody but Canadians discovered a cure for cancer.  Therefore, he would only employ Canadians and only sell the cure to Canadians.  It does sound less than ideal...but however you spin it...it's still progress.  The Canadians who are employed were given a better option and the Canadians with cancer had a big problem solved.  And yes, I know that Canadians aren't a race of people.

The basic idea is that we can't say that John Holbo has an obligation to solve any problems...big or small...and he doesn't have an obligation to offer the Afghan mother a better option.  Really understanding that we don't have these obligations is key to appreciating it when entrepreneurs (in the broadest sense of the word) actually do solve problems...for any amount of people...and offer any amount of people better options.

The question is...how many Canadians with cancer would engage in ethical consumerism and boycott the company?

Even if right now some dude said 'I'm going to say a bunch of racist stuff but afterwards I'll give you a biscuit' I’d be like that’s a weird deal but I'll take it. Because I hate racism...but I love a good biscuit. - Aziz Ansari