419 Baiting, Altruistic Punishment, and Ideology

Al Roth at the excellent Market Design points out that 419 baiting is a form of altruistic punishment. Spending your own time and resources in order to waste the time and resources of email scam artists makes it less likely that they’ll bother the rest of us. 419 baiters are voluntarily contributing to a public good. This video of Nigerian scammers performing Monty Python’s dead parrot sketch in order to obtain a scholarship from a fake production company is perhaps the pinnacle of 419 baiting, but the wooden carving of a Commodore 64 keyboard has to be close.

Altruistic punishment is extremely important for libertarians, and particularly those in favour of a completely voluntary society. Many social problems can be solved through entirely contractual arrangements among only the affected parties. Some problems, though, cannot be solved in the marketplace. For the anarchist, this makes the non-market voluntary institutions of civil society, along with nonmarket individual action, vitally important. Many social problems will require altruistic punishment. Thankfully, humans seem to have evolved such a disposition.

I think the best example of a problem which needs to be solved through altruistic punishment is child abuse within a community. Say there’s an isolated cult which likes to torture to death one in five of its children to appease a bloodthirsty God, and will violently protect their territory from interference by outsiders. The children aren’t in any sort of situation to be able to contract their way out of such a cruel fate, since they have nothing to trade (to head off any complex contractual arrangements, suppose also that the present value of their expected lifetime earnings is less than the cult is willing to expend to prevent their escape). In a world of self-interested utility-maximisers, these children would be tortured to death. In a world of sufficiently motivated altruistic punishers, they may be saved. Altruistic punishment is a good thing for the liberal.

Altruistic punishment, though, also has its dark side. In a world where people react to homosexuality or drug-use as strongly as they do to child torture; child-tortue, homosexuality, and drug-use will prove equally difficult. To have a decent voluntary society, we need the people to be willing to punish child-torturers, but leave gays and drug-users alone. Beating up gays produces a public good wrt bigots, in the same way rescuing tortured children produces a public good wrt decent people. This is not a situation which depends on political institutions or structures, but ideology. Preferences always matter.

Seasteading will make inter-community altruistic punishment more difficult by increasing the costs of monitoring and enforcement. This will be good for those who like gay sex and cocaine, but bad for those worried about child-torture. Altruistic punishment can produce great good or great evil, depending on human motivations.  For any given realistic distribution of preferences, changes in the tendency to engage in altruistic punishment will have opposing effects on the freedom of people to use drugs, and of children not to be tortured. The only way for both drug-users and torure-victims to simultaneously become more free is for the ratio of anti-drug and anti-torture sentiment to reduce. As I’ve said before, this makes ideology a crucial part of a free society. Changing ideology is not easy, of course, but I don’t think it’s impossible.

Asthma and the Limits of Public Choice

Jason Kuznicki wonders why politics has robbed him of an effective asthma treatment:

My old CFC albuterol inhaler is much more effective than my new non-CFC inhaler. The medicine is the same, but the delivery system is awful.

I’m dreading the day that my old inhaler runs out. Yes, I follow the directions on the new one, and I know that it’s used differently. I know about priming and cleaning and all that. It doesn’t matter. The old inhaler works. The new one, if it works at all, may take around twice as many applications. (…)

But enough about asthma per se. The public choice aspect of the problem seems to run counter to the usual, doesn’t it? Here we have a concentrated group of people taking a huge utility loss. Being unable to breathe is one of the most unpleasant experiences you could possibly imagine. The old inhalers fixed it instantly. That’s what was lost.

The gain from this legislation is tiny, hard to notice, and literally diffused among all the people of the entire world — There are slightly fewer CFCs in the atmosphere. (CFCs are a problem, yes, but CFCs from inhalers were never a serious problem when considered alone.)

Why should it be that in this one case, the tiny, diffuse benefits win out over the large, concentrated ones?

I think it’s because the ban on CFC inhalers is not at all the result of classic public choice dynamics. This nicely demonstrates the limits of public choice theory in understanding politics. As Caplan and Stringham show, most inefficient policies are not the result of concentrated interests having their interests served against the preference of a powerless majority. Policymakers are tightly constrained by public opinion, and cannot normally simply accept bribes in exchange for creating unpopular rules to enrich special interests. We have bad policy because that’s what voters want. The public gets warm fuzzies from banning CFCs, and doesn’t much think about the costs (thinking about costs is, afterall, a downer).

Public choice theory in general and The Logic of Collective Action in particular has opened our eyes to many important aspects of the political process. The good old tyranny of the majority, though, remains of paramount importance. Democracy requires that politicians pander to the whims of the majority, even when there is strong pressure from concentrated interests to do otherwise. Interest groups do have an effect on political outcomes, but can only operate in the cracks of majoritarian democracy. Small, well-organized interest groups can achieve their goals when issue salience is low and voters will not punish politicians; when there is a compelling moral or public-interest argument to accompany their preferred policy; or when there are already legislators in favour of their preferred policy (which obviously depends on a significant constituency) whose legislative efforts they can subsidize. When these factors are absent, the majority will prevail even when there are huge utility losses to a minority.

The upshot of this is that anyone wishing for social change should focus on preferences at least as much as incentives.

Claudia Williamson on Informal Institutions

I haven’t yet read this paper from the latest Public Choice, but it looks very good. Williamson, C. 2009. ‘Informal institutions rule: institutional arrangements and economic performance.’ Public Choice 139(3), pp.  371-387.


Institutions are widely believed to be important for economic development. This paper attempts to contribute to our understanding of how institutions matter by examining the effect of formal and informal institutional arrangements on economic progress. Formal institutions represent government defined and enforced constraints while informal institutions capture private constraints. The findings suggest that the presence of informal institutions is a strong determinant of development. In contrast, formal institutions are only successful when embedded in informal constraints, and codifying informal rules can lead to negative unintended consequences. This suggests that institutions cannot be easily transplanted in order to spur economic development.

Hat tip: Division of Labour. Claudia blogs at The Perfect Substitute.

Quote of the Day: Worst-Case Political Economy Edition

There is one final observation to be made. Homo economicus by no means represents the worst imaginable character for the social drama. The natural monopolist whose predilection towards the ‘ small is beautiful’ philosophy leads him to produce less output than would be profit-maximising inflicts yet larger marginal losses on the community than his rapacious wealth-maximising counterpart. The political zealot who works with self-sacrificing conscientiousness to pursue some ideological goal – such as the purification of the race, or securing the world for Islam – can cause much greater harm than the mere budget-maximiser.

Brennan and Buchanan, Predictive Power and the Choice among Regimes, pp. 103-104.

Libertarian Misogyny in Theory and Practice

I find the furore over Peter Thiel’s comments on female suffrage and the growth of the welfare state rather disturbing. (See here and here for some sensible comments.) Here’s the offending statement:

The 1920s were the last decade in American history during which one could be genuinely optimistic about politics. Since 1920, the vast increase in welfare beneficiaries and the extension of the franchise to women — two constituencies that are notoriously tough for libertarians — have rendered the notion of “capitalist democracy” into an oxymoron.

The responses to this were spirited, but not quite on point.

What’s attracting so much attention to his piece is that he pretty openly states that he’d like to disenfranchise women and “welfare” recipients, which I guess is a way of saying that voting is only acceptable if the franchise is limited to the landed gentry.

I may be spinning myself into mendacity here, but I can’t find the place where Thiel says that he would prefer women or welfare recipients be denied suffrage. He did suggest that female suffrage moved public opinion in an unlibertarian direction. These two propositions are not equivalent. I’m not in absolute agreement with the claim that Thiel does make, but I certainly think it is a reasonable one deserving of serious consideration rather than indignation and ad hominem attacks.

I do think Thiel’s remarks were slightly unwise insofar as they framed female suffrage only in a negative light, without acknowledging the importance of political equality to liberal ideals. He probably would have been better to stipulate that he doesn’t advocate a return to male-only suffrage, which he certainly doesn’t. It would be nice, though, if people were able to simply write what they mean without taking special care to detail everything they don’t.

There is very good evidence that the extension of the franchise to women increased the size of government by making the median voter more inclined toward redistribution and social spending. Many policy preferences, including redistribution and social spending, are empirically related to gender. Women on average prefer a larger welfare state than men. You could tell an evolutionary story about women’s nurturing nature to explain this, or a cultural story about men being socialized as cold-hearted individualists. Either way, the gender gap in public opinion is a fact which will not go away because you find it uncomfortable.

Given that I don’t like a whole lot of government spending, I see the growth of government accompanying female suffrage as a bad thing. Does this mean that I would prefer women never had the vote, or that I would like to take it away from them now? No, of course it doesn’t. Favouring one group over another in this way is itself extremely illiberal, and a libertarian should reject such a proposal even if it were likely to produce more liberal policy in other respects. Forcibly silencing socialists might reduce voter preference for the welfare state too, but that’s not something any libertarian should be prepared to do. I’ve never met (nor heard of, read, etc) a single libertarian who has advocated male-only suffrage. Libertarians are surely the least likely to equate finding a negative consequence of something and calling for it to be banned.

Taking away all the PC bullshit, I find the argument over gender and liberalism pretty interesting. I think it’s pretty incontrovertible that female voters demand more redistribution and social spending. Female suffrage leads to bigger government. I’m a libertarian and I like much less government than your average voter. Female suffrage is bad for me in this respect. There are other issues, though, on which women seem closer to the libertarian position. I can’t be bothered investigating this properly, but by looking as the GSS, we can see that men and women in the United States (between 1972 and 2006) significantly differ on a great many issues. A look through suggests to me that consistent with Thiel’s claim, men tend to be more libertarian than women in most respects. Women are more in favour of price controls, and other forms of government intervention in the economy. They also express less willingness to allow unpopular views (anti-religion, communist, gay) to be aired in public, and more likely to favour a law against interracial marriage, for example.*



There are, of course, some issues on which women are more liberal than men. Perhaps unsurprisingly, these have to do with violence. A return to the military draft is preferred by significantly more men than women:


Men also seem more willing to give police arbitrary powers. More men than women think that it’s okay for a cop to hit a person for swearing at the cop:


I find militarism and police violence particularly troubling, because I think they give government the capacity to erode other freedoms much more effectively, particularly in times of crisis. Men and women each have their own illiberal biases. It seems to me that women’s are greater in number, but men’s are potentially more harmful. I’m not sure what to worry about more.

*I’m pretty sure this has changed over time, with women now being more socially liberal on things such as interracial and same-sex marriage. At any point in time, women seem more likely than men to hold the more traditional view. It was once radical to favour interracial marriage. It’s now antisocial to oppose it.

Quote of the Day: Politics and Aesthetics Edition

We may be able to learn something about expressive political from aesthetic theory. Its function, like that of the abstract political symbols discussed here, is to serve as a vehicle for expression, both for the artist and for the audience, rather than as an instrument for changing the world. Here again remoteness from immediate experience turns out to be a necessary feature. Many artists have recognized that the expressive power of their works is dependent upon their creating a world set apart from the one in which the audience lives and breathes, so that the spectators may find it easier to engage themselves with the artistic symbols. The proscenium arch in the theatre, the stylized language or form of poetry, the frame and distortions of a painting are some devices for creating a special symbolic universe. … Psychological distance from symbols that evoke perceptions and emotions heightens their potency rather than reducing it. Few principles are more centrally involved in the working of government.

Murray Edelman, The Symbolic Uses of Politics, p. 11.

Quote of the Day: Ideology in Economics Edition

I am well aware of the difficulties of introducing the notion of equity into the literature on property rights. How do individuals arrive at the notion of a just exchange ratio and at what point does a just ratio become unjust? If the concept is not crucial to the way in which choices are made, then we are left with the puzzle of accounting for the immense amount of resources invested throughout history in attempting to convince individuals about the justice or injustice of their position. Competing rationalizations of the world around us have been the basic ingredient of history since long before Pericles’ rhetoric was decisive in his struggle with Cimon for the support of Athenian citizens. This ingredient has dominated historical conflict ever since. Becker and Stigler, however, would ignore Christ, Mohammed, Marx, and – in 1980 – Khomeini, not to mention the thousands of other sources of ideology in history.

Douglass North, Structure and Change in Economic History, p. 51.

Eric had grudgingly admitted North into the order of Elder Gods of Economics. I worship North as the One True God. He even has the beard.

Relatively Absolute Ideology

Patri Friedman’s rejoinder is up at Cato Unbound. The debate seems to have reached a reasonable synthesis, with Patri admitting that Folk Activism does have some value and Brian Doherty admitting that it has its limits. Most of the remaining disagreement seems to be little more than a matter of emphasis.

Patri does make one point I disagree with:

In addition, whatever progress we do make has a ceiling, as I mentioned in my essay based on David Nolan’s work, or you can find in the research of Cato’s own David Boaz.  That ceiling is in the range of 9 to 16 percent of intuitive libertarians — plenty to take over New Hampshire or start a new country, but not to be a major power at the national level.  And the hope that libertarian morality will prove contagious beyond those intuitive libertarians is, I believe, a mirage.  Research by Jonathan Haidt suggests that people’s morality is an instinctual judgment, with reasons made up after the fact (one might call it “folk morality”).  Yes, some minds can be swayed, but this does not augur well for a mass conversion.

Ideology is probably best treated as a relatively absolute absolute – something which changes but is stable enough to be treated as constant for most, but not all, analytic purposes. It’s true that there is currently a more or less fixed number of people receptive to libertarian ideas, but I don’t think it’s safe to assume that this will always be true. Intuitive libertarianism is very unlikely to be some disposition that a certain proportion of people are born with, but a culturally contingent factor which can change over time. The enormous cultural changes we have seen in recent years – from most people seeing homosexuality as an abomination to most people seeing it as entirely unobjectionable, for example – show us that we can’t treat the existing distribution of preferences as stable in the medium to long term. The acceptance of democracy may be the clearest example. A few hundred years ago democracy was seen as crazy, and very few people found it appealing. Fast-forward to the present and any libertarian is all too aware of the reverence people have for the will of the people.

This isn’t meant to downplay the difficulty of convincing people of the virtue of a voluntary society, but to suggest that the ceiling on progress is shifting. At any point in time, there will be many we cannot reach. Over time this number will change. The current climate makes it seem equally likely that ideology will shift in an illiberal direction. In either case, advocacy is important. Even if we never achieve a society freer than we have today, it is chilling to consider a counterfactual world in which illiberal sentiment is not balanced by libertarian folk activism.

Democracy, pfft.

Megan McArdle is justifiably confused by the reaction of many libertarians to independent central banks:

I’ve been thinking a lot lately about the political theory of an independent central bank.  A lot of the libertarians I know have deep issues with the activities of the Fed, which have been largely unaccountable to elected officials.

That’s a valid critique.  But here’s the problem:  the Fed has performed vastly better on any metric except “being elected” than the Congress.  There’s little doubt in my mind that if we had not had an independent central bank, unemployment would be many percentage points higher, GDP would have contracted much more strongly, and we wouldn’t now be making optimistic noises about the thing bottoming out. (…)

All the people that I know, left and right, who are currently very worried about the democratic implications of the Fed’s actions, seem to spend an awful lot of time trying to insulate their pet cause from the democratic process–whether that cause be property rights or sexual behavior.  As an institution, what the Fed is doing now is not much different from what most of them want the Supreme Court to do on some issue or another:  rule it out of the bounds of majority debate.

I completely agree with Megan up to this point, but I’m baffled by the practical conclusion she reaches (read the whole thing).

I would prefer private currency, but given that we do have a government monopoly over money, monetary policy is clearly necessary and I see a very strong case for insulating it from everyday democratic politics. Those running central banks are appointed by elected officials, giving the voter does have some say over how monetary policy is ultimately conducted, but are not subject to the short term vagaries of public opinion. This is incredibly important in times of crisis.

Stupid, stupid populism abounds at times like this and preferences tend to spike in a highly interventionist direction. In the same way that moral panics over teen drinking and the like lead to oppressive laws through the democratic system, panics over hard economic times would lead to excessively inflationary monetary policy if such choices were similarly responsive to the will of the people.  If policy were perfectly responsive to public opinion, the public would get exactly what they want at every moment, good and hard as Mencken would say. Since voters are guided more by irrational instinct than reasoned choice, and irrational instinct often spikes in times in crisis, technical inefficiency in the way political institutions transform preferences into policy can be good for everybody.

Sensible monetary policy generally sounds like a good idea to most people most of the time: irrational instincts and instrumental interests in this case converge. If central bank governors are appointed in times of normal preferences, we should put relatively smart and sensible people in the job who will perform reasonably well even when majority preferences turn wacky. This effectively involves public opinion binding itself to the mast of technocratic governance at times when technocrats and the public agree, in order to protect against later irrationality.

Of course, if a governor happens to be appointed in a time of crisis, the normative implications are completely reversed…

Peter Thiel on Folk Activism

Peter Thiel’s response to Patri Friedman’s Folk activism essay is up at Cato Unbound. His central point is that politics is unavoidably illiberal, and the only way to be free is to escape the forces of politics.

Most importantly, I no longer believe that freedom and democracy are compatible. By tracing out the development of my thinking, I hope to frame some of the challenges faced by all classical liberals today.

As a Stanford undergraduate studying philosophy in the late 1980s, I naturally was drawn to the give-and-take of debate and the desire to bring about freedom through political means. … Much of it felt like trench warfare on the Western Front in World War I; there was a lot of carnage, but we did not move the center of the debate. In hindsight, we were preaching mainly to the choir — even if this had the important side benefit of convincing the choir’s members to continue singing for the rest of their lives.

I basically agree with this pessimistic view of politics. Collective action can never give us freedom because its very core is the idea that one choice must be made for all, that there is One Best Way. Still, I disagree with Thiel’s conclusion that libertarians should focus solely on escaping from politics, since attempts to increase freedom within politics are completely useless. I have four reasons for this view:

1. Politics will never produce absolute freedom, but unfreedom comes in degrees. Hong Kong is much freer than mainland China, and New Zealand today is much freer than New Zealand twenty-five years ago. Political activism has the potential to make modest but genuine gains. Of course, the value of this would pale in comparison with escaping politics altogether, except…

2. It’s not yet clear whether it’s possible to escape politics. Seasteading may devolve into coercive government through the cartelization of competing jurisdictions. This may be less likely than in a land-based anarchic society, but I don’t think it can be discounted altogether. If this happens, the unfreedom we have today is about the best we can hope for, and will be very grateful for the incremental gains we have made: ending the draft and Jim Crow laws, legalizing homosexuality. It doesn’t seem unreasonable to think more significant advances could be made in the meantime: legalizing marijuana, liberalizing pharmaceutical regulations, lowering taxes somewhat.

3. Preferences matter even in an anarchic society. If people see drug-taking, homosexuality, or profit-making as wicked, they may very well take efforts to prevent them. This will reduce the liberty of those who like drugs, gay sex, or money. If it’s possible to change preferences through advocacy (which I think it is in the long run), this will be valuable regardless of the political ecosystem in which we live.

4. Governments may intervene to shut down seasteads, but will be less likely to do so the more liberal they are. This depends on the efforts of libertarian advocates within existing polities. As Brian Micklethwait puts it:

But seasteading will only flourish if there are enough landlubber libertarians out there to (as they say in the USA) run interference for it, by arguing against their various governments wanting to shut it down, mostly by publicising that this is what they are trying to do and threatening to publicise it some more if they do.  This was how communism got stuck in and started, and contrived for itself its various doomed chances to work.  At that, at least, it succeeded triumphantly.  It erupted in a few places, and in all other places it had sympathisers. Weight of numbers and weight of argument, in other words.  All of which took a hell of a long time to contrive.

I certainly hope an escape from politics proves possible, as this is the only way people are ever going to be truly free. I’m cautiously optimistic about this, but certainly see advocacy work through existing political institutions as very valuable nonetheless. Peter Thiel seems to make good investments. I hope the Seasteading Institute proves to be another.