Category: Democracy

John Locke and the Case against Brexit

John Locke – commonly known as the “Father of Liberalism” – was born in Wrington, England, on August 29, 1632.

locke

In his Two Treatises on Civil Government (1690), Locke refuted the idea of absolute authority. Although his immediate target was monarchical power, his argument applies to any form of absolute authority. Authority – whether that of the monarch or Parliament – must always be limited by law.

… Which brings us to maybe the best argument against Brexit: the fact that in Britain the concept of Parliamentary Sovereignty still enjoys widespread support.

Parliamentary Sovereignty is the idea that Parliament can do anything in its legislative capacity  – “Sovereignty” means unrestrained power – and that individual rights and the courts must yield to that democratic imperative.

Membership of the European Union implied an end to Parliamentary Sovereignty because the British Parliament was now bound by European law. After Brexit this check will be gone.

… Nevertheless, I’m slightly more optimistic than pessimistic about the long-run effects of Brexit.

Let’s hope the best.

Liechtenstein – the country with the most advanced constitution in the world

Imagine you are living in a country where an internet provider claims a de jure territorial monopoly wherein all inhabitants must be customers. The price-performance ratio is dismal. There are two proposals to fix the problem:

    • First proposal: Democracy … the CEO of the service provider shall be elected by the country’s citizens every four years.
    • Second proposal: Competition … the monopoly of the internet service provider shall be abolished and the market be opened for competitors.

Which solution would you prefer?

I, just like basically all sane persons, would prefer the second over the first proposal. “Democratizing” the internet provider may (or may not) improve things somewhat. But only competition can deliver the best possible price-performance ratio. I don’t care how the CEO of my internet provider gets appointed. He/she can be chosen by shareholders, through “democratic elections” or by rolling the dice.  As long as I’m happy with the service, I couldn’t care less.

What does this have to do with Liechtenstein?

Liechtenstein is, so far, the only country in the world where the provider of governance services does no longer have a de jure territorial monopoly over the country’s inhabitants.

In the words of Prince Hans-Adam:

The State should treat its citizens like an enterprise treats its customers. For this to work, the State also needs competition. We therefore support the right of self-determination at the municipal level, in order to end the monopoly of the State over its territory.

Therefore, since the constitutional reform of 2003, every commune in Liechtenstein has had the right to secede. Even tiny Planken (with roughly 280 voters) could have its independence recognized following a local vote.

The root of bad governance is lack of competition. Incorporating this key insight into its constitution has made Liechtenstein the country with the most advanced constitution in the world.

It’s a catastrophe that in other countries there has, thus far, been so little understanding of the fundamental importance of the right to secession.

Conflating Democracy with Freedom

By chance I came across this interview with a Harvard political scientist on his new book titled The People vs. Democracy: Why Our Freedom Is in Danger and How to Save It.

Reading the interview was frustrating because it showed that even political scientists (even from Harvard) are apparently unaware that democracy is not the only alternative to authoritarianism, let alone the best one.

The interviewer, Sean Illing, introduces the book as follows:

Mounk’s book asks a fairly simple question: Why are citizens across the world falling out of love with democracy?

This fairly simple question also has a fairly simple answer: democracy doesn’t work very well.

In the system of democracy good laws are public goods and therefore underproduced, as David D. Friedman pointed out in The Machinery of Freedom almost half a century ago:

Imagine buying cars the way we buy governments. Ten thousand people would get together and agree to vote, each for the car he preferred. Whichever car won, each of the ten thousand would have to buy it. It would not pay any of us to make any serious effort to find out which car was best; whatever I decide, my car is being picked for me by other members of the group. Under such institutions, the quality of cars would quickly decline.

In a Polycentric Legal System, on the other hand, law would be far more like a private good. Different people in the same country could subscribe to different legal codes.

This way, the negative effects of a bad legal code would be internalised by the persons subscribing to that legal code – at least far more so than in a democratic system where I am no less subject to the costs of bad laws than the people voting for them. Hence, market forces can be expected to lead to rapid improvement in the quality of law in general.

Put differently: freedom in a Polycentric Legal System, where making a choice between different legal codes is similar to making a choice between different Internet providers, is far greater than in a democracy with its “one-size-fits-all” approach.

The problem is that people keep conflating the terms Democracy and Freedom – even political scientists from Harvard.

The Economics of Stupidity

Here’s Bryan Caplan:

I’m an IQ realist, all the way.  IQ tests aren’t perfect, but they’re an excellent proxy for what ordinary language calls “intelligence.”  A massive body of research confirms that IQ predicts not just educational success, but career success.  Contrary to critics, IQ tests are not culturally biased; they fairly measure genuine group differences in intelligence.

Yet I’ve got to admit: My fellow IQ realists are, on average, a scary bunch.  People who vocally defend the power of IQ are vastly more likely than normal people to advocate extreme human rights violations.  I’ve heard IQ realists advocate a One-Child Policy for people with low IQs.  I’ve heard IQ realists advocate a No-Child Policy for people with low IQs.  I’ve heard IQ realists advocate forced sterilization for people with low IQs.  I’ve heard IQ realists advocate forcible exile of people with low IQs – fellow citizens, not just immigrants.  I’ve heard IQ realists advocate murdering people with low IQs. 

When I say, “I’ve heard…” I’m not just talking about stuff I’ve read on the Internet.  I’m talking about what IQ realists have told me to my face.  In my experience, if a stranger brings up low IQ in Africa, there’s about a 50/50 chance he casually transitions to forced sterilization or mass murder of hundreds of millions of human beings as an intriguing response.  You can protest that they’re just trolling, but these folks seemed frighteningly sincere to me.

Don’t such policies flow logically from IQ realism?  No way.  If someone says, “I’m more intelligent than other people, so it’s acceptable for me to murder them,” the sensible response isn’t, “Intelligence is a myth.”  The sensible response is, “Are you mad?  That doesn’t justify murder.”  Advocating brutality in the name of your superior intellect is the mark of a super-villain, not a logician.

But don’t low-IQ people produce negative externalities – negative externalities that well-intentioned consequentialists will want to address?  I’m no consequentialist, but the consistent consequentialist position is: Not if the “solution” is worse than the problem!  And if your “solution” involves gross human rights violations, there’s every reason to think it is worse than the problem.  We should be especially wary of self-styled consequentialists who rush toward maximal brutality instead of patiently searching for cheap, humane ways to cope with the social costs of low IQ.

A couple of questions may arise from reading this:

    1. Where the hell does he meet these people? What are the negative externalities low-IQ people supposedly produce?
    2. If there are such negative externalities, what are the “cheap, humane ways” to cope with them.

What are the negative effects of having a low IQ? Well, people with low IQ are, on average, less productive than people with high IQ. That’s definitely a negative effect – but does it also constitute a negative externality? I.e. does it not only negatively affect the person with the low IQ but also third parties?

Under institutions of private property this is not the case.

The only negative effect of low productivity caused by low IQ (or laziness for that matter) is on the salary of the respective person. In a private-property society, salary – the amount for which a person can sell what he or she produces – corresponds closely to the real value of that product to the people who consume it. You get out what you put in. If you put less in, you get less out.

However, besides the sphere of private property there is yet another sphere: politics. And in the political sphere there is no comparable internalisation of the negative effects of stupidity as in the sphere of private property. When a government produces bad laws, everybody bears the costs, not just those who voted the politicians into office. So, in the political sphere low-IQ people can indeed produce a virtually unlimited amount of negative externalities.

Of course, due to, e.g., rational ignorance even a democracy consisting exclusively of high-IQ people would overproduce bad laws. However, adding stupidity to the mix certainly exacerbates the problem.

The solution proposed by some IQ realists is apparently to eliminate low-IQ people – either by straight out killing them or through “softer” methods such as a No-Child Policy for people with low IQs.

The thing is: this would not only be morally reprehensible but also (pardon the pun!) stupid: a waste of resources and also not very effective. Not eliminating stupids, but eliminating politics – the only sphere where stupids can, and do, cause significant social costs – is the smart solution.

Just because we are used to law being produced monopolistically by parliament doesn’t mean this is the best or even only possible way.

In a Polycentric Legal System law would be a private good produced on a private market. Different people in the same country could subscribe to different legal codes.

Now, when a low-IQ person buys bad law, this is, in principle, his/her problem. The negative effects of the bad legal code are internalised by the persons subscribing to that law – at least far more so than in a democratic system where I am no less subject to the costs of bad laws than the people voting for them. Of course, this internalisation is not complete because I may have to incur costs to have my good legal code applied in the case of a conflict with somebody subscribing to a bad legal code.

However, market forces can be expected to lead to rapid improvement in the quality of law in general.

In a democracy you buy nothing but promises. You may know how one party ran the country for the past four years, but not how the opposition party might have run it. In a Polycentric Legal System people can compare alternative brands – much like in the case of “normal” products. Information would be imperfect, as it is in making most decisions; people may make mistakes. Stupid people may make more mistakes. But at least alternatives exist; they are there to be looked at. You can talk with neighbors who subscribe to a different legal code and compare costs and benefits.

By turning law over to the private market, making a choice between different legal rules will be much like making a choice between different cars or different Internet providers. So we can expect the same positive effects of competition.

Remember that the sphere of private property is made up of the same people as the sphere of politics but the quality of the products in the former is infinitely better.

Achieving efficient law simply requires changing the way people choose legal rules, not changing the people who make the choice.

The Social Machine, Hayek and Politicians

Don Boudreaux at Cafe Hayek points us to the following gem of a quote by Kevin Williamson:

The people who have an explicit legal obligation to work not on our behalf but on behalf of their shareholders do a pretty good job of giving us what we want; the people who vow to work on our behalf do not. That is a paradox only if you do not think about it too much, and not thinking about it too much is the business that politicians are in.

If capitalism – which is to say, human ingenuity set free to follow its own natural course – is a kind of social machine, then politicians are something like children who take apart complex machines without understanding what they do or how to put them back together. (At their worst, they are simply saboteurs.) When they rail against capitalism, automation, trade, and the like, they resemble nothing so much as those hominids at the beginning of 2001: A Space Odyssey, shrieking hysterically at something that is simply beyond their comprehension.

The thought of F. A. Hayek, who, incidentally, died 25 years ago today, shines through this quote. Hayek’s key insight was the concept of Spontaneous Order. The market system was not designed, it emerged and evolved.  When people traded, prices emerged. And prices contain all the information needed for the system to work.

This delicate social machine is different from an ordinary mechanical one, but you can still throw sand in the gears, which appears to be something politicians can’t stop doing.

The question is: what can be done about that? And this question leads us from Hayek to the topics of Polycentric Law and Competitive Governance, which happen to be main foci of this blog and will be examined in much more detail in future posts.