More on Transparency & Generality

I left the following thoughts in Megan McCardle's comments, but I thought I would share them here, along with some additional thoughts about liberalism and libertarianism . . .

Governments use coercion to make things happen. Government coercion can be legitimate, but it has to meet certain conditions. One of the traditional conditions is that a majority of the citizens who are going to be coerced, or a majority of their representatives, have to agree to it. However, if policies are structured so that we can't see whether or how we are being coerced, then we can't freely endorse them in the democratic process. So those policies fail the test of legitimacy.

Part of the issue here is a big principle-agent/incentive compatibility problem between representatives and the citizens they represent. Politicians want to get re-elected. If they can subsidize interest group A at group B's expense without group B really noticing due to the hidden transfer, then that will sound like a real winner to a politician. Which is just to say that the incentives politicians face encourage them to violate the very conditions of transparency and public justification that make their coercive powers legitimate. That sounds like a problem to me.

Politicians would have a constant incentive to try to violate and work around an explicit transfer requirement. Which is exactly why we need one. It would give anyone in the group from which resources are being appropriated standing under the Constitution to file suit in order to repeal the law licensing the hidden transfer. The whole class wouldn't need to notice the hidden transfer, and then fight it off politically. Only one person would have to notice and win in court. If the politicians can succeed in passing a law that makes the transfer explicit, then that's OK–it satisfies the minimal conditions of legitimate government power.

It occurs to me that Charles Murray's “just give everyone $10,000 a year” plan is a lovely example of a rule that satisfies both the explicit transfer/public justification/democratic transparency requirement and Buchanan's generality requirement.

For those of us, like Murray and me, who are Hayek/Friedman/Buchanan-style classical liberals as opposed to Rand/Rothbard-style libertarians, things like generality and transparency matter. There is no natural rights beef against transfers per se, but a fundamentally liberal beef against institutional forms that undermine the conditions for liberal legitimacy. If the conditions of liberal legitimacy are met, then the result is the free-market, minimal welfare state. This is a “libertarian” result according to the vernacular, if not according to orthodoxy. It is surely a classical liberal result. (Is Samuel Freeman right that Rand/Rothbard libertarianism is not really a kind of liberalism?)

Here is a hypothesis for debate: The cause of classical liberalism as a really existing possibility for political reform has been harmed by bundling free markets with a ban on transfers. This package deal has influenced people who think justice requires transfers to eschew free markets. If we had spent the last forty years hammering away at liberal fundamentals like transparency and generality instead of the natural right to not be taxed, our society would now be closer to the free market, limited government ideal.


Hot Philosophy Action at Cato Unbound

The informal blog discussion has kicked off at Cato Unbound! In response to David Schmidtz's blog reply to the formal reply essays, Peter Singer, evidently unimpressed by the whole point of Tom Palmer's essay, writes

Why should we assume that sellers have the right to get as much as the market will bear? Two families acquire similar looking acreages of Texas grazing lands. One is fortunate: their land has oil beneath the surface and they become fabulously wealthy. The other is unfortunate: their land has no oil, and despite working as hard as their neighbors, and applying similar intelligence, they remain poor. What gives the former “a right” to their wealth? In my view, nothing. We believe in an inherent right to property because we believe that somehow rugged individuals living in a state of nature can acquire and retain wealth. That is nonsense, of course. Oil would have little value if society did not provide the infrastructure that enables us to use it. Wealth does not exist without society, and the security that society provides.

So instead of asking what gets us to the conclusion that “we have a right” to interfere with market mechanisms, why not ask, instead: “Would interfering with market mechanisms make people, on the whole and in the long run, better off?”

Schmidtz replies:

Peter Singer says, “Oil would have little value if society did not provide the infrastructure that enables us to use it. Wealth does not exist without society, and the security that society provides.” I agree, and I believe in providing that security. Perhaps that leads to a point about inequality. But it seems more obviously to lead to a point about property rights. Suppose we substituted “property rights” for “society” in Singer's sentence. It would seem to be a more precise way of making Singer's point, but perhaps he has something else in mind.

Later, I liked this very Schmidtzean passage:

It occurs to me that when I read a newspaper, I get the impression that it is wildly unsafe to drive a car, or more generally, to leave the house at all. It's also unsafe to stay at home. I get the impression that normal people get shot at every day, unless they get run over by a drunk driver first. I also read in the newspaper that people are starving, and that to have the income of a graduate student is to be utterly desperate. I get the impression that I and everyone I know are the lone exceptions to the rule that people are desperately short of the means of looking after themselves. Every time a newspaper reports a plane crash, people overestimate the odds of plane crashes for a while. Anyway, my impression is that inequality is news, where equality isn't. Just a thought. How much do you know from personal experience about how much worse it is to be relatively poor these days, compared to, say, fifty years ago?

Expect more today from Hacker, and, let's hope, from the globetrotting Tom G. Palmer. Check it out. And blog about it!

Demographics and Democracy

Contemplating Longman's latest baby bust thumbsucker, The Munger asks a good question:

What does this say about democracy? Does the will of the majority contain moral force? Or does it just reflect different rates of reproduction, rather than persuasion?

Good question!

If I'm the Netherland's, or some other small liberal country, my immigration policy will have a lot to do with restricting entry by people who do not share our evolved liberal values and taste in designer eyeglasses. The problem is worse if the illiberal would-be immigrants breed at rates outstripping the native population. I am, in effect, rigging elections by rigging who has standing to vote. If we democratically choose to prevent our democracy from changing democratically in ways the present majority dislikes, is that a triumph or failure of democracy?

Suppose it was discovered that Indonesians are just natural Republicans and seldom fail to sow their seed and multiply. So the Republican administration gives immigration priority to Indonesians. What would that do to the moral force of the will of the majority? Better or worse than gerrymandering? (What if Indonesians promised to vote Republican in a secret pact?) Democrats like to think that young people and poor people will vote Democrat if only they would vote. So that well-known Party organs bombard us with “rock the vote” and “vote or die” nonsense in order to make grape drink out of the sour grape of electoral dependency on demographic classes that don't like to vote. That's also why Dems scream bloody murder about “disenfranshisement” every election. What if Namibians are natural Democrats? If a Republican adminstration puts Namibia on to immigration shit list, are they disenfranchising future voters? I want to know!

The harder you think about democracy, the harder it is to see it as morally super-special. But it's still special. Not everything needs to be super-special.

Kinsley Gets It!

Kinsley is just a short step logical step away from endorsing the Will Wilkinson dualistic market rationing system.

Krugman and Wells note repeatedly that 20 percent of the population is responsible for 80 percent of health-care costs. But that doesn't explain why health insurance should be different from other kinds. The small fraction of people involved in auto accidents in any year is responsible for almost all the cost of auto insurance. You insure against the risk of being in that group.

What's different about health insurance is the opposite: Much of it isn't insurance at all but a subsidy. The value of the subsidy is the difference between what the individual pays and what the insurance would cost in the free market. If people were buying health care or insurance with their own money, they might or might not spend too much—whatever “too much” is—but no one else would need to care if they did.

Good show!

If you can afford real insurance on a real market, go ahead and overinsure. It's your money! If we had a real market in insurance, we'd also know who was uninsurable. Probably the 20% responsible for 80% of the costs! And if he had a real market, the absolute cash value of that 80% would be smaller, and the quality of the services the 20% falling under the care of the Federal Health Rationing Serive would be higher. (The percentage of total health expenditure due to that 20% would probably shrink, as they are pushed into less expensive services by the HRS. Indeed, in my plan, the percentage of total health expenditures due to those covered by the HRS will be the HRS budget over total annual expenditure. In my plan, legislators have to choose each year what amount is going to be, and the Rationing Service has to stretch it out to make it work the best they can.)

It is incredible to me how often this idea occurs to me, and how seldom it seems to occur to others: If there is a transfer from class A to class B, make it explicit. When you propose making an hidden transfer explicit, people often climb the wall with annoyance. Why? Because the whole point of many hidden transfers is that they are politically viable only because they are hidden. If you like the transfer, you'll want to keep hiding it.

Hey! Maybe that's my new favorite Constitutional amendment idea. The Explicit Transfer Amendment! Under the ETA, raising the minimum wage is unconstitutional. Levying extra taxes on business owners or consumers and transferring the money to low-income workers is not. The point is just that the transfer is obvious. If there is a political constituency that is hurt by it, they'll be able to see that, and speak up for themselves in the political process. I think this falls out of Rawlsian principles of public justification, for what that's worth. The Health Rationing Service is fine because the transfer from taxpayers to the poor “insurance exempt” is explicit. Our current insurance regs, on the other hand, hide the transfer. And that's bad!

Speaking of favorite constitutional amendments, from Samwick's commentary on the grisly miscarriage of legislative responsibility that is pension reform:

On top of those changes, companies also persuaded lawmakers to add dozens of specific measures, including a multibillion-dollar escape clause for the nation's airlines and a special exemption for the makers of Smithfield Farms hams.

Tell me again what's wrong with Buchanan's generality amendment? The generality amendment plus the explicit transfer amendment would eliminate almost everything that is terrible about politics.

Paper of the Day: Economic Policy and the Level of Self-Perceived Well-Being

Economic Policy and the Level of Self-Perceived Well-Being: An International Comparison by Tomi Ovaska and Ryo Takashima, the Journal of Socio-Economics 35 (2006) 308-325. An excellent econometric paper. Best part:

Contrary to the findings on political freedom, economic freedom was found to be statistically significant in nearly all estimations, and of the positive sign. Furthermore, the relationship between SWB and economic freedom depicted in Fig. 2 largely held, unlike that for income, after controlling for alternative explanations of well-being. For instance, when the economic freedom index average in the sample rises from 5.76 to 6.34, the happiness levels rise from 3.01 to 3.07. The effect on life satisfaction is identical. The results suggest that people unmistakably care about the degree to which the society where they live provides them opportunities and the freedom to undertake new projects, and make choices based on one’s personal preferences. Compared to the GDP per capita measure, the index of economic freedom – personal choice, freedom to compete and the security of privately owned property as its core components – turned out to be about four times as important, as measured by elasticities. This indicates that the newly found interest of economics and of policymakers in measures of institutional quality is well placed. Based on the regression results, economic freedom holds some promise in serving as one of the policy tools that could be potentially used to increase the SWB of a nation’s population.

The explanation of why political rights (i.e., voting rights) had a negative influence was interesting:

It turned out that though insignificant, political rights had negative sign while civil liberties had a positive sign. This may be a reflection that democracy is not ideal as a collective decision making mechanism. As one can see from the median voter model of public choice theory, only the median voter obtains satisfaction from political rights. In addition, unlike market exchanges, every majority voting decision can potentially create a relatively large number of losers, all those who were in minority. However, the positive sign of civil liberty indicates that regardless of political structure, civil liberties are essential for human beings across society.

They also note that general freedom is likely prone to adaptation. We take it for granted. Sound's right to me.

Health Care Fantasia

Megan McCardle has some sane thoughts about health care. This isn't my area, but I've given it some thoughts. They are not necessarily sane or feasible. But I think it is interesting to compare your inuition of what would work well in a better world with the menu of policies that actually get offered. So here's my crazy (not Cato-approved!) plan.

  • Decartelization.

This is bigger than people understand. Without recourse to any actual data, I believe that the state's grant of monopoly privelege to certain official certifying agencies has a lot do do with the high cost of health care. Besides creating artificial scarcity (and therefore huge rents for M.D.s), the certification cartel violates our natural liberty to cooperate. The more I think about this, the more it ticks me off. You don't need a Ph.D. in mechanical engineering to change a muffler any more than you need a M.D. to set a broken arm. You just need to know how to change a muffler or how to set a broken arm. Here comes an arumentum ad maternum… My mom was a nurse for twenty-odd years. And my mom knew what she was doing. There is no reason she should not have been able to diagnose basic illnesses, prescribe drugs, set bones, etc. etc. No reason. At all. My sister is just starting her M.S. in nursing courses (she's a BSN). And, of course, the AMA is trying to strictly limit what services nurse practioners can offer under the law. So, the AMA is evil! And I would think so even if it was no skin off my sister's back. There ought to be a guy, Manny, say, who does stitches. You cut your arm and you go to Manny's stitches joint, which flourishes because Manny is the best at stitches. Manny leaves no scar! Ever! Moreover, he's cheaper that some guy who spend years learning about the biochemistry of the human body. What does that have to do with stitches!? Why isn't there a Manny's Stitches Joint! You should be able to get a degree from the University of Phoenix in knee replacements. Just knee replacements! Why can't you?! Because the AMA is evil. M.D.s are monopolists and welfare queens, and preventing a huge infusion of high-quality low-cost health care providers from coming to market. SHAME! If anyone attempts to say that our current system resembles a “free market,” point out that in a free market you wouldn't have to buy a massively expensive indulgence from the Church of Medicine in order to sell health services.

  • Abolish the FDA

Of course!

  • Real insurance markets!

I don't understand what passes as “insurance.” I complained last year that social security isn't really insurance. Well, by and large, health insurance isn't insurance, either. I want a real, very very lightly regulated market, that charges each person based on their real expected cost of coverage. Family history, ethnicity, weight, job, what you eat, whether you smoke, whether you live in a city or in the country, excercise, etc. all goes into the actuarial hopper. Mormons should pay less for insurance. They should! Deregulate. Yes, it sucks to be an overweight black male smoking underwater welder!

  • Health Care Ideas Future Markets

A source of free, highly reliable information about the most effective treatements. If you want to know if a treatment A, which costs half as much, works as well as treatment B, check the ideas markets.

  • Google (or whomever) Diagnostic Services

Statistical prediction rules” [pdf] generally do a better job than real doctors at diagnosis (just by curve-fitting). Enter your symptoms, and the computer will ask you a few more questions, and then will tell you what you have with greater accuracy than some jackass with a God complex who spent $200,000 to get a blessing from Johns Hopkins. A quick search of the ideas markets and open insurance company databases will provide a menu of drugs and treatments by price, probability of curing or ameliorating your symptoms, alongside a map showing where in your area these are offered with user satisfaction scores of all these establishments (“Gash on your arm? You need disinfection and stiches. Try Manny's! Avg. 4 3/4 stars from 26,734 users”) If we had a real market in health services, it would be possible to make huge amounts of money providing people with this kind of service. Which is a good reason to have a real market in health services.

  • Big HSA

Allow people to save lots of tax exempt money that they can spend on health care, which will be a lot cheaper in a competitive market for services. If you are poor, a percentage of your negative income tax payment is automatically deposited in your HSA.

  • Force people to have a catastrophic insurance plan.

I don't love it, but in general I think systems that make people internalize costs are better than ones that allow them to foist them off on other people. Our choice seems to be forced internalization vs. forced externalization of responsibility. So I choose the former.

OK. Now here we go into the fun stuff. If we have real, risk-sensitive insurance markets, and we're forcing people to buy catastrophic health, like we force drivers to have collision, we're going to end up in the following situation: a non-trivial portion of the population will not be able to afford insurance, and a non-trivial portion of the population will be uninsurable.

So, you can't afford insurance. What then? There are two reasons you can't: (1) You're plain poor; (2) Your policy is super-expensive. I haven't thought this through yet. But the rough idea is:

  • If you're poor, the government buys you a policy in the normal cost range. If you're not necessarily poor, but you can't afford your policy, because you're risky to insure, you become, from the point of view of the state, uninsurable. Or you pay the premium for the most expensive policy you can afford, and the state tops you off. It depends.

The uninsurable people are the most interesting problem. The premium for a burning house is the cost of the house. When the price of your premium equals your actual medical bills, there's no point in having insurance. Now, remember, we're imagining a beautiful world in which medical services are decartelized and the costs are lower, and insurance premiums reflect the real expected cost of medical services on a competive, non-monopolistic market. Our prices convey real information, which is what prices are for. Inability to qualify for insurance puts you in a new legal category: insurance exempt. If you are insurance exempt, you have two choices for financing your health care. One, pay for it yourself. Lots of people who are uninsurable will be wealthy enough to simply pay for health care out of their own pocket. Two:

  • The Federal Medical Rationing Service

You're insurance exempt, and you can't afford to pay for health care out of pocket. Sorry! But don't worry, we're the government and we're here to help. Unfortunately, we're the safety net, and the safety net simply is not as good as things get. Here at the rationing service, we're clear about what it is that we do: rationing. The Rationing service is funded by annual appropriations in the general budget from Congress. Since the 2009 Balanced Budget Amendment passed, Congress can't appropriate more than next year's projected revenues (except with a 2/3 plurality in both houses, and an OK from more than half the state legislatures.) So what the Rationing Service has to work with is a function of (1) our budget, which is a function of political trade-offs sensitive to the size of next years projected revenues (is it more important to subsidize ethanol or give more to the Rationing Service? Choose!), and (2) the number of people falling under the aegis of the Rationing Service.

What we do here is examine your case, examine the treatment options available to you on the roiling competitive market for healthcare services, or at your nearestl HRS facility, and offer you a voucher for an amount that will buy you the best treatment you can get relative to the Rationing Service's budget constraints and principles of prioritization. With the voucher you will be given a menu of qualified treatments. We will include on the menu some qualified treatments that cost more than the voucher. If you are able raise funds from other sources (family, church bake sale, jar at the local McDonald's), then you should feel free add those funds to your voucher to by a pricier approved treatment. You will not get a voucher for the most expensive treatment. But because there is a real market, you also will not have to wait in line (unless you choose to use a HRS facility). And you can use Google Diagnostic Services yourself (which, to tell you the truth, is mostly what we do), and you will often be able to find excellent qualified treatment for less than your voucher. You are free to put the savings in your HSA.

Rationing is less of a burden in the context of a real market. Our limited funds go a lot further. And you will not feel as bad not getting the very latest, most expensive treatments because the market will generate information that will make it quite clear just how little additional value you would get for the extra cost. You don't feel like a second class citizen driving a ten year old Honda when it still looks pretty good and can get you from A to B just as well, and in almost as much comfort, as this year's Mercedes. We give you vouchers for the health equivalent of ten year old Hondas. But they work. The crazy thing about the old system is that you couldn't buy the health equivalent of a ten year old honda even if you wanted to! New Mercedes or nothing! How foolish we were then. There would simply be no way we would have a big enough budget to help all the insurance exempt in a world of nothing but new Mercedes. Either people would die waiting in line, or the debt would detroy us! Here at the HRS, we're proud to part of a system that is both high-quality and sustainable.

And that's pretty much it! For most of the population, this system gives them all the blessings of genuine market: high quality at low prices, an insurance market with prices that convey real information about risk (providing a real incentive to become healthier in order to decrease your risk and premiums), plentiful cheap drugs (your insurance company will require you to tell them when you start taking a drug, since drugs could make you sick, and the way they adjust your premium will tell you whether it is safe to take it), cheap, extremely accurate diagnostic and treatment information. And for the rest of the population, the market makes a rationing system in which the uninsurable receive quality care possible. Our problem with health care is, at one level, the same as our problem with education. We don't have enough imagination to see that a system that unleashes the power of imagination would have a huge payoff. It is “too important” to be “left to the market.” So important that we leave it to a system sure to fail instead. Oh well. May the enlightenment one day arrive.

Equality of Opportunity is the Central Principle of Distributive Justice

I understand that I am supposed to be arguing the opposite from Will's position. This is in some sense impossible, because Will is a sophist who refuses to acknowledge his sophistry, and who therefore claims to embrace propositions that he in fact rejects. In the present case, Will might say that he agrees with the proposition if only you grant him his favored interpretation of “equal,” “opportunity,” “distribution,” and “justice.” And then we shall be astonished to see the Sun rising in the West.

That said, we do need to interpret these terms. What does it mean for opportunities to be equal?

Our interest in equality of opportunity rests on a shared moral intuition of general opportunities that must be open to us in order to have the prospects of a good and meaningul life. We don't mean equality of opportunity to join in ecstatic union with Jessica Alba. But we might mean equality of opportunity to join in ecstatic union with someone or other. In my way of thinking, the opportunities with moral weight are opportunities to realize basic human capacities, potentialities, or “capabilities.” This is an approach associated with Amartya Sen and Martha Nussbaum.

Before I say more, let me say that on most days I agree with Will that equality of opportunity to compete for the nth position in the income distribution is incoherent. It makes no more sense than does equality of opportunity to compete for a starting position on the US men's Olympic team. We all begin with different potentialities which are a function of our genetic endowments. Simply in virtue of my lineage I never had an opportunity to be competitive in basketball at a high level. No matter how many resources had been devoted to the development of my basketball capacities, my relative position in the distribution of basketball skill would never rise much above average. The Olympic team is reserved for people at a certain exalted level in the distribution of skill. And that level is closed to me due to the constraints of my physical constitution. There are opportunities that we do not have in virtue of what we are, and they cannot be equalized.

Likewise, the nth position in the income distribution might be closed to me due to irremediable aspects of the physical order. It therefore makes no sense to worry about equal opportunity to achieve the nth position. What makes sense is equal opportunity to develop the capacities that in large part account for your position. If the best I could do, if my capacities are fully realized, is position n-1,000,000, then that's the best I can do. This gets us close to our principle of equal opportunity.

To be precise and convincing, however, it is necessary to point out that it remains highly miseading to speak of competition for positions along various dimensions, especially the dimension of income. For our position in the income distribution is not much up to us. It is largely a function of demand in the labor market. (It is partly up to us insofar as our choices take the labor market into account. The choice between lawyer and professor is a choice, among other things, between different likely ranges of future income. Professors who complain that they do not make as much as lawyers are not complaining about their access to higher incomes–they could have been lawyers, but chose not to be. They are complaining about the tradeoffs defined by the interaction of their preferences and demand in the labor market.) In a society with our contingent history, in which Naismith happened to invent basketball, there exists a labor market which rewards some individuals who in every other possible labor market in which basketball did not exist would lack the capacity to reach the median position. That is to say, an individual's top possible position relative to their capacities can vary by orders of magnitude based on a single other individual's discoveries, inventions, or initiatives. This complicates matters a great deal. My relative position given ideally realized capacities may be a matter of whether others do or do not realize theirs, or a matter of the degree to which they do.

The interdepence of the utility of capacities pushes us to recognize the primacy of the most general and necessary capacities. I will not make a list here. But I have in mind those capacities the development of which is necessary to effectively pursue one's good, whatever that may be. Call these primary capacities.

We edge closer. We must all have the equal opportunity to realize our primary capacities. But realize to what extent? I think that the differential realization of capacities is not something subject to institutional manipulation. I don't think we can provide equal opportunity to maximally realize our capacities. The attempt to do so would hurt more than help, so we should be content with realization that is adequate. Adequate to what end? Adequate to enable each person to be a full participant in productive cooperation and to achieve their reasonable, meaningful ends.

So, here's our principle:

A just society will distribute opportunities so that each person has an equal opportunity to adequately realize their primary capacities.

Our society manifestly fails this principle. Now, my problem was not to lay out a set of policies that I believe will rectify this failure. Let me just say something brief about how we would justify the reallocation of wealth in order to ensure that our society satisfies the principle of equal opportunity.

As I mentioned earlier, the utility of capacities is radically interdependent. The economic value of one person's realized capacities may be a function of the realization of other person's capacities. Now, in a generally cooperative context, the development of one person's capacities enhances the asbolute value (but not necessarily the relative value) of other persons' capacities. Which is just to say, a person's realized capacities generally produces positive externalities. Whether they do in a specific case is a question of how a person's capacities are are expressed through their agency. But in a cooperative context, the incentives will create a general tendency for people to choose to express their capacities in productive ways.

Now, people who either would be participants, or would be more productive participants, in the network of cooperation if only their capacities were adequately realized, represent lost value to the network of cooperation. The realization of this pool of capacities is a classic public good. We would each be better off if they were realized, but we will individually underinvest in them. If there is an amount that we could reallocate to the development of primary capacities that is smaller than the value that would thereby be created by the productive expression of those capacities in the cooperative network, then we should reallocate it. Because the value of these adequately realized capacities is likely very high, we should be willing to reallocate a very large amount to the task. A subsidy that will produce benefits greater than the cost of the subsidy is smart and just, especially if the subsidy is funded, and its benefits are distributed, in a fair way, such that each person can see herself as a winner in the overall transaction.

In order to establish that equality of opportunity as I have characterized it is the central principle of distributive justice, I would need to say more about why a number of other principles are not. But I think I have said enough to indicate why I might think that equality of actual material holdings, or equality of opportunity to positions in the wealth distribution, or mere formal equality as citizens with regard to the laws, are unattractive alternatives.

I have gone on too long. I'm not comfortable in this format. However, I may be willing to address questions in the comments if they are well-framed, and politely addressed. And, since I've framed an argument that is designed to be appealing to Will, I wonder what he thinks is wrong with it, if anything. Perhaps some readers will wish to conjecture.

The Rawls Letter

Via Chris Bertram, I find this striking passage in a letter from John Rawls to Phillipe van Parijs:

It seems to me that much would be lost if the European union became a federal union like the United States. Here there is a common language of political discourse and a ready willingness to move from one state to another. Isn’t there a conflict between a large free and open market comprising all of Europe and the individual nation-states, each with its separate political and social institutions, historical memories, and forms and traditions of social policy. Surely these are great value to the citizens of these countries and give meaning to their life. The large open market including all of Europe is aim of the large banks and the capitalist business class whose main goal is simply larger profit. The idea of economic growth, onwards and upwards, with no specific end in sight, fits this class perfectly. If they speak about distribution, it is [al]most always in terms of trickle down. The long–term result of this — which we already have in the United States — is a civil society awash in a meaningless consumerism of some kind. I can’t believe that that is what you want.

I was aware that this was Rawls's view, but it's really something to see him say it. I agree with Rawls here about the meaningfulness of the separate cultural forms contained within the various European nation states. But it strikes me as woefully blinkered to see an open European market as primarly in the interests of, yes, bankers!

Although Rawls's philosophy is at bottom based in the possiblity of cooperation, I don't think he ever became reconciled to the idea that the political structure of the nation state never was, and never will be, the ultimate framework for cooperation. Free and equal people with diverse ends have reason to cooperate because cooperation advances each party's ends. But the people with whom there are possible (morally good) gains from cooperation will never inhabit a single nation state with a single structure of institution. The ultimate institutions of cooperation are broader than states, and policies that decrease the barriers to cooperation set in place by states, such as policies creating a common market over a region of several states, strikes me as a straightforward moral advance. There simply is no liberal justification for prohbiting two people standing on opposite sides of a line from cooperating. Say that liberalism is impossible. Or say, trying not to sound too surreal, that only nationalist social democracy can achieve the goals of liberalism. But don't say that liberalism says that two free and equal people standing on opposite sides of a line are not free to make each other's lives better.

The source of so much of Rawls's trouble is that he insists on putting his second principle of justice first, even though he knows that it is second for a reason. When you fetishize the second principle, it become hard to see how justice is possible without a single basic structure that contains all the parties to cooperation, and which ensures that the surplus of cooperation is distributed according the criterion of the second principle. But once you acknowledge that cooperation across state borders is just a fact of the world, generated by our moral nature, akin to the fact of pluralism, you have to accept that a minimally adequate theory of justice requires us to understand the interaction of state institutions, and the ways in which they facilitate and hamper cooperation across their borders are subjects of justice. Well-ordered cooperative endeavors for mutual advantage do not stop at political lines.

And this is annoying to the second principle-firsters, for there is no common jurisdiction, or common set of political institutions, in cases of international cooperative that can determine the distribution of the surplus in a principled way. But the fact of international cooperation is a fact—a morally good fact—and if your ostensibly liberal theory of justice has a hard time accomodating it—if your theory really requires a closed society assumption in order to work—then it is not really a liberal theory at all. Is it?
Rawls's last point about “meaningless consumerism” is fascinating, in a puzzling way. What is the point? Americans are interested in distribution only in a trickle down way, and so Americans have, what? too much stuff?

Of course, I've never understood the beef against “trickle down” other than that it is sort of a bad metaphor. The idea is that people who most boost productivity, or reduce the costs of cooperation, can rarely internalize even a small fraction of the benefits they have generated, and so they make everyone else wealthier as a side-effect, whether or not they intended to (or intended not to). A basic structure that contains the incentives for people to undertake activities that produce huge positive external effects is, well, likely to be pretty much mandatory from the perspective of the second principle. You'd think.

My guess about what is going on here is that Rawls 's idea of basic structure includes, in addition to some distribution by coercive state reallocation, things like regulations on marketing and advertising and heavy restrictions on political speech pertaining to campaigns, etc., and he thinks that these things, in addition to positively affecting the ultimate distribution of primary goods, would have a salutary effect on the preferences of citizens and the character civil society. I think much of this is just contemporary academic liberal faith, what passes for wisdom in places like Cambridge. However, it is exceedingly difficult to see how this kind of thing even passes the sniff-test of neutrality with regard to the variety of reasonable comprehensive conceptions. And there we have the ever-fertile Paradox of Rawls. He gives us a powerful set of intellectual instruments with which to test the worthiness of our institutions, and then offers up institutions that fail his own tests.

On the shoulders of giants…

Hello from Liam James

Greetings. Thanks to Will for inviting me to comment on his blog. I believe this was an unwise choice on Will's part, since open disputation is more often confusing than clarifying, and I can't see his position looking better afterward. But that's Will. A condition of my participation here is that I am assigned topics that I know will be of interest to readers. I cannot quite grasp the blogger's motivation to assail strangers with their predilictions and stray thoughts, so I'll stick to doing requests. Since Will is so often ridiculously wrong, demand should be high.

My assigned topic is:

Equality of opportunity is the central principle of distributive justice.

Did you think I was going explain why right now? Well, I won't; sorry. I'm busy today arguing with Will offline about positional externalities, which he bullheadedly refuses to comprehend. But soon.