If you want to help the poor, you should read this

I agree with Mark Perry (an economist who has bought me a beer), of Carpe Diem, that the reduction in the world poverty rate is the most remarkable achievement in human history.

The percentage of the world population living on $1 per day or less has dropped since 1970 from around 26% to just over 5%.

It’s hard to argue with those results. They are inflation-adjusted.

I can think of a couple things that might be easier to argue about regarding those results.

1. I can imagine some folks would say that 5% isn’t good enough.

2. I can imagine that some folks would argue about the cause of those results. I agree with Perry’s explanation as provided by Arthur Brooks: “globalization, free trade and international entrepreneurship.”

I can imagine that some folks would say it was the growth in government and aid. But, for them, I’d ask, what if you’re wrong? As Brooks says:

…if you love the poor, if you are a good Samaritan, you must stand for the free enterprise system, and you must defend it, not just for ourselves but for people around the world. It is the best anti-poverty measure ever invented.

I agree. I could be wrong and I think — for the benefit of the poor — I should keep that in mind and stay open to evidence to the contrary, because whether I’m right or wrong doesn’t amount to a hill of beans.

What is important it what really helps them.

I also think us supporters of free markets often forget this. The opposition paints us as the defenders of the rich, the “1%” and king-like CEOs, while we’re really advocating for the benefit of everyone, including the poor. 

Let the experiments begin

Whenever I think of Bitcoin, I can’t help to think of the Liberty Dollar, a paper-based alternative currency that the Fed shut down in 2009 after about an 11 year run.

Bitcoin has a unique value proposition in currency.

It carries cachet among techies (and maybe druggies) and is in limited supply. The former gives it collectible value. The latter gives it purpose for citizens of countries with bureaucrats who have inked their money presses. It feels better heading to the store with currency that may not lose half its value before you get there.

If allowed to continue, I think Bitcoin has the potential of spawning an evolution in alternative currency experiments that may find all different sorts of niches for value propositions and, more importantly, reduce the power the Fed has to mess up the economy.

There already is a Bitcoin cousin, Litecoin. I wouldn’t be surprised to see the likes of Starbucks, Walmart, Amazon.com and Google test the waters. Why just supply a wallet when you can also supply the currency?

Liberty is the Golden Rule

Why I’m Libertarian is a new Tumblr blog (via Pretense of Knowledge and EconLog blogs) where folks declare why they are libertarian. Great idea.

Here’s why I’m libertarian: Because I believe in The Golden Rule. I believe that’s the true source of liberty.

Do unto others as you would have done unto yourself.

The day we talked about The Golden Rule in church when I was a kid was a clarifying moment. I remember thinking, man, that makes a lot of sense. What a fabulously easy way to test your actions. Would I want others to do that to me? If the answer is no, or even a maybe not, don’t do it.

Lots of libertarians say they are libertarian because of things like ‘limited government’, ‘individual rights’, ‘don’t believe in war’…and so forth.

But, for me the Golden Rule is why all of those things are important.

Update: In another coincidence on this blog, in this week’s episode of EconTalk, Russ Roberts interviews Nassim Taleb about an essay he wrote called, Skin the Game. He also discusses the source of the Golden Rule.

I personally believe that the Golden Rule is a social norm that is responsible for the advances in the standards of living humans have experienced over the last several hundred years. I haven’t finished listening to the EconTalk podcast yet, but I’m hoping Taleb will agree with me.

 

Happy Independence Day

flag

I thought it might be good to take a portion of the Declaration of Independence each Independence day and translate it into today’s lingo. Here’s the first paragraph:

When in the Course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature’s God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.

Translation:

Dear Rulers: We don’t like the decisions you’ve been making. We’re going out on our own. But, because we are a polite sort, we’re going to let you know why we feel this way.

 

Good links

From Sheldon Richman’s, So What if Freedom Isn’t Free?  (Thanks to Mark Perry, Carpe Diem)

Freedom may not be free, but lots of things aren’t free. Food isn’t free, but farmers aren’t drafted. They farm voluntarily. It is true that we are taxed to support certain (but not all) farmers, but not because we wouldn’t have food if farmers weren’t subsidized — even if the farm lobby and its congressional agents have convinced most people that is the case. The fact is, we could have ample supplies of food — not free but at low cost — in a completely voluntary marketplace.

The next time someone says, “Freedom isn’t free,” you might simply respond, “What’s your point?”

Shame-less” society update from Jeff Jacoby, Is this any way to help the poor? (Thanks to Don Boudreaux, Cafe Hayek)

It wasn’t so long ago that such a degree of dependency would have been inconceivable. In 2001, according to federal data, 17.3 million people were receiving food aid. In little more than a decade, the food stamp rolls have almost tripled.

That didn’t happen by accident. Under the last two presidents, increasing food stamp enrollment became an explicit government goal. George W. Bush sharply expanded eligibility, rebranding food stamps as “nutritional assistance” instead of welfare. States were encouraged to sign up more recipients — a ball the Obama administration took and ran with. The Agriculture Department promotes food stamps through radio ads and “public service” announcements; billboard-style ads appear on city buses. To attract even more participants, the department advises local welfare agencies to “host social events where people mix and mingle” — show them a good time, and try to get them on welfare.

I forget who asked this question, but it’s a good one. If government welfare works shouldn’t we see less of it over time, not more?

Kings by committee

From Don Boudreaux’s Sunday’s Quotation of the Day

…page 123 of the 1981 Liberty Fund edition of Herbert Spencer’s important 1884 tract, The Man Versus the State:

“The great political superstition of the past was the divine right of kings.  The great political superstition of the present is the divine right of parliaments.”

Challenge accepted

I found the following comment from Gunteh on the Idiot’s Collective blog post about Michael Sandel that I linked to here (square brackets are Gunteh’s):

I recently came across a particular individual on Youtube who makes a living by debating libertarians in spontaneous and live radio format.
[He is a self-proclaimed leftist, believes that libertarians are idealistic albeit aloof, and argues on the following argument pattern]:
-There has “never” been historical context for a purely free-market system, both economically/morally.
-There are rules/interventions that are mandatory in order for society to run (laws, subsidies)
-There are always winners and losers, and whether or not government has a responsibility to that, we ourselves pick and “subsidize” businesses/moral opinions relatively. Therefore, there is no reason for government not to do that as well if human beings innately make choices.

I’m not sure who this individual is and I’m not sure I’d be willing to debate him on his home turf. I don’t have much experience with live radio. But, I would be willing to discuss his views on a blog post.

To the specific argument pattern that Gunteh lays out, I would likely respond as follows:

“There has ‘never’ been historical context for a purely free-market system, both economically/morally.”

First, I don’t think there are many libertarians who don’t think there is a role for limited government. Though, there might be some.  But, I think this person paints with too broad of stroke.

Second, and more important, there doesn’t have to be a historical context for a purely free-market system since we have plenty of historical contexts, and current contexts, for “systems” (that is, groups of people) with vibrant free markets and systems without.

Even within these “systems” there are subsystems that we can look at. Within the U.S., for example, there are other organizations of people. Cities, businesses, chess clubs, Home Owners Associations, families, charities, hospitals, states, churches, AA, AAA, crime syndicates, lobbies and so forth.

So, if we are interested, we can look at countries and subgroups and see which ones seem to do better and why. Not doing so, lacks imagination. This has been something that has interested me from an early age. For example, I wondered how two neighboring public school districts could be so different as to prompt my parents to undertake the cost of moving from one district to the other.

In my view, the case is strong that systems that allow people to make the choices that are right for them, within their set of constraints and consequences, produce better results over time.

Granted, it is hard to untangle that and we often confuse cause and effect. Folks often look at the success story of the U.S. and assume that all that government has done has been a cause for the success, rather than a result of the wealth created in the free market.

I think it’s more productive to discuss the features of these groups and subgroups and what makes them different, rather than discuss whether a pure free market system has ever existed or is desirable.

To use an old and tired quip, there was nary a historical context against slavery before that was largely abolished, either, as slavery existed in some shape or form just about every in the world up to that point. That, in itself, did not prove that abolishing slavery wouldn’t be good.

“There are rules/interventions that are mandatory in order for society to run (laws, subsidies)”

The question I would have this radio host to consider is where these rules come from. Did they evolve from emerging practice or were they conjured up by a small group of people?

I’d be looking for more specific examples here, though, before I engage beyond this.

‘There are always winners and losers, and whether or not government has a responsibility to that, we ourselves pick and “subsidize” businesses/moral opinions relatively. Therefore, there is no reason for government not to do that as well if human beings innately make choices.’

I’d argue that government is a poor mechanism for picking winners and losers because its feedback loops are less effective, and sometimes backwards, from market feedback loops.

My post, Profits and Ballot Boxes, summarizes a few key reasons why government feedback loops are bad.

There are more reasons, like the knowledge problem, that Steven Landsburg explains wellAnd, it’s important to understand the only four ways to spend money. The way government spends money (spending other people’s money on other people) ends up being the least careful way to spend it.

It’s also good to remember that government tends to reward failure. Finally, when we discuss private vs. public, it seems we often assume politicians are saints, not subject to the same incentives as other people, which is a rotten assumption.

 

Whose wealth is it?

The author of a Letter to the Editor in the local paper is tired of hearing about how the richest country in world is broke.

The author makes a common mistake of confusing someone’s wealth for the country’s, or our, wealth.

Liberty isn’t rugged invidualism

Advocates of liberty are often wrongly characterized as ‘rugged individualists.’ I often hear our position referred to as ‘survival-of-the-fittest’ or an ‘on-your-own’ society.

I think this straw man exists for a couple of reasons.

First, it’s an expedient portrait to paint of political opponents when you don’t wish voters to think too deeply about the issues. It turns out that Don’t vote for the mean guys is a compelling campaign message.

Second, and possibly more common, is that a great many people confound government and society as one in the same. They see society expressed through government, rather than government as having a specific and limited role to play in society, like the role a janitor or security guard has in cleaning and protecting a building.

To these folks “we”, government and society are interchangeable ideas. Whatever “we” think “we” should do, should be done through government.

In my The Government Subsidy Fallacy post from January, 2012, I reference a David Henderson Econlog blog post that referenced this quote from 1800s French economist, Frederic Bastiat:

When we oppose subsidies, we are charged with opposing the very thing that it was proposed to subsidize and of being the enemies of all kinds of activity, because we want these activities to be voluntary and to seek their proper reward in themselves.

This applies to all government activity. If you oppose a government program intended to help the poor, you are accused by the people who confound government and society for not wanting to help the poor at all.

And, if you prefer liberty to big government, then that can only mean that you are a rugged individualist — you believe only the fittest should survive and everyone should carry their own weight.

But, you don’t need to be a rugged individualist to respect that the next guy deserves a chance to decide what is right for him without you sticking your nose in, just as you expect the same respect from him (“golden rule of liberty”).  You earn your freedom by letting others have theirs’.

That may be individualism, but it is not rugged individualism. And definitely not ‘survival of the fittest’ or ‘on your own’ society.

Individuals are important. Individuals are the building block of society. Without them, there is no society. It’s as simple as that. I think this is something that most people in our country believe intuitively. That’s not an -ism. I don’t think we would take the effort to educate people or attempt to help others through government or otherwise if we didn’t believe individuals were important.

Respecting the liberty of others doesn’t mean that you want an ‘on-your-own’ society. Quite the contrary. It means that you recognize that the greater good is better served from the voluntary actions of individuals than through involuntary, even if well-intended, actions of government.

Voluntary actions work so well for the greater good that not only do the unfit survive, but they don’t even really exist. In a free society with lots of specialization, nearly everyone can usually find something with which they are fit.

But for those who confound government and society, they have trouble seeing the benefits that result from voluntary actions be it trading, charity or otherwise. Why?

Even as they personally benefit from so many things provided by profit-seeking trading including basics like indoor plumbing, bountiful food, shelter, climate control and amenities like fashion handbags, smartphones and a camera in just about everything, these people scoff at the idea that businesses do good by seeking profit for their owners. They view profit-seeking as a drain on society.

They don’t see that they are the very people who have rewarded the owners with profit. They also don’t understand why they rewarded the owners — because they too gained value (or profited) from the product. Even though they participate and benefit from this activity 24/7, it is such a part of their daily lives, it is invisible to them.

These people also discount the notion that charitable activities can ever be generous enough to meet all the needs of the poor or they have strange ideas about why they do not prefer private charity. I recall one conversation where I mentioned how well churches carry out charity. The person agreed, but said she didn’t want people in need to have to get a pitch on religion just to get help. There was so much wrong with that, I didn’t know where to begin.

So, with trade, charity and other voluntary actions discredited as a reliable and viable way to achieve the greater good, that leaves government. If they see one person who wasn’t served well by private actions (usually these are the people who are asked to stand at State of the Union addresses), that’s all the convincing they need for government intervention. Rarely do they ask, can I do something to help solve this problem? It’s far easier to support government doing it and then assume the moral high-ground for that. In fact, that requires no action beyond flapping lips.

So, as a supporter of liberty, when someone tries to pin you with the ‘on-your-own’, rugged individualist tag, don’t let them off so easy. Explain that one of the things that attracts you liberty is that it does a far better job of serving the greater good than government and why you think that. It may not lead to an immediate change in thinking, but it could plant a seed that could blossom later.