Wednesday, September 24, 2014

DPI-235 Lecture 7: Policy and Classical Liberalism

Readings:


Mark Pennington. “Poverty Relief and Public Services: Welfare State or Minimal State” and “Institutions and International Development: Welfare State or Minimal State,” Chapters 6 and 7 of Robust Political Economy: Classical Liberalism and the Future of Public Policy (Edward Elgar Publishers 2011). Groups 2-3 Chapter 6; Group 1 Chapter 7

8 comments:

  1. This is a meta-comment about Pennington and classical liberals and libertarians.

    Why is property the ONLY right (along with the right to contract, which is related) that needs to be protected? Accepting that it stems from self-ownership and proceeding from that, one can imagine that expression and association are also rights that should be protected and that impact how well the free market can function.

    For example, free expression is at least one of the things that allow the markets to "solve" the knowledge problem, which seems to be a key argument in their favor. In the US, at least, the right is only against the government, but one can imagine ways in which private actors, with no check on their behavior can seal off all avenues to expression, especially when every square inch of the planet is owned, which we've touched upon as well.

    So if the market is so vital, why not protect all the components of functional markets, not just the outputs?

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  2. Your speech is your intellectual property since it stems from your owned self and thus protected. The right to free association is protected as long as you enter into agreements with consenting adults. There are of course gray areas, where exactly does free speech end and threats (a form of coercion) begin and if children are allowed to operate lemonade stands but not hedge funds, exactly where do you draw the line?

    So it is not that classical liberals are uninterested in these aspects, it is just that they chiefly believe that more things than physical capital can be considered property.

    Expression on the other hand is a positive right. You have every right to write what you want but no right to have it published by anyone.

    As with most things, there will always be gray areas. If I buy all the land around someone's house and charges that person a million dollars to walk on my property I am, technically speaking, not violating his or her rights in any way. However, the mere fact that you can often construct paradoxes and exploit loopholes is something a minimal state can simply refuse to guarantee. But again, drawing the line is not always that easy but that goes for every conceivable philosophical system.

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    1. So, it seems like you're saying that the libertarian/classical liberal conception of intellectual property is much broader than ours. I don't see how that's workable - every utterance is protected and can't be copied without permission, for example? If that's set out somewhere, I'd like to see the reasoning.

      Besides being unworkable, it also seems like defining property this way just broadens it beyond any useful definition - we could just define any right protected under any other political philosophy as property. This robs CL/Libertarianism of any meaning.

      I don't think that it's a paradox to say that, if all a state does is protect property (assuming a broad, but reasonable definition of property), there are many other important rights that don't get protected but are still necessary to free markets. Leaving aside speech, since you claim that's protected IP, Pennington mentions that the free movement of labor is vital to a functioning market - it doesn't take too much imagination to envision how someone could control a physical chokepoint in order to prevent this movement and if he or she or they can profit off the market failure that ensues.

      Think also of technology and the abstract property rights - someone might have an intellectual property right to an important standard where there are high barriers to entry for competitors (ahem . . . Qualcomm). In a world where governments don't constrain property and contracting rights by requiring FRAND licensing terms, then any standard holder becomes a monopolist - not by virtue of market forces, but because they're able to stifle competition thanks to their property rights.

      If these things are possible under Classical Liberalism or Libertarianism, that may be a "loophole" but it's one that so vast as to call into question the philosophy itself. I suppose I'm saying that I agree that drawing the line isn't easy, but drawing it at JUST property and contract doesn't seem like the right place even to achieve the goals CL/Libertarians espouse.

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    2. Recognizing IP as property does not automatically mean that it cannot be copied since your property is not taken from you in the process. This is one of the most discussed questions within the classical liberal movement as of now.

      A classic piece defending the right to ban the free copying of IP was made by Lysander Spooner. It is quite dry to say the least but an interesting read
      http://lysanderspooner.org/node/10

      Most classical liberals today lean towards a position where patent laws need to be reformed (and according to some, completely abolished). Here is a good read by libertarian feminist Wendy McElroy arguing against copyright
      http://libertarianpapers.org/wp-content/uploads/article/2011/lp-3-12.pdf

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    3. The McElroy piece seems to make the point that utterances aren't protectable, especially by the kind of ultra-minimal state described by our authors; only things one keeps in his own mind are protected, just as only writings one does not publish (locked in a desk drawer) are protected. So speech, then, would not be protected as property (so therefore not at all) here and that brings us back to my free expression argument. As an aside, it's interesting that McElroy is publishing under a Creative Commons license, yet doesn't discuss the fact that CC pretty much reaches the same result as her "free market copyright" while, at the same time, allowing for a broader array of choices for IP holders.

      I read very little of the Spooner, but from your description, he seems to describe the type of IP that I call unworkable above. Thanks for the link, food for though, I suppose.

      It is interesting that there's this property debate going on, and it makes a lot of sense to try to get to the bottom of "what is property", if that's the only thing one is really interested in protecting. I think the problem might be that CL/Lib viewpoints require a really broad vision of "property" because we can all understand that there's a lot more worthy of protection than what common notions of "property" would include.

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  3. Since both of the Pennington chapters make several references to Hong Kong, I feel obliged to share some of my thoughts.

    While there was a consensus that economic liberalism had served Hong Kong well in previous years and had played a major role in transforming Hong Kong from developing world status into an advanced economy, debates have been raging for the last decade or so in Hong Kong about whether this is still appropriate in the present context. The dilemma is that now that Hong Kong has reached a certain income level whereby the basic needs of its citizens are being satisfied, whether we should move towards a more sustainable and inclusive mode of economic growth which maximize society “well-being” rather than relying on the “trickling-down” effect of robust economic growth. In a way, this mode of thinking is consistent with the so-called “Easterlin Paradox” (named after a USC economics professor Richard Easterlin), who argued that there was a diminishing return in terms of “happiness” from economic growth after a country has reached a certain development stage.

    This is in fact borne out in anecdotal evidence. As demonstrated in this chart (http://www.nytimes.com/imagepages/2008/04/16/business/20080416_LEONHARDT_GRAPHIC.html), the people of Hong Kong rank much lower in terms of “happiness” as compared with, say Denmark, notwithstanding the fact that the GDP per capita of the two economies are pretty much the same. While no explanation has been given for this phenomenon, I would say (without strong evidence, I must confess) the wealth gap in Hong Kong plays a significant part in contributing to the overall “unhappiness” of the general public. Much has been said about income inequality in the US, but Hong Kong is in fact the economy with the highest income disparity amongst high income countries (https://www.cia.gov/library/publications/the-world-factbook/rankorder/2172rank.html).

    Finally, I would end by adding that while the Hong Kong government remains a staunch believer in economic liberalism (we are, incidentally, recognized by the Cato Institute, that “bastion of liberatarianism”, as “the freest economy in the world”), we do in fact have a fairly efficient public-financed, centrally-organised, government run healthcare system and primary/secondary education system.

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  4. How do Classic Liberalists view religion? Is it seen as consistent with private rights and freedoms or is it viewed as sort of a quasi-State with coercive powers that albeit are not legally enforceable, but nevertheless are morally compelling

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    1. Religion as a philosophical system is nothing classic liberals have a problem with (on a systemic level that is, on a personal level atheism/agnosticism is very common among classical liberals and I suspect that many of these cases stem from a view of religion similar to the one you state). As soon as a church starts taxing non-believers or enforces its morals on others through legislative means though, they do so in opposition to classical liberalism.

      Every individual has the right to, of his or her own free will, surrender the exercise of certain rights while the rights remain intact. If someone converts to a religion that bans, say, the wearing of the color purple, no violation of that persons rights have taken place. You can still wear purple without the state punishing you. You can of course discuss what kind of sanctions the religious organization should be able to employ, besides excommunication in some form if you choose to wear purple, which turn into the same kind of gray-scale problem as discussed in my earlier post.

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