« "The Moral Heart of Economics" | Main | The FOMC Keeps the Federal Funds Rate and QEII Unchanged »

Wednesday, January 26, 2011

The Unbridgeable Moral Divide

When Paul Krugman talks about a great and unbridgeable moral divide, this is the kind of thing he's talking about. There's no middle ground here, and no room for compromise (I left the highlighted passage out in the excerpt from Glaeser in the post below this one). This is Robert Higgs from the Independent Institute:

Freedom Is Not Compatible with Government’s Initiation of Force against Innocent People, by Robert Higgs: In yesterday’s New York Times appears an op-ed article by Edward L. Glaeser... Glaeser’s article is remarkable because arguments in favor of freedom, insisting that economic analysis implicitly rests on a moral presumption that individual freedom has fundamental value, do not appear every day — or every month — in “the newspaper of record.” So, I am glad to give two cheers to Glaeser, one for his theme and another for his courage in placing the argument in such a hostile outlet.

I cannot give Glaeser a third cheer, however, because toward the end of the article he inserts a concession that I find wholly inconsistent with the rest of the argument. He writes:

Economists’ fondness for freedom rarely implies any particular policy program. A fondness for freedom is perfectly compatible with favoring redistribution, which can be seen as increasing one person’s choices at the expense of the choices of another, or with Keynesianism and its emphasis on anticyclical public spending.

Many regulations can even be seen as force for freedom, like financial rules that help give all investors the freedom to invest in stocks by trying to level the playing field.

To be sure, many mainstream economists do think about policy just as Glaeser says they do. But in doing so, they are mistaken. I find it difficult to believe that a man of Glaeser’s intelligence has really given much thought to what he is saying in these passages.

In fact, a presumption in favor of freedom rules out virtually everything that modern governments do, certainly nearly everything they do in interfering in economic affairs. Redistribution of income, for example, requires that the government rob Peter in order to benefit Paul (and its own functionaries, who serve as middlemen in this transfer). This action is not freedom; it is a crime against Peter, a raw violation of his right to his own legitimate property. Keynesian countercyclical spending requires the government to spend borrowed money whose acquisition is premised on future taxation (that is, robbery) of taxpayers in order to service the debt and repay the principal. Again, innocent persons have their rights violated. How can anyone fail to see that robbery is incompatible with freedom? Finally, the financial rules that Glaeser finds compatible with freedom entail threats of violence against financial transactors who do not follow arbitrary government rules — often extremely foolish and even destructive rules — in making their transactions, notwithstanding the fact that the parties to the transaction may be perfectly willing to proceed without such regulatory compliance. Such regulation is the very opposite of freedom; it is instead the sheer imposition of outside force, intruding on willing transactors, and thereby discouraging them to some extent, if not entirely, with consequent loss of the wealth that such transactions would have created, in addition to the loss of liberty...

Glaeser quotes Milton Friedman to good effect in his article... Friedman’s arguments were good as far as they went, but they did not go nearly far enough. Like Glaser, Friedman was prepared to make many concessions to state power, and his focus on utilitarian arguments, as opposed to moral principles, diminished the intellectual force of his laudable efforts to enlarge the scope of liberty in economic affairs.

Taxation is robbery, regulation is a threat of violence -- it's not hard to understand why so many people who hold these beliefs do not accept the legitimacy or the authority of the democratic process as a means to resolve disputes about the proper role of government.

    Posted by on Wednesday, January 26, 2011 at 09:44 AM in Economics, Politics | Permalink  Comments (59)


    Comments

    Feed You can follow this conversation by subscribing to the comment feed for this post.