We discuss

• Is the government effective at doing anything?
• What's the use of thinking counterfactually?
• Is it just market failures all the way down?
• Three kinds of anarcho-capitalists
• The economic calculation problem
• Is an economic theory necessarily political?
• What to make of the claim that austrian economics is like physics
• But wait, isn't it also metaphysics?

References

• Scott's FAQ
• Napolean science funding:
  • Canned food
  • More readings
• Bruce's Theory of Anything Pod and on twitter at @bnielson01
• Vaden's blog posts on Libertarianism:
  • First: Is Austrian Economics the Best Explanation of Economics?
  • Second: Can we predict human behaviour? A discussion with Brett Hall

Quotes

The Argument: Government can’t do anything right. Its forays into every field are tinged in failure. Whether it’s trying to create contradictory “state owned businesses”, funding pet projects that end up over budget and useless, or creating burdensome and ridiculous “consumer protection” rules, its heavy-handed actions are always detrimental and usually embarrassing.
...
The Counterargument: Government sometimes, though by no means always, does things right, and some of its institutions and programs are justifiably considered models of efficiency and human ingenuity. There are various reasons why people are less likely to notice these.
- Scott's FAQ

7.1.1: Okay, fine. But that’s a special case where, given an infinite budget, they were able to accomplish something that private industry had no incentive to try. And to their credit, they did pull it off, but do you have any examples of government succeeding at anything more practical?

Eradicating smallpox and polio globally, and cholera and malaria from their endemic areas in the US. Inventing the computer, mouse, digital camera, and email. Building the information superhighway and the regular superhighway. Delivering clean, practically-free water and cheap on-the-grid electricity across an entire continent. Forcing integration and leading the struggle for civil rights. Setting up the Global Positioning System. Ensuring accurate disaster forecasts for hurricanes, volcanoes, and tidal waves. Zero life-savings-destroying bank runs in eighty years. Inventing nuclear power and the game theory necessary to avoid destroying the world with it.

Socials

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Special Guest: Bruce Nielson.

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We discuss

• Do the poor deserve to be poor? Waddabout the rich?
• Is dogmatism ever a good thing?
• Is social mobility determined in part by parental wealth?
• Is this due to genetics, culture, upbringing or something else?
• The chances of escaping the lower class
• Does government regulation increase social mobility?
• Why progressive taxation makes sense

References

• David Friedman's response
• Bruce's Theory Of Anything podcast
• Popperian/Deutschian FB group: Many Worlds of David Deutsch
• On dogmatism:
  • Bruce's episode: https://podcasters.spotify.com/pod/show/four-strands/episodes/Episode-51-Was-Karl-Popper-Dogmatic-e1obs0m/a-a2hb64g
  • Ben's blog post: https://benchugg.com/writing/dogmatism/
• Vaden's blog posts on Libertarianism:
  • First: Is Austrian Economics the Best Explanation of Economics?
  • Second: Can we predict human behaviour? A discussion with Brett Hall

Quotes

The Argument:

Those who work hardest (and smartest) should get the most money. Not only should we not begrudge them that money, but we should thank them for the good they must have done for the world in order to satisfy so many consumers.

People who do not work hard should not get as much money. If they want more money, they should work harder. Getting more money without working harder or smarter is unfair, and indicative of a false sense of entitlement.

Unfortunately, modern liberal society has internalized the opposite principle: that those who work hardest are greedy people who must have stolen from those who work less hard, and that we should distrust them at until they give most of their ill-gotten gains away to others. The “progressive” taxation system as it currently exists serves this purpose.

This way of thinking is not only morally wrong-headed, but economically catastrophic. Leaving wealth in the hands of the rich would “make the pie bigger”, allowing the extra wealth to “trickle down” to the poor naturally.

The Counterargument:

Hard work and intelligence are contributory factors to success, but depending on the way you phrase the question, you find you need other factors to explain between one-half and nine-tenths of the difference in success within the United States; within the world at large the numbers are much higher.

If a poor person can’t keep a job solely because she was lead-poisoned from birth until age 16, is it still fair to blame her for her failure? And is it still so unthinkable to take a little bit of money from everyone who was lucky enough to grow up in an area without lead poisoning, and use it to help her and detoxify her neighborhood?

Socials

• Follow us on Twitter at @IncrementsPod, @BennyChugg, @VadenMasrani
• Come join our discord server! DM us on twitter or send us an email to get a supersecret link
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Do your part to increase social mobility by sending your hard-earned money to: incrementspodcast@gmail.com

Special Guest: Bruce Nielson.

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We discuss

• Loose ends from last episode - coercion and the Non-Aggression Principle
• What distinguishes a conservative like Bruce from a libertarian?
• Externalities
• Boycotts and Coordination Problems
• Irrational Choices
• Lack of Information

References

• The Non-libertarian FAQ
• Planet Money on the Porcupine Freedom Festival

Vaden's blog posts on Libertarianism / Austrian Economics / Anarcho-Captialism / Whateveryawannacallit

• First: Is Austrian Economics the Best Explanation of Economics?
• Second: Can we predict human behaviour? A discussion with Brett Hall

Quotes

The Argument:

In a free market, all trade has to be voluntary, so you will never agree to a trade unless it benefits you.

Further, you won’t make a trade unless you think it’s the best possible trade you can make. If you knew you could make a better one, you’d hold out for that. So trades in a free market are not only better than nothing, they’re also the best possible transaction you could make at that time.

Labor is no different from any other commercial transaction in this respect. You won’t agree to a job unless it benefits you more than anything else you can do with your time, and your employer won’t hire you unless it benefits her more than anything else she can do with her money. So a voluntarily agreed labor contract must benefit both parties, and must do so more than any other alternative.

If every trade in a free market benefits both parties, then any time the government tries to restrict trade in some way, it must hurt both parties. Or, to put it another way, you can help someone by giving them more options, but you can’t help them by taking away options. And in a free market, where everyone starts with all options, all the government can do is take options away.

The Counterargument:

This treats the world as a series of producer-consumer dyads instead of as a system in which every transaction affects everyone else. Also, it treats consumers as coherent entities who have specific variables like “utility” and “demand” and know exactly what they are, which doesn’t always work.
- https://slatestarcodex.com/2017/02/22/repost-the-non-libertarian-faq/

What is an externality?

1.1: What is an externality?

An externality is when I make a trade with you, but it has some accidental effect on other people who weren’t involved in the trade.

Suppose for example that I sell my house to an amateur wasp farmer. Only he’s not a very good wasp farmer, so his wasps usually get loose and sting people all over the neighborhood every couple of days.

This trade between the wasp farmer and myself has benefited both of us, but it’s harmed people who weren’t consulted; namely, my neighbors, who are now locked indoors clutching cans of industrial-strength insect repellent. Although the trade was voluntary for both the wasp farmer and myself, it wasn’t voluntary for my neighbors.

Another example of externalities would be a widget factory that spews carcinogenic chemicals into the air. When I trade with the widget factory I’m benefiting – I get widgets – and they’re benefiting – they get money. But the people who breathe in the carcinogenic chemicals weren’t consulted in the trade.

2.3: How do coordination problems justify regulation of ethical business practices?

... Let’s say Wanda’s Widgets has one million customers. Each customer pays it $100 per year, for a total income of $100 million. Each customer prefers Wanda to her competitor Wayland, who charges $150 for widgets of equal quality. Now let’s say Wanda’s Widgets does some unspeakably horrible act which makes it $10 million per year, but offends every one of its million customers.

There is no incentive for a single customer to boycott Wanda’s Widgets. After all, that customer’s boycott will cost the customer $50 (she will have to switch to Wayland) and make an insignificant difference to Wanda (who is still earning $99,999,900 of her original hundred million). The customer takes significant inconvenience, and Wanda neither cares nor stops doing her unspeakably horrible act (after all, it’s giving her $10 million per year, and only losing her $100).

The only reason it would be in a customer’s interests to boycott is if she believed over a hundred thousand other customers would join her. In that case, the boycott would be costing Wanda more than the $10 million she gains from her unspeakably horrible act, and it’s now in her self-interest to stop committing the act. However, unless each boycotter believes 99,999 others will join her, she is inconveniencing herself for no benefit.

Furthermore, if a customer offended by Wanda’s actions believes 100,000 others will boycott Wanda, then it’s in the customer’s self-interest to “defect” from the boycott and buy Wanda’s products. After all, the customer will lose money if she buys Wayland’s more expensive widgets, and this is unnecessary – the 100,000 other boycotters will change Wanda’s mind with or without her participation.

3.1: What do you mean by “irrational choices”?

A company (Thaler, 2007, download study as .pdf) gives its employees the opportunity to sign up for a pension plan. They contribute a small amount of money each month, and the company will also contribute some money, and overall it ends up as a really good deal for the employees and gives them an excellent retirement fund. Only a small minority of the employees sign up.

The libertarian would answer that this is fine. Although some outsider might condescendingly declare it “a really good deal”, the employees are the most likely to understand their own unique financial situation. They may have a better pension plan somewhere else, or mistrust the company’s promises, or expect not to need much money in their own age. For some outsider to declare that they are wrong to avoid the pension plan, or worse to try to force them into it for their own good, would be the worst sort of arrogant paternalism, and an attack on the employees’ dignity as rational beings.

Then the company switches tactics. It automatically signs the employees up for the pension plan, but offers them the option to opt out. This time, only a small minority of the employees opt out.

That makes it very hard to spin the first condition as the employees rationally preferring not to participate in the pension plan, since the second condition reveals the opposite preference. It looks more like they just didn’t have the mental energy to think about it or go through the trouble of signing up. And in the latter condition, they didn’t have the mental energy to think about it or go through the trouble of opting out.

If the employees were rationally deciding whether or not to sign up, then some outsider regulating their decision would be a disaster. But if the employees are making demonstrably irrational choices because of a lack of mental energy, and if people do so consistently and predictably, then having someone else who has considered the issue in more depth regulate their choices could lead to a better outcome.

4.1: What do you mean by “lack of information”?

Many economic theories start with the assumption that everyone has perfect information about everything. For example, if a company’s products are unsafe, these economic theories assume consumers know the product is unsafe, and so will buy less of it.

No economist literally believes consumers have perfect information, but there are still strong arguments for keeping the “perfect information” assumption. These revolve around the idea that consumers will be motivated to pursue information about things that are important to them. For example, if they care about product safety, they will fund investigations into product safety, or only buy products that have been certified safe by some credible third party. The only case in which a consumer would buy something without information on it is if the consumer had no interest in the information, or wasn’t willing to pay as much for the information as it would cost, in which case the consumer doesn’t care much about the information anyway, and it is a success rather than a failure of the market that it has not given it to her.

In nonlibertarian thought, people care so much about things like product safety and efficacy, or the ethics of how a product is produced, that the government needs to ensure them. In libertarian thought, if people really care about product safety, efficacy and ethics, the market will ensure them itself, and if they genuinely don’t care, that’s okay too.

Socials

• Follow us on Twitter at @IncrementsPod, @BennyChugg, @VadenMasrani
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Special Guest: Bruce Nielson.

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Have you encountered such phrases in the wild? Confused, perhaps, as to why an afternoon beer with a friend become an extended diatribe against John Maynard Kaynes? Us too, which is why we're diving into the ideological source of such views: Libertarianism.

Welcome to Part 1 of a four part series where we, with Bruce Nielson (@bnielson01) as our battle-hardened guide, dive into Scott Alexander's non-libertarian FAQ. Ought George help, or ought George respect the government's property rights? Let's find out.

And make sure to check out Bruce's excellent The Theory Of Anything podcast here: https://podcasts.apple.com/us/podcast/the-theory-of-anything/id1503194218

We discuss

• Varieties of libertarianism
• Why are some libertarians so ideological?
  
• Is taxation theft?
• The problem of public goods
• "Proprietary communities" and the perfect libertarian society
• Why the perfect libertarian society doesn't escape taxation
• Are we living in the libertarian utopia right now?
• Taxes as membership fees

References

• The Non-libertarian FAQ
• George ought to help
• The Machinery of Freedom by David Friedman

Vaden's blog posts on Libertarianism / Austrian Economics / Anarcho-Captialism / Whateveryawannacallit

• First: Is Austrian Economics the Best Explanation of Economics?
• Second: Can we predict human behaviour? A discussion with Brett Hall

Quotes

0.2: Do you hate libertarianism?
No.

To many people, libertarianism is a reaction against an over-regulated society, and an attempt to spread the word that some seemingly intractable problems can be solved by a hands-off approach. Many libertarians have made excellent arguments for why certain libertarian policies are the best options, and I agree with many of them. I think this kind of libertarianism is a valuable strain of political thought that deserves more attention, and I have no quarrel whatsoever with it and find myself leaning more and more in that direction myself.

However, there’s a certain more aggressive, very American strain of libertarianism with which I do have a quarrel. This is the strain which, rather than analyzing specific policies and often deciding a more laissez-faire approach is best, starts with the tenet that government can do no right and private industry can do no wrong and uses this faith in place of more careful analysis. This faction is not averse to discussing politics, but tends to trot out the same few arguments about why less regulation has to be better. I wish I could blame this all on Ayn Rand, but a lot of it seems to come from people who have never heard of her. I suppose I could just add it to the bottom of the list of things I blame Reagan for.
- https://slatestarcodex.com/2017/02/22/repost-the-non-libertarian-faq/

Socials

• Follow us on Twitter at @IncrementsPod, @BennyChugg, @VadenMasrani
• Come join our discord server! DM us on twitter or send us an email to get a supersecret link
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• Click dem like buttons on youtube

How do you summon libertarians at a party? Finish the punchline and tell us over at incrementspodcast@gmail.com

Special Guest: Bruce Nielson.

Support Increments