Author: marklutter

Sometimes smaller is worse

While I am a huge fan of decentralization, it is important to be cognizant of the potential negative effects.  Proponents of decentralization argue that local governments are more responsive to the needs of people.  However, local governments can be dominated by local special interests, restricting the overall level of freedom.

This tension was apparent during the drive to Burning Man.  Many towns would pull over cars, ticketing them for any perceived traffic violation.  This would have no negative effect on the elected officials as out of towners don’t vote.  A more insidious example is Ferguson and the broader St. Louis area.  They weren’t ticketing one time passers through, but oppressing an entire population, keeping them impoverished.

Zoning restrictions are another example.  Japan decides zoning policy on a national level, and as such, Tokyo has cheaper housing prices than San Francisco.  This is because the property owners in Tokyo are unable to effectively lobby the national government, while San Francisco property owners are much closer to the relevant decision making body.

This point can be brought back the the 16th, 17th, and 18th centuries and the building of the nation state.  One of the primary advantages of the modern nation state was its ability to crush local monopolies.  Rivers which previously had tolls every mile for a different fiefdom would be traveled at much lower cost.  By crushing the local monopolies the modern nation state created a free trade zone within its borders.  This allowed Britain to experience the industrial revolution, overtaking the rest of Europe, despite having higher tariffs than France.

The question advocates of political decentralization must ask is, under what circumstances will the benefits of local governments outweigh their costs? Moving cities is already much cheaper now than previously, increasing the elasticity of demand for local governments.  Trade, rather than plunder, is also a far greater part of wealth today.  Another option is a shareholder state, one where the incentives of the population are more closely aligned with the ruling class than most forms of government.

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Introduction to proprietary cities

The Freeman was kind enough to publish a short introduction to the intellectual history of proprietary cities, by yours truly. Here’s an excerpt.

There has been a lot of discussion about what Tyler Cowen calls shareholder states. A shareholder state is a territorial governance structure where the decision-makers have a monetary incentive for performance: Decision-makers would be rewarded for decisions leading to long-term growth. This system contrasts with democracy, where decision-makers rarely think past the next election cycle.

But the discussion has been missing an understanding of the intellectual history of proprietary communities, the “purest” type of shareholder state. A proprietary community is a territorial governance structure under a single owner. This structure more closely approximates private property, giving it an advantage over other governance structures. In a proprietary community, there is a single decision-maker with an interest in property values, which are highly correlated with economic development.

Review of Rationalism in Politics by Michael Oakeshott

This summer I read what is now one of my favorite books, Rationalism in Politics, by Michael Oakeshott.  One of the premier conservative thinkers of the 20th century, his work is criminally underrated.

Rationalism in Politics is a collection of essays.  The best are in the beginning.  He makes arguments similar to Hayek in Law Legislation and Liberty: Rules and Order, attacking rationalism, the belief in the use of reason to re-organize society.  Instead, we should be aware of the limits of our knowledge, and not be too presumptuous in our ability to use reason to re-shape society.

Perhaps the best analogy to understand Oakeshott’s thought is to compare it to the Austrian idea of the market process.  Austrians dislike the economic focus on equilibrium, instead arguing that the market is a process by which knowledge is learned and society is organized.  Oakeshott makes similar points with regards to politics.  Rather than decry the messy reality, he embraces it.  People acting on imperfect and wrong information is inevitable in the political process.  It is only through such interactions does politics come to resemble the order that it does.

I highly recommend Rationalism in Politics to anyone interested in politics or economics.

An economist considers Burning Man

I spent last week at Burning Man. It was one of the best experiences of my life. However, as much ink has been spilled on the experience of Burning Man, I will direct my attention to where I have a comparative advantage, understanding the social organization of Burning Man.

Burning Man is a city which exists for a week. In 2014 the city had 70,000 inhabitants. Creating a social order of 70,000 people is hard enough. However, what makes Burning Man so interesting is that they not only create a city, but they also operate under social norms that are alien to the outside world.

The two most important norms are that of a gifting economy and removing all trash. Monetary transactions are unacceptable. All matter brought into Burning Man must be brought out. The difficulty in enforcing both norms is that Burning Man is big enough to be anonymous. If I wanted to dump my trash during the night I might be yelled at, but it is easy enough to disappear into the dark with no further social repercussions.

Economists have long distinguished between familiar and anonymous social interactions.  The rules we use when interacting with family and friends are different from the rules we use when interacting with strangers.  This is because social pressure is sufficient to ensure cooperation among individuals who have long term repeated interaction. However, one shot interaction with strangers requires different rules to ensure cooperation. These rules range from reputation used by Ebay and Uber to formal contracts used in the business world.

What make Burning Man so impressive is that they have been able to sustain rules that primarily exist in small groups in a city of 70,000 people. Burning Man proves social pressure is scalable far beyond what is normally assumed. Further, such social pressure works even though each year 40% of Burners are new residents. These new residents, by and large, successfully are integrated into the wider social order.

This is where the tension between new and old Burners come in. For almost every event, there are people who complain that it has changed for the worse as time progressed. The new attendees don’t understand the culture, and have morphed the event into something unrecognizable. The dynamic exists in Burning Man too, probably to a greater extent than other events. However, while I tired of hearing people complain about the good old days, it is clear that such conversation fulfills an important social function. It pressures new attendees, such as myself, to learn and conform to the norms that have made Burning Man what it is.

(Image credit Neil Girling)

Review of Liberal Archipelago

I recently read Liberal Archipelago by Chandran Kukathas. It is the best academic defense of exit as a moral principle, articulating a vision of society as a large number of sub-societies where people have the choice of which sub-society to join. I highly recommend it to to anyone interested in exit.

Kukathas bases his argument on freedom of association, choosing to jettison the traditional liberal focus on justice as the foundational principle of society. He bases his defense of freedom of association on the fact that different groups of people tend to have different conceptions of justice. The way to ensure these groups can live together without conflict, is to allow them to live under their different moral institutions, so long as individuals in such groups are free to leave and join other groups as they wish.

One implication of his views is the possibility of the proliferation of “illiberal” societies, such as the Amish, or more ugly, ethnic nationalist groups. However, under Kukathas’ conception, such a meta-society would be liberal so long as individuals were free to leave their group.

On interesting thing to note is his preface. He was influenced by libertarians, thanking both IHS and Liberty Fund, as well as a number of libertarian scholars. He also acknowledges the influence of both Hayek and Oakeshott on his work. That being said, Liberal Archipelago is squarely in the liberal tradition, with his libertarian influences having a much more subtle influence on his thoughts.

Strategic leaks, restricted access, and freedom of the press

Freedom of the press usually means no prior restraint.  That is, anyone can publish anything, whether or not the government likes it.  While a lack of prior restraint seems to be a necessary condition for freedom of the press, I am becoming increasingly convinced that it is not a sufficient condition.  It is possible for government to have a significant impact on news by restricting access to reporters who are likely to write favorable stories.  A mild version of this is when disliked members of the press are not invited to news conferences.  A extreme version involves selective leaks to press who will spin a story positively.

The problem was aptly noted by a number of press organizations in an open letter to President Obama.

Over the past two decades, public agencies have increasingly prohibited staff from communicating with journalists unless they go through public affairs offices or through political appointees. This trend has been especially pronounced in the federal government. We consider these restrictions a form of censorship — an attempt to control what the public is allowed to see and hear.

The stifling of free expression is happening despite your pledge on your first day in office to bring “a new era of openness” to federal government – and the subsequent executive orders and directives which were supposed to bring such openness about.

Recent research has indicated the problem is getting worse throughout the nation, particularly at the federal level. Journalists are reporting that most federal agencies prohibit their employees from communicating with the press unless the bosses have public relations staffers sitting in on the conversations. Contact is often blocked completely. When public affairs officers speak, even about routine public matters, they often do so confidentially in spite of having the title “spokesperson.” Reporters seeking interviews are expected to seek permission, often providing questions in advance. Delays can stretch for days, longer than most deadlines allow. Public affairs officers might send their own written responses of slick non-answers. Agencies hold on-background press conferences with unnamed officials, on a not-for-attribution basis.

In many cases, this is clearly being done to control what information journalists – and the audience they serve – have access to. A survey found 40 percent of public affairs officers admitted they blocked certain reporters because they did not like what they wrote.

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