"Libertarians and the Welfare State"

Bryan Caplan on libertarians and the welfare state:

Libertarians and the Welfare State: Is It Time to Drop the Hard Line?, by Bryan Caplan: Libertarians are widely seen as welfare-state abolitionists - people who want to eliminate government's "safety-net" role, not make it more efficient. Will Wilkinson rightly points out that many well-known intellectuals in the libertarian camp - including Friedman, Hayek, and Buchanan - didn't share the abolitionist position, and suggests that it might be time for libertarians to drop their extremism and get real:

The death of socialism as a viable competitor to the liberal-capitalist welfare state makes continued slippery-slope-to-socialism thinking look densely anachronistic. Other liberal welfare states, like the UK, Sweden, Denmark, Australia, New Zealand, etc., have moved in a rather more market-liberal direction, becoming rather less of a soft-socialist middle-ground between the American model and full-on economic socialism... In this context, the negative income tax looks much less like a dangerous concession to the world-historical forces of evil.

Will's right about Friedman, Hayek, and Buchanan, and right about the slippery-slope argument. But I still think that welfare-state abolitionism has the force of argument on its side.

First, though I'm not going to win Will over to "Ayn Rand and Murray Rothbard’s peculiar views of rights and coercion," the welfare state is an area where it's particularly apt. Almost no one thinks you should be legally required to financially assist your relatives - even your indigent parents who raised you. The welfare-state abolitionist can fairly ask all of these people a tough question: If your parents shouldn't have a legal right to your help when they really need it, why should complete strangers? ...

I'll answer that for unemployment insurance and other programs designed to cushion workers against shocks (I'm taking as given that unemployment insurance has social value, that market failure prevents the private sector from providing sufficient insurance, and that government can improve the situation by intervening, points that libertarians may not be willing to stipulate).

In order to be flexible and dynamic, capitalism has to be able to move people and resources out of declining industries and into other industries where they can be utilized more effectively, and this needs to happen as quickly and efficiently as possible.

As a society we do better if we can respond effectively when the economy is hit by shocks, but this capability comes at a cost to individuals. Workers can lose their jobs for reasons that have nothing to do with their own behavior. They show up to work each day, put in a full days work, and make their contribution to society. But one day, for reasons outside of their control, the job can suddenly end. Now, if somehow the individual's choices are the cause of their unemployment, there might be an argument for letting individual workers bear the full cost of losing the job. But that's not what generally happens, it's not usually the individual's fault that the plant closed or that people stopped purchasing Betamax (and there are rules to try to exclude people from receiving benefits when their unemployment is the consequence of their own behavior or choices).

The source of the insecurity for workers is the system we live under, capitalism. It's better than any other system yet devised at providing for our needs, but within this system changes in preferences, changes in technology, management errors, the weather - all sorts of things out of the worker's control can cause them to become unemployed. Because it's a risk that's due to the system we live under, the cost of insuring against it should be shared by all those living within the system and benefiting from it, i.e. the cost should be shared across the entire population. The burden of paying for capitalism's dynamism and flexibility shouldn't be limited to the individual or the individual's family. So I don't see any contradiction in saying that families should not be required to provide this insurance, but "complete strangers" should.

Comments

[napablogger]

No system is perfect. Pick the best one and then ameliorate the problems that come up. Make sure what you do to ameliorate those problems don't make worse problems than the ones you are fixing.

And there you have it. :)

says...

Why can't the individual himself cover this safety net? It seems to me that the market system could better determine the worth of protecting one's income against unemployment than a government system. I can see the utility in public goods in certain instances, but I don't think that this is one of them. But it is certainly a complicated issue and something to think about. Thank you for the article!

[hari]

Funny how family values get into consideration of state insurance for unemployed....

Let me give an example from Austria, Sweden and other EU countries in which children are required to care for their parents old age insecurity in the event they're unable to get an adequate pension or life insurance and therefore can't feed themselves....

The law simply says children are obliged by law to care for their parents in such cases.

[anne]

"If your parents shouldn't have a legal right to your help when they really need it, why should complete strangers?"

The essence of immorality; thrilling.

[save_the_rustbelt]

Caplan and his libertarian colleagues are tenured professors at a state-sponsored school in an "industry" that is heavily subsidized (directly and indirectly) by the government.

Makes their libertarian positions a little weak, huh?

[Headache]

Following up on Save the Rustbelt's comment, Caplan also got his undergrad degree at a public university (Berkeley). Somebody should tell BC that welfare-state opposition begins at home.

[ken melvin]

Methinks the whee the people governed society is best viewed from the vantage of 'if I were king', i.e., in toto. What is best for my people. all my people, the nation?

[spencer]

Caplan is the perfect example of what I mean when I say every 15 year old should read Ayn Rand and no adult should take her seriously.

[piglet]

"Funny how family values get into consideration of state insurance for unemployed...."

What I find funny is that such attitude comes from the (self-described) country of "famiy values" par excellence, and is taken seriously.

[Bruce Wilder]

"Why can't the individual himself cover this safety net? It seems to me that the market system could better determine the worth of protecting one's income against unemployment than a government system."

Why can't the individual himself cover the "safety net" of operating his automobile? Owning a home?

Many of the problems of insurance are general, and the "market failures" are well-known. I won't rehearse them in a blog comment; buy a textbook and read it, or google "moral hazard" and "adverse selection". So, insurance markets, even when they have substantial elements of private provision, remain heavily regulated. The government's ability to require coverage or to finance insurance through a tax remains, in general, an attractive way to overcome the moral hazard/adverse selection problem. (In the abstract, moral hazard and adverse selection come down to different aspects of the same problem.)

Where "unemployment compensation", in particular, is at issue, there are other extended considerations: specifically, there's a concern that the employer is taking advantage of incomplete labor contracts to externalize costs. That's a jargon-filled way of saying that the employer can impose costs associated with the risks of doing business onto workers, by laying them off; the employer is in a superior position to know about those risks and to control them; employees are likely to be unable to negotiate fair compensation for the risks, especially after those risks become manifest.

So, government-mandated unemployment compensation, can economize on labor contracting costs, ameliorating a "market failure" in the labor market.

It is characteristically immature of Bryan to frame the question as one of why he (in full possession of an immature adolescent's self-assurance about personal mastery and invulnerability) should help others (when he, clearly, doesn't need help).

A real economist would know that efficient incentives require that the decision-maker not be risk averse in his decision-making. A society where the government does not support adequate institutional provision of insurance, public and private, the individual has to make choices -- choices about work, whether to invest in education, driving a car, making a home, the "risk" of growing old and infirm -- that entail enormous, uninsured risk. In such circumstances, the individual is pressed to either venture nothing, gaining nothing, or to take wild, desperate gambles. Neither course results in efficient social cooperation.

[donna]

Once again, this is total confusion of the libertarian viewpoint. It ticks me off that it has been hijacked so far from its former meaning.

Even Rand has been taken completely out of context. No one wants to feel exploited by others or taxed unfairly. But that doesn't mean you shouldn't want to help take care of others if you are able to, or that the government shouldn't provide security for those who are not fortunate enough to do well enough to survive by themselves in the economy.

To those who call themselves libertarians and believe that means everyone else can just go to hell, go live in a damn cave already.

[Bruce Wilder]

Just a side note: What I wrote is "orthodox economics". What Bryan Caplan writes is professional malpractice. Why James Galbraith et alia cede the central ground of the profession to these quacks, to tout "heterodox economics", I will never understand. George Mason should be in serious danger of losing its accreditation for hiring so many law and economics nutcases. This isn't intellectual diversity; it's "flat earth" b.s.

[robertdfeinman]

If Caplan keeps this up Charles Koch will stop paying his salary.

Notice that both his gigs at Cato and GMU come from Koch funds. What's the economist equivalent of "kept woman"?

[Blissex]

«Neither course results in efficient social cooperation.»

But see, the libertarian position cares not one bit about efficient outcomes, it is entirely about principles: if allowing a single act of coercion would double the standard of living of every citizen of an ideal libertarian republic, it still should not be allowed.

Efficiency, never mind social or arising out of cooperation, is entirely irrelevant before individual rights; if a libertarian USA were to have a GDP that were half of today's USA, that would be fine, because while a reduced standard of living would be tolerable, the continuance of a regime of coerced enforcement of looting and mooching would be far more intolerable.

[ECONOMISTA NON GRATA]

Unlike Democrats and Republicans, who seem to be stuck in the infinite and dogmatic tunnel of political discourse, "Libertarians" or better said "Progressive Libertarians" wholeheartedly cooperate with the inevitable. For anyone to suggest otherwise, would suggest to me that they are still in the early stages of human evolution.

"Consider for example, a glaring paradox of free enterprise. If we declare that Smith, Malthus, Ricardo, Friedrich Hayek and Milton Friedman are right, and that man is basically motivated by self interest, do we not by that very declaration encourage people to be more selfish? By recognizing the inevitability of greed and self interest, we seem to approve it."

Matt Ridley, ORIGINS OF VIRTUE, p. 260 (suggested reading)

In fact, we do approve and encourage it. But, only up to a certain point where a natural tipping point of social consequences occur. We have most certainly reached that tipping point on a global scale and now through a process of trial and error, persuasion and coercion, research and development, we will manage to scale slowly into equilibrium. That is the story of the human species.

Best regards,

Econolicious

[Blissex]

«The welfare-state abolitionist can fairly ask all of these people a tough question: If your parents shouldn't have a legal right to your help when they really need it, why should complete strangers? ...»

Well, indeed why? In the USA nobody is coerced to help complete strangers when they need it, for example.

If they find that not of mutual benefit, they can go live on the Moon. Nobody is forced to be a resident and citizen of the USA, and it is only by voluntary agreements (called "elections") that USA residents and citizens find it of mutual benefit to insure each other, even if otherwise complete strangers, against need.

I am reliably informed that the Free Luna State has a different attitude, and its citizens and residents have instead found it of mutual benefits not to insure each other against need, and there is no coercion against leaving the USA behind and going to live on the Moon and becoming a citizen of the Free Luna State if one desires so.

Similarly as mentioned above there are several countries in Europe where children have a legal obligation to support their parents (and viceversa) in case of need, and USA residents and citizens that don't like the lack of such voluntarily chosen mutual family insurance can choose free of any coercion to move to one of those countries and become their citizens and residents and voluntarily enter into such mutual insurance obligations.

In exactly the same way that nobody is coerced to work for $5/h sweeping floors in the USA, as anybody in the USA is entirely free to go and find work as the CEO of Merrill Lynch or Citicorp instead. What you do in the USA or whether to be part of the USA is a free, uncoerced choice.

«Why can't the individual himself cover this safety net? It seems to me that the market system could better determine the worth of protecting one's income against unemployment than a government system.»

But the market does -- there is a free market in social compacts, and if you feel that the social compact in the USA is not of mutual benefit to you, nobody is coercing you to remain there. You can move to the Free Luna Republic or to an european country depending on your tastes for less or more mutual insurance.

[Luni]

Apparently Blissex, the moon's ownership is in question....

href="http://www.popularmechanics.com/science/air_space/4264325.html">http://www.popularmechanics.com/science/air_space/4264325.html

[Luni]

Sorry for the bad link... maybe this one will fit.

www.popularmechanics.com/science/air_space/4264325.html

[S Brennan]

Ever call a cop?

You are not a libertarian.

Ever use a road?

You are not a libertarian.

Ever used a product made overseas?

You are not a libertarian.

Ever use a airplane?

You are not a libertarian.

Ever flush a toilet?

You are not a libertarian.

Ever give a damn?

You are not a libertarian.

Libertarian is just different spelling for ingrate.

[Bruce Webb]

"Almost no one thinks you should be legally required to financially assist your relatives - even your indigent parents who raised you."

Let me amplify on Anne. The reason there is no legal obligation to financially assist your indigent parents is because unless you are a sociopath like Caplan there is no reason to legislate basic morality. And of course through most of Western history people considered the legislation to already be in place via "Honor your father and your mother" while in the Far East similar rules drawn from Confucius ruled the day.

And when I say sociopath I mean it in its literal sense. This guy is a (near) tenured professor and a father and yet his university hosted website has a template so garish that it would embarrass your typical high school sophomore, it literally has to be seen to be believed.
http://economics.gmu.edu/bcaplan/

On it he links to his 'Intellectual Autobiography', itself a monument to hubris but inadvertently more revealing that Caplan could possible realize. For Caplan all of the work involved in getting his PhD and gaining tenure was in the end the equivalent of earning the right to attend Scout Camp. Because this is frankly bizarre

The quality of my colleagues immediately rose when I moved from Princeton to George Mason, and improved every year. A few of my fellow students at Princeton, especially Jim Schneider, were excellent friends and debating partners. But most of the students at Princeton were what I dismissively call “careerists,” and in spite of their high IQs, the Princeton faculty - with the notable exception of Ben Bernanke - were sadly narrow. At Mason, I found colleagues - faculty and students alike - who love talking about economics as much as I do. Tyler Cowen, Pete Boettke, Robin Hanson, Don Boudreaux, Alex Tabarrok - they are among my favorite intellectuals on the planet. We argue non-stop, and I wouldn’t have it any other way. Once we agree, it is time to change the subject.

You can almost smell the smores. I can imagine thinking such things but to be so unself aware to actually publish them openly, to openly mock all your former colleagues and professors, to admit that you really didn't care about the topic of your dissertation and regarded the whole process as giving you a ticket to ride (and then calling those colleagues careerists) shows a sense of self-absorption and selfishness that would make Caplan's ur-Goddess Ayn Rand gasp. Once again the whole thing has to be read to be believed, if it were written as a piece of satire it would be judged over the top. As it is---
http://www.gmu.edu/departments/economics/bcaplan/autobio.htm

What do you do with a guy who argues with a straight face that voters who argue for a minimum wage are by definition irrational ('Myth of the Rational Voter'). There are words for people who define 'rationality' as 'agree with me that I am in fact the judge of "deep truths" ' a pretty much open claim of Caplan's. Sociopath is one, monomaniac is another, but lets be charitable and concede that Caplan's mentality can be summed up as:
'Smartest sophomore on the dorm floor (if you ask him)'.

[ddt]

re: BW on insurance

After working at a large insurance brokerage for a while, I'm sure that there must be a better way to organize insurance (ie through the government).

The insurance industry is a farce. As a broker, when you send for quotes from different insurance companies the quotes can vary from $5,000 to $20,000 to cover the same simple generic commercial lines risk (apartment building). When you email one company back to tell them that they were over the other quotes by about 400%, they just pick another premium out of the air that is more to your liking. Why? Because they have no idea how to reliably quantify the risks, and they know it. they have actuaries, but they're not very good at predicting future losses (see Taleb) and the insurance industry learned it the hard way through the black swan of asbestos.

Ever wonder how insurance rates are actually set? endemic price fixing. Look up the recent Ohio case involving most of the major insurance companies in America. The price fixing isn't even driven by greed so much as the necessity of setting sustainable, stable prices in the absence of information on the ultimate costs (future loss runs) that go into the product. If they didn't, the most optimistic insurance company could put everyone else out of business by underpricing risk, then go out of business itself when the losses eventually pile up (example: the Bond Insurers - Ambac, MBIA).

Insurance is really the world's most boring form of gambling. Every once in a while someone realizes that they can get away with taking on excess risk for small returns, and get caught with their pants down. that's when Warren Buffett reemerges - boring gambler par excellence - and takes over (re-insurance after Katrina netted him huge money, and now he's set to do the same following the failure of the bond insurers)

To avoid the easy pitfall of underpricing risk, they collude on prices. When the collusion results in overpricing, that just means fat profits and everyone is happy. When the collusion fails by underpricing a risk, they get together and collude again to roll out industry-wide exclusions (terrorism, asbestos, grow ops) to make the prices work again (and get a bailout from the government if they need it) or if that fails, raise premiums across the board.

Eventually I think people are gong to realize that the "market" is not well suited to the task of providing insurance. I'd like to see home insurance incorporated into property tax and auto insurance incorporated into an auto registration tax that would also fund highways etc. similar to property tax. I'm not quite sure how to organize commercial insurance, but I think that industry associations could take on this role (that's where insurance originated) in general as a cooperative system amongst members.

The important thing is that the losses are tallied, split up and billed after the fact, not guesstimated beforehand and charged as a premium. The first is an insurance system, the second is a form of gambling that goes by the name insurance.

[John V]

To hear Caplan speak about economics or to read a more varied sampling of his economic writing is to know where is coming from and apply that context to what he says.

Caplan is like a young mad scientist of economics. It's his passion. He lives it, breathes it and even thanked his wife in the preface of the Myth of Rational Voter for being an able and willing listener and partner in his endless economics discussions and thought-projects. He also thanked his colleagues for their endless and far flunk debates and chats. In a way, I envy the fact that he has been able to fuse his passion, socializing, work and love life in such a complete way.

I read Caplan enough and have heard to him speak enough to vaguely understand his personality type. He simply enjoys debate and thinking outside the box without caution for social faux-pas or fear of the taboo or being mischaracterized. He's almost like a quirky modern-day Tesla of economics. His defiant, off-the-cuff, anything-goes-in-the-spirit-of-debate style is very easy take as an inhuman, immoral or tasteless or a sociopath if you don't get him or give him the benefit of the doubt that he's just be the unruly Bryan Caplan.

His recent I'll shill for Hillary" post (which I believe was linked here at one point) is just a simple example of his whimsically glib and serious style. For the sake of argument, he'll say what others won't, challenge the status quo when others won't and happily add a wrinkle to a discussion when others won't...all without fear or shyness and all for the sake of debate.

There's nothing wrong with that. It's a breath of fresh air when taken as intended. Some of the reactions I've read on this thread give me the image of some stuffy grumpy, uptight old lady patting her chest and saying "Oh-my-GOODNESS, did you hear THAT??" in overdone indignation.

As Will Wilkinson said about a party he attended where Caplan, among other GMU professors, was present:

It’s a special kind of relief to be able to spend a few hours with a whole house full of people with whom one does not have to be defensive about thinking rationally (i.e. “reductively”, “autistically”, “soullessly”) about tough questions. This is a party where you’re the weird one if you don’t think it’s appropriate to apply cost-benefit analysis to the choice to have kids, or if you don’t think it’s more or less obvious that open immigration is welfare-enhancing, or that robots are awesome. Good times.

[To Each His Own]

When I was employed, I never really had much use for unemployment insurance. It just limited my options for going on extended vacation the few times I was laid off (reporting to this and that bureaucracy). I would much rather have had the insurance premium my employer paid given to me in the form of higher wages. Since I saved a bit to allow for the possibility of income interruption (despite it being inflated away), I would actually have preferred to be laid off a few more times when I was young enough to enjoy the time off. I would much rather have had a few more lay off/vacations instead of constant inflation eroding my savings. To each his own I guess.

[John V]

Bad hmtl goof:

Willkinson Link

[dilbert dogbert]

Sometime ago I read of the Ik, I think that is the name of the African tribe, where there was a perfect libertarian society.
Every man, woman and child for themselves.
I will have to google that to see if I can refresh my memory.

[Bruce Wilder]

ddt: "I'd like to see home insurance incorporated into property tax and auto insurance incorporated into an auto registration tax that would also fund highways etc. similar to property tax. I'm not quite sure how to organize commercial insurance . . ."

I appreciated your remarks about the craziness of our for-profit insurance industry.

Allowing insurance companies to organize on a for-profit basis, as opposed to mutual basis, is a serious flaw. But, you won't see many economists critiquing that aspect of the organization of insurance, let alone drawing the somewhat obvious conclusion that it amounts to mandating slow-motion casino gambling.

One of the most sensible reforms I can think of would be for State government to finance a massive group policy for auto liability, from a combination of gas taxes, driver license fees and vehicle registration fees. Combine that with no-fault rules for settlement of claims, and we'd be well on the way to a rational system.

You won't see Bryan Caplan championing that kind of rational reform. Instead, he'll be arguing about whether people, who think he's crazy, should be allowed to vote.

[RW]

There was an ethnography written some years ago called "The Mountain People" that portrayed the Ik of Uganda as having a laissez faire economy and a rather anti-social attitude (ISTR that cheating each other was fairly common) but I don't know how accurate that report was. I have heard the Ik tribe has been failing for years and is currently in pretty bad shape but in northern Uganda that's hardly surprising what with Turkana and Karamojong raiders and the terrifying presence of the murderous Lord's Resistance Army.

Basically I think there are a lot of US citizens who have not lived in situations as threatening as the Ik, or in a real totalitarian state if it comes to that, and lack sufficient historical knowledge and/or imagination to see that nothing they have endured really compares to life in such a place so they manage to convince themselves they are being actively oppressed in some way; someone or something is curtailing their 'freedom' and an ideal exists by which this putative oppression may be resisted.

If one believes such things it has apparently become the fashion these days to refer to oneself as a libertarian but frankly it's hard to tell what belief system one is dealing with until a particular cannon is revealed. I've encountered individuals calling themselves libertarian who, after some conversation, appeared to entertain beliefs that would previously have been described as more akin to: anarchist, or survivalist, or objectivist (Randite), or Misean, or Hippie, or American Fascist, or Know-Nothing, or neo-Calvinist, or something so incoherent and self-contradictory it could only be logically reduced to the perennial adolescent howl, "leave me alone."

I see some attempts to forge coherency out of this chaos, to create something that might be distinctly 'libertarian,' but there are significant conceptual impediments including what appears to be a chronic inability to adequately distinguish between license and liberty hence the bulk of what I've seen so far implies a society severely lacking important structures; e.g., essentially everyone is either on their own or a member of a clan so large scale projects to deal with regional or global problems become impossible and laws, assuming any could be passed, become effectively unenforceable.

says...

"Caplan is the perfect example of what I mean when I say every 15 year old should read Ayn Rand and no adult should take her seriously."

We better take it seriously, we're living it.

[Bruce Wilder]

Placed in the affirmative, libertarianism among bright academic economists generally appears autistic, and at the watercooler, as fully incohate as RW asserts.

Libertarianism does have some great tactical advantages in argument, and these should not be overlooked. The libertarian always poses as a proponent of freedom and of high principle, even when advocating for abuse, neglect, cruelty and bigotry. The ideal can always be made the enemy of whatever good is advocated by others, while the assumed perfection of process endows any libertarian institution an exemption from considering actual, material outcomes.

The ability to shroud one's self against the liberal moral critique is a large part of the appeal of conservative libertarianism. The alternative would be to acknowledge reprehensible desiderata. Imagine a libertarian economist trying to advocate Social Security reform, after admitting that he really wanted some substantial fraction of old people to end their days destitute and eating cat food, so that some investment bankers could afford a bigger house in the Hamptons. As embarrassing as libertarianism may be as an intellectual production, it is infinitely better than the alternative, if the alternative is naked honesty.

[John V]

like I said Bruce, shrill.

Too bad....

[Barkley Rosser]

I agree that this has gotten pretty shrill. For what it is worth, and for all his admitted geekiness, Bryan Caplan is open-minded and perfectly willing to consider pretty much any ideas thrown at him. Like many libertarians this means that he is not always predictable in his views (there are many factions of libertarians for one thing). I do not think these nasty personal ascriptions really apply to him.

BTW, Hayek supported national health insurance, although it must be admitted that Hayek also said that he was not a "libertarian" (or a "conservative" either, for that matter). He preferred the term "classical liberal."

[Mark Thoma]

I think you were posting this comment at the same time I was posting this ("Who’s Afraid of Friedrich Hayek?").

[ddt]

"Bruce Wilder says... One of the most sensible reforms I can think of would be for State government to finance a massive group policy for auto liability, from a combination of gas taxes, driver license fees and vehicle registration fees. Combine that with no-fault rules for settlement of claims, and we'd be well on the way to a rational system."

Well there would be somewhat of a precedent, and a pretty clear cut example demonstrating that government can actually provide the same insurance coverage for cheaper. In Canada a few of the provinces already operate public insurance systems that have been very successful:

"Public auto insurance is a government owned and operated system of automobile insurance operated in the Canadian provinces of British Columbia, Saskatchewan, Manitoba and Quebec. According to studies by the Consumers' Association of Canada, rates charged for auto insurance in these four provinces are lower than in provinces that use a private auto insurance system.[1] In Quebec public auto insurance is limited to coverage of personal injuries while damage to property is covered by private insurers.[2] Saskatchewan has the oldest public auto insurance system with Saskatchewan Government Insurance being founded in 1945. Manitoba Public Insurance was created in 1971 followed by the Insurance Corporation of British Columbia in 1973 and the Société de l'assurance automobile du Québec in 1977.

Other provinces have considered introducing a public auto insurance system. The Ontario New Democratic Party won the 1990 provincial election on a platform that included public auto insurance. After assuming office, Premier Bob Rae appointed Peter Kormos, one of the most vocal proponents of public insurance, as the minister responsible for bringing forward the policy.[3] With the onset of the recession, however, both business and labour groups expressed concern about layoffs and lost revenues.[4] The government rejected the policy in 1991.

Public auto insurance has also been considered in New Brunswick after private insurance rates nearly doubled from 2003 to 2005, but was ultimately rejected by the provincial government.[5] It was also an issue in Nova Scotia during its 2003 provincial election and remains in the platform of the official opposition, the Nova Scotia New Democratic Party.[6] It was also under consideration by the Newfoundland and Labrador Progressive Conservative government of Danny Williams in 2004 as a "last resort" when private insurance firms threatened to pull out of the province in response to legislation rolling back premiums."
http://en.wikipedia.org/wiki/Public_auto_insurance

I think that having a few public system provinces has actually lowered the premiums in the private system provinces through the political pressure that comes from voters comparing their private coverage to the public plans in other provinces. If a few progressive states were to go public, it would probably help lower premiums throughout all of America.

[Bruce Webb]

Barkley generally I bow down at the alter of Rosserism. I named a whole equation after you. But three or four minutes reviewing Caplan's choices of template on his website and/or a review of his linked 'Intellectual Autobiography' shows a guy dangerously detached from reality. Near as I can see the fundamental base of his judgement about 'The Myth of the Rational Voter' boils down to defini g rationality boil down to 'agrees with Bryan Caplan'. Correct me if I am wrong on this one.

[John V]

No. I doesn't boil down to that Bruce. As far as econ and prevailing biases are concerned, the biases he points out such that nearly all economists from Caplan to Thoma to Krugman to DeLong and Cowen and Rodrik and others are all firmly on the same side of the issue.

[Lafayette]

hari: The law simply says children are obliged by law to care for their parents in such cases.

I confirm that such is the law in France as well.

[Lafayette]

Kit and caboodle

BR: He preferred the term "classical liberal."

What, pray tell, is the purpose of this academic labeling? Does anyone believe that because someone puts a ticket on a professor or pundit or acknowledged economic philosopher (such as Hayek or Keynes) that the labeling indicates what we should think of them in a preconceived manner. Like the classification of plants?

To me, it indicates pettiness on the part of the person doing the labeling. And it engenders pissing contests on this forum of utter banality and boringness.

May I suggest that we are all sufficiently intelligent to have our own opinions regarding economics and economists -- and we should be debating Applied Economics and not the labels we foolishly attach to schools of economic thought or persuasion. That is how I interpret Mark Thoma's considerable effort in finding these articles to spark discussion/debate.

Some like to be eclectic about economic thought. (I am one.) Taking what they perceive as the best from wherever it comes as a useful tool and not buying the whole kit and caboodle.

[hari]

There is surely a middle ground between Libertarians (and whatnots) and the Welfare State; a place like Sweden has more or less discovered it by *stealth* (some here might claim!). Why not study and find out the antecedents of its development and growth and why? Why this mudcracking about your foolish ideological predispositions on basic economic laws of society? If there is anything academics have to learn, it is to apply their (theoretical) knowledge and provide some useful practical policy solutions....

BASTA!

[Blissex]

«he really wanted some substantial fraction of old people to end their days destitute and eating cat food, so that some investment bankers could afford a bigger house in the Hamptons»

But to some people that outcome is perfectly desirable, because of a moral reason: that, assuming that the rich have deserved that money, and the old people have deserved being poor, helping the old people at the expense of the rich banker is a crime.

Because stealing the billionth dollar of Jim Cayne is exactly the same crime as stealing the only dollar of a Calcutta street urchin (arguably worse, because as their relative wealth shows, Jim Cayne has contributed a billion times more to GDP as that worthless Calcutta street urchin).

Now, one might consider the kind of position above as callous, but it contains an important kernel: if Jim Cayne in some moral sense "owes" his billionth dollar to help some old destitute person, isn't that billionth dollar owed much more to the Calcutta street urchin who cannot even afford the good food that rich countries give their cats (or their destitute old people)?

There are good, reasonable, liberal (and almost as callous) answers to that, but it is not the "moral" argument implicit in the «old people to end their days destitute and eating cat food, so that some investment bankers could afford a bigger house in the Hamptons» sentimentalism.

[paine]

"This isn't intellectual diversity; it's "flat earth" b.s."

bruces wild

[joey]

But, but...that Great Insurance Company in the sky is
about to go tits up.

[anne]

Remember to be vilely sexist; remember.

[paine]

"robots are awesome"

the utterly calculating
and calculated

hot for
the libertarian's bride of frankenstein

barkley would try to make peace with a cobra
if he thought it was listening to him

[paine]

caplan is like
the zit faced high school walter mitty dweeb
who day dreams
he's a massively superior space alien
about to
clean house

overly involved
off kilter mother's
often look after these chaps

to their indifferent peers imaginary peril

[paine]

"vilely sexist"

vilely neuter comes closer
to their unreachable ideal anne

[Barkley Rosser]

Bruce W.,

Caplan comes across as wackier on his website than he does in person. He is a perfectly reasonable guy. His views are not cut out of cardboard.

anne, L.H.

So, when are you going to apologize?

[zapradon]

"because as their relative wealth shows, Jim Cayne has contributed a billion times more to GDP as that worthless Calcutta street urchin)."

This is the libertarian's fundamental fallacy, that amassing wealth is equal to contribution to society. Case after case throughout history shows the correlation between inequality of wealth and the deterioration of overall GDP. Allowing wealth to accumulate in a few hands simply reduces its availability to the commonwealth.

There are good reasons that Denmark with its high taxes and solid safety-net is repeatedly rated "best place to do business." Looking around, it appears that the social democracies have done more for individual rights and freedoms while remaining compassionate than libertarians can even imagine. Since most libertarians can never hope to be anywhere near the top 1% of wealth-holders, they're simply cutting their own throats as the amount of pie they can grab for themselves gets ever smaller.

[Blissex]

«"because as their relative wealth shows, Jim Cayne has contributed a billion times more to GDP as that worthless Calcutta street urchin)."
This is the libertarian's fundamental fallacy, that amassing wealth is equal to contribution to society.»

Well, that's what the Arrow-Debreu-Lucas Serious Economics taught by Mankiw, Thoma and everybody in between proves mathematically -- that the only reason why Jim Cayne has earned a billion times more than the Calcutta street urchin is that he has satisfied much more than a billion times over the needs of other people. It is as simple as that.

But that's not the main fallacy of the libertarians. The main fallacy is that they value people less than (however sane or insane) principles. Jim Cayne may be a hero who deserves every cent of his billionth dollar, and the Calcutta street urchin someone who has earned his dollar by stealing rubbish from tips, but one cannot disregard his misery.

«Case after case throughout history shows the correlation between inequality of wealth and the deterioration of overall GDP. Allowing wealth to accumulate in a few hands simply reduces its availability to the commonwealth.»

And why should anybody as principled and moral as the libertarians care one bit about overall GDP? Indeed in that kind of world view it would be immoral to have a higher GDP if this went to those who don't deserve it (looters and moochers).

[HeroicLife]

The small minority of adults who are unable rather than unwilling to work, have to rely on voluntary charity; misfortune is not a claim to slave labor; there is no such thing as the right to consume, control, and destroy those without whom one would be unable to survive.-- Ayn Rand

[Bruce Webb]

Barkley monomaniacs ranging from simple sociopaths to actual psychopaths always seem more reasonable in person, google Ted Bundy or Gary Ridgeway. It is in their private or semi-private writings that the looniness comes through. Caplan was clearly skilled enough to negotiate his way through Berkeley and then Princeton without showing his hand, now that he is on the threshold of tenure he seems free to exhibit his contempt for the whole profession which thinks econometrics adds more to the debate than direct perceptions of "deep truths". If I had read his entire oeuvre and written a biography mirroring his autobiography I would possibly be accused of writing a hit piece. As it is I don't care how rational he appears in a formal professional context, when he presents himself in an unmediated format he comes off as a self obsessed loon.

[Lafayette]

The tectonic center

hari: Why this mudcracking about your foolish ideological predispositions on basic economic laws of society?

Good question! Great question!

My take on the answer: Because the US has no history of social democracy in a collective context. It has a long history of personal enrichment in a individual context.

It glorifies the rich, adulates them, puts them on pedestals. It is the personification of the American Dream.

Sweden has had its rich. Europe has had its fortunes. But, are they role models? Not by any stretch of the imagination. So?

So, how can we expect economic thought to embrace a notion that the economic pie must be shared more fairly. Why, when we look at Income Inequity historically, as expressed in a Gini Coefficient, do we see that coefficient historically higher than just about another developed economy. Why?

Because it is considered perfectly normal. It has never been put in question. Would you question why the sun rises in the East because the sun has always risen in the East?

And, this notion will not change. Americans see themselves and their country in just such terms. That by dint of "hard work" or even "luck" or often both, one can become a millionaire, billionaire or trillionaire. This is part and parcel of the American Dream. Not that one WILL become immensely rich, but that one CAN become immensely rich.

It is supposedly just a question of grit or willingness or individual resolve. Economic fairness? That's for people who drive a Prius. Real men drive Ferraris.

One could also call it the American Myth, it is so unreal. But, reality and notions are often confused in many societies.

For the moment, despite this upsurge of hope in "Change you can believe in" (whatever that means, because it is wholly undefined), the mindset described above is the one that prevails in America. BO is going to have tough going making his "Change" become reality.

The current American mindset is clearly against him. He must recognize that American's have shifted subtly to the right and it is not a Democratic primary that is going to indicate otherwise.

This presidential race, like past races in recent history, will be decided in the tectonic center that shifts perceptibly at each election. Having convinced the Left, he must now seduce the Center and Center-Right of the American political spectrum. This is his challenge. It's time he gets specific and, if he doesn't, he could lose this race.

The Neanderthal Right will vote for McCain out of desperation. Neo-conservatism, like nostalgia, ain't what it used to be.

PS: Well done, Hari. Welcome to the Socratic method. Not enough questions are asked in this forum, though everyone seems pleased to make statements. Maybe we are afraid of the answers?

[reason]

John V.
If I can paraphrase you - Brian C isn't really a heartless monomaniac, he is a nerdish shit stirrer.

[reason]

John V.
And I'm being serious - that is what I read into what you say. It is just that some of are old enough to think that that is just a stage you grow out of.

I'm HORRIFIED that if you read the GMU blogs you would hardly know that the world is confronted with really serious problems at the moment. If they are acknowledged at all, it is treated as an intellectual curiousity. Academic detachment is all well and good, but hell - when are they going to get serious about things (like say Krugman is).

[reason]

HeroicLife...
That quote from AnnRand is interesting in that it can be perfectly ironically interpreted by anyone who has for instance read Dickens. Where people who were in fact destitute and helpless were (via "charity") - in fact used as slave labour. The problem with private charity is that (because it is not regulated) it gives the giver power of the reciever. (Not to mention that it demeans very often both).

[reason]

... it giver the giver power over the receiver. ...

[piglet]

I just posted the following comment on Bryan Caplan's blog site:

My comment above was "removed for supplying a false email address". Let me clarify this. I am writing under a pseudonym that I use on multiple sites and I cherish my right to remain anonymous. I will not supply my real email address. The risk that it may fall into the wrong hands (whether it be commercial spammers or the government seeking to identify dissenters) is just too great. There is no legitimate interest for you to ask commenters to lift their anonymity. There is no legitimate interest for you to request and store indefinitely in an electronic database, without any guarantee of privacy, the email addresses of people who want to post their opinions on your site. There's just no justification for that policy; there is absolutely no (legitimate) reason why you would want to contact me. Indeed I am able to post on many similar forums without anybody ever complaining.

You will most certainly defend your policy by saying that your forum is your "private property", that you are making the rules and that you can remove whatever post you would like without having to justify anything. That may, legalistically, be true, but it is a pathetic excuse for exerting censorship. It is ironic that this is happening on a site where self-described "libertarians" are fretting about how unfair it is that they are forced to help provide assistance to people in need. Oh yeah, you are one bunch of pathetic whiners. Scrape the surface of any libertarian, and what you'll find is a deplorable miser who gives shit about other people's liberties.

[piglet]

Bruce: "The reason there is no legal obligation to financially assist your indigent parents is because unless you are a sociopath like Caplan there is no reason to legislate basic morality.

An instructive part of the story is missing - how Caplan is turning history on its head. In earlier times, in preindustrial societies, people were indeed obligated to help parents and other relatives in need. These obligations maye have been enforced by law, by honor, or just by social pressure, but they were very real.

In modern societies, by contrast, family ties have lost much of their significance. Their role has been replaced by collectively organized, essentially anonymous welfare institutions. This has in fact contributed significantly to individual autonomy. We are not any more burdened with the responsibility to help a cousin or uncle in need, not even our own parent or child (once turned 18), with limited exceptions. But this state of affairs, whether you hail it as liberating or deplore the growing anonymity and loss of a sense of personal responsibility, depends on some welfare net being in place. Without the welfare net dislikede by Caplan, we'd have no choice but to go back to the older, clan-based arrangements. The fallacy is to make believe that since we've given up the latter, we could also do without the first.

[reason]

Piglet...
Of course you are correct. I have been arguing for a while now, if people want to reduce population the recipe is clear. Universal compulsory education, public pensions and basic universal health care. All government infrastructure. Sorry Libertarians. (And all of those have - not co-incidently - contributed enormously to the liberation of women. Does Caplan see eye to eye with his wife on this?)

[Lafayette]

Predilections

piblet: The fallacy is to make believe that since we've given up the latter, we could also do without the first.

Have "we" really surrendered the sense of "individual responsibility"? It depends upon your POV.

My POV is here in Europe; where individualism, meaning the responsibility and freedom of each individual to act as they judge fit, is subjugate to the collective moral value that we are not all islands in the sea. That we all share the same destiny.

If this morality has no longer much significance beyond small communities and particularly in large anonymous cities, shouldn't we be asking, Why?

How is it that an individual who grows up in small comunities, where they cannot possibly be anonymous, where they are inculcated with moral values (either by their religion or their education); when they free themselves from these constraints by seeking the anonymity of the large city, can trespass social norms?

Just because they can. Meaning, there is nothing, in the anonymity of the large city, to any longer hinder them regarding some types of behaviour -- whether anti-social or personally destructive. But, why?

The answer lies in the question, "What is the new set of "needs, wants or desires" that they can now chose from?" What are the values of their adopted urban social existence that has changed their predilections, inducing them to behave differently. Is it the enhanced Conspicuous Consumption, associated with the desire to "belong"?

Just asking ... because economics shows how consumption happens but not why it happens (that people consume with the propensities that they do).