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Three Cheers For Globalization

I finally got around to reading Peter Thiel's Hoover essay from a few months ago on bubbles and globalization. Much of it was over my head, but I did like his definition of globalization:

“Globalization” means a breaking down of barriers between nations; an increase in travel and knowledge about other countries; an increase of trade and competition among and between the peoples of the world, to the point where there is a more or less level playing field in the entire world; and the death of all cultures, in the sense of robust systems that exclude part of humanity. On the level of economics, it means a global marketplace; and on the level of politics, it means the ascension of transnational elites and organizations, at the expense of all localized countries and governments.

Even these preliminary observations remind one that globalization remains far from complete. Massive barriers to trade remain. The nation-state has not withered away. On the crudest of economic measures — say, the difference between the income of a car factory worker in Detroit and in Shenzhen — the gulf between the present and a truly global future remains vast. And on the level of the UN, the WTO, or Echelon, political unity remains more an aspiration than a reality.

At the same time, the current round of globalization has reached a point equal to or greater than past cycles. As measured by the percentage of tradable GDP, or the number of people who live in countries different from their place of birth, or even more abstractly, the connectivity of the world, we stand at a level of globalization that compares with the previous peak year of 1913.

Thiel strikes the right balance between retrospective optimism regarding past progress and forward-looking pessimism given how far we still have yet to go. We live in interesting times, and I can only hope the trend continues.

Freedom Through Unfreedom


That is why it is necessary for a people and a duty of their government to restrict this movement into their lands by force, through whatever physical or legal or punitive barriers prove necessary.

Followed four sentences later by this:

But for those of us with other goals - such as the continuation (at least thru our grandchildrens' lives) of the United States as a bastion of freedom and rule of law in an otherwise corrupt and lawless world...

Freedom through unfreedom. The disconnect is delicious. What kind of bastion of freedom is a country that punishes people for wanting to take part in that very same freedom? Not a country worth preserving.

Why Didn't Someone Tip Me Off To This Already?

I finally came across it reading Jacqueline Passey's archives from two weeks ago. I guess I should be reading Marginal Revolution more often.

Time travel back to 1000 A.D.: Survival tips

I liked this suggestion, for nonsensicalness on its own terms:

Change history! I like the tip about cats. Make them draw LOLCATS in their churches, temples, or whatever. Make historians frown.

Why would historians frown at the discovery of ancient inscriptions of LOLCATS? Unless they knew what you were up to with your time-traveling shenanigans.

At first I was thinking I would use my futurist knowledge to impress people and make them think I was a prophet or a God, then start my own religion, becoming wealthy, famous, powerful, and getting all the ladies, while also (somehow) instilling the values of science, rationality, liberal tolerance, and a Rothbardian respect for the nonaggression principle. But then I realized that besides the inherent contradictions inherent in promoting rationality through a cult of personality (*ahem* Objectivism), this would probably get me killed very quickly.

The Bubble Puzzle

For all these people who think the rise in oil prices is due to a bubble -- and I'm not saying it isn't, 'cause I honestly don't know -- shouldn't they put their money where their mouths are and sell oil futures short? I mean, if the high prices are due to speculation and not fundamentals, and if you think you know the fundamentals better than the speculators, shouldn't you be able to beat them at their own game and get rich in the process?

Am I missing something here is or is all this talk of bubbles just cheap talk?

Times Sure Have Changed Since Adam Smith

The Republican presidential nominee, John McCain, speaking on June 17, 2008 [via Matt Welch]:

There is the further problem of speculation on the oil futures market, which in many cases has nothing to do with the actual sale, purchase, or delivery of oil. [...]

[W]e all know that some people on Wall Street are not above gaming the system. When you have enough speculators betting on the rising price of oil, that itself can cause oil prices to keep on rising. And while a few reckless speculators are counting their paper profits, most Americans are coming up on the short end -- using more and more of their hard-earned paychecks to buy gas for the truck, tractor, or family car.

Investigation is underway to root out this kind of reckless wagering, unrelated to any kind of productive commerce, because it can distort the market, drive prices beyond rational limits, and put the investments and pensions of millions of Americans at risk. Where we find such abuses, they need to be swiftly punished. And to make sure it never happens again, we must reform the laws and regulations governing the oil futures market, so that they are just as clear and effective as the rules applied to stocks, bonds, and other financial instruments. In all of these markets, reform must assure transparency, prevent abuse, and protect the public interest.

Adam Smith, writing 232 years earlier:

The popular fear of engrossing and forestalling [Smith's terms for commodity speculation] may be compared to the popular terrors and suspicions of witchcraft. The unfortunate wretches accused of this latter crime were not more innocent of the misfortunes imputed to them, than those who have been accused of the former. The law which put an end to all prosecutions against witchcraft, which put it out of any man’s power to gratify his own malice by accusing his neighbour of that imaginary crime, seems effectually to have put an end to those fears and suspicions, by taking away the great cause which encouraged and supported them.

Is Obama Cribbing From Chris Rock?

via AotP:

Mr. Obama laid out his case in stark terms that would be difficult for a white candidate to make, telling the mostly black audience not to “just sit in the house watching SportsCenter,” and to stop praising themselves for mediocre accomplishments.

“Don’t get carried away with that eighth-grade graduation,” he said, bringing many members of the congregation to their feet, applauding. “You’re supposed to graduate from eighth grade.”

Compare to:

N*****s always want credit for some shit they supposed to do. A n***** will brag about some shit a normal man just does. A n***** will say some shit like, "I take care of my kids." You're supposed to, you dumb motherfucker! What kind of ignorant shit is that? "I ain't never been to jail!" What do you want, a cookie?! You're not supposed to go to jail, you low-expectation-having motherfucker!

Jeffrey Friedman on Persuasion Strategy

From a very interesting comment thread at The Austrian Economists blog:

I've found that the very brightest Ivy League students become suddenly receptive to Austrian economics if I posit the complexity of the world, and present market mechanisms as making our cognitive task easier. When I point out that there are no equivalent political mechanisms, they are sold--on libertarianism!--but without any invocations of "rights," "liberty," and all the rest. If you start insisting on those concepts, not to mention "universal laws," Homo economicus, etc., all you do is make Austrian economics look like a cog in an ideological contraption. (I can't help but wonder sometimes whether that's all that it is.)

Kevin Carson on Hierarchy and Intellectual Property

While we're on the topic of intellectual property, take a look at Kevin Carson's recent article published in The Freeman: Hierarchy or the Market. Unlike many left-wing anarchists who see hierarchies as inherently unjust and undesirable, Carson views hierarchies as artificially prevalent, a result of market distortions creating by state subsidies and interventions. Remove those distortions and we still might have some hierarchical social structures, but not nearly as many as we have now.

The problem is not hierarchy in itself, but government policies that make it artificially prevalent. No doubt some large-scale production would exist in a free market, and likewise some wage employment and absentee ownership. But in a free market the predominant scale of production would likely be far smaller, and self-employment and cooperative ownership more widespread, than at present. Entrepreneurial profit would replace permanent rents from artificial property and other forms of privilege. Had the industrial revolution taken place in a genuine free market rather than a society characterized by state-backed robbery and privilege, our economy today would probably be far closer to the vision of Lewis Mumford than that of Joseph Schumpeter and Alfred Chandler.

Carson gives intellectual property laws special attention as a source of state-subsidized market distortion:

The state’s so-called “intellectual property” laws, especially, are a powerful force for cartelization. Many oligopoly industries were created by controlling patents (for example, AT&T was based on the Bell patent system) or exchanging them (GE and Westinghouse). Patents also enable corporations to restrict the supply of replacement parts for their goods and thus render artificially expensive the choice to repair an old car or appliance as an alternative to buying a new one. This facilitates a business model based on planned obsolescence, large production runs, and “push” distribution.

“Intellectual property” also artificially promotes hierarchy even in industries where the minimum level of capitalization has ceased to be an effective barrier to self-employment. One of the original justifications for corporate hierarchy was that the enormous scale of even the minimum capitalization, in entertainment and information, was an entry barrier: To start a newspaper, radio station, movie studio, publishing house, or record company required, at minimum, an outlay of several hundred thousand dollars. As a necessary result, media and entertainment were concentrated in the control of a few gatekeeper corporations.

But as Yochai Benker observed in The Wealth of Networks, the digital revolution has reduced the cost of the basic item of capital equipment—the personal computer—to under a thousand dollars. And supplemental equipment and software for very high-quality desktop publishing, sound editing, podcasting, and so on can be had for a few thousand more. The ability to replicate digital information on the Internet, at zero marginal cost, renders the corporate dinosaurs’ marketing operations obsolete.

The gatekeepers’ only remaining basis for power is the state’s “intellectual property” monopolies—which explains why Microsoft, the RIAA, and MPAA have pursued such draconian copyright legislation to protect themselves from market competition. The intrusive DRM (digital rights management) used by Microsoft and the entertainment companies, and the legal penalties for circumventing it, in effect outlaw precisely what computers are made for: the replication and exchange of digital information. Without copyright and patent monopolies, peer production by self-employed information and entertainment workers would likely be the norm in software, music, and publishing. (It’s probably no coincidence, by the way, that industries dependent on such “intellectual property” monopolies are the main profitable sectors in the global economy. It’s a case of artificial “comparative advantage,” created by state-erected barriers to the diffusion of knowledge and technique. The most profitable industries are those whose profits amount to rents or tolls for access to artificial property.)

Cato Unbound on Copyright

Copyright is doomed:

Another important consideration is that the digital is larger than the online. According to one recent study 95 percent of British youth engage in file sharing via burned CDs, instant messaging clients, mobile phones, USB sticks, e-mail, and portable hard drives. [5]

Such practices constitute the “darknet,” a term popularized by four Microsoft-affiliated researchers in a brilliant 2002 paper.[6] Their thesis is simply that people who have information and want to exchange it with each other will do just that, forming spontaneous networks which may be large or small, online or offline. By being interconnected they can always keep the most popular material available. Attempts to curb open file-sharing infrastructure may only drive activity towards smaller and darker networks.

One early darknet has been termed the “sneakernet”: walking by foot to your friend carrying video cassettes or floppy discs. Nor is the sneakernet purely a technology of the past. The capacity of portable storage devices is increasing exponentially, much faster than Internet bandwidth, according to a principle known as “Kryder’s Law.” [7] The information in our pockets yesterday was measured in megabytes, today in gigabytes, tomorrow in terabytes and in a few years probably in petabytes (an incredible amount of data). Within 10-15 years a cheap pocket-size media player will probably be able to store all recorded music that has ever been released — ready for direct copying to another person’s device.

In other words: The sneakernet will come back if needed. “I believe this is a ‘wild card’ that most people in the music industry are not seeing at all,” writes Swedish filesharing researcher Daniel Johansson. “When music fans can say, ‘I have all the music from 1950-2010, do you want a copy?’ — what kind of business models will be viable in such a reality?” [8]

Naturalism, Materialism, and Unanswered Questions

Scott points to an interesting post on naturalist metaphysics and its inability to answer two questions: (1) Why is the world made of this stuff, and not some other stuff? (2) Why is there this stuff and not nothing at all?

I respond in the comments to both threads. The takeaway point, made by commenter Pablo, is:

The link between naturalism and materialism is rather an a posteriori consequence of the fact that the world uncovered by this methodological approach appears to be ultimately made of matter.

This conception of naturalism avoids Barry's critique insofar as this version of naturalism is unable to answer the two questions listed above in exactly the same way that every other system of metaphysics is unable to answer the two questions listed above.

The Overuse of Godwin's Law

Godwin's Law often serves a useful purpose: References to Hitler, Nazism, or the Holocaust are conversation stoppers, inappropriate for use as analogies when less extreme analogies would suffice.

But invoking Godwin's Law can itself be carried too far. Sometimes analogies to the Holocaust, Nazism, or Hitler are not just perfectly relevant, but useful and more informative than any other conceivable analogy. There are things worth learning from historic crimes, and to remove these crimes from rational discourse is not only an insult to the victims of those crimes (who ask us to not forget their history but to learn from it so that it never happens again) but is also to commit the same type of intellectual error as violating Godwin's Law itself, by closing off discussion too early.

Phoebe Maltz has an article in a recent issue of the fusionist magazine Doublethink (unfortunately the article is not available online) titled "The End of Anti-Semitism." Maltz argues that because of the Holocaust, it is now next to impossible to accuse someone or something of being anti-Semitic, because unless the offense rises to the level of the Holocaust itself, the accuser is brushed off as engaging in hyperbole. There seems to be no middle ground anymore: either someone is Judeophile or the second coming of Adolf.

Part of this problem arose because of bigots themselves, who defended themselves against charges of bigotry by making claims like, "I can't be a racist because I don't want to reenslave black people, I just want to live separately from them."

So, the example that inspired this post. As anyone who has argued with an anti-immigrant restrictionist well knows, the first argument they use is an appeal to positive legal authority. In this thread on remittances, TLB from The Lone Wacko blog claims that politicians who oppose crackdowns on illegal immigration and accept money from campaign groups who share their views are PoliticallyCorrupt (Lone Wacko's unique style of overcapitalization and under use of the spacebar), while politicians who enforce crackdowns on illegal immigrants and accept lobbyist money from anti-immigrant interest groups are presumably just HonestPatriots doing their jobs.

I responded,

Um, no Lonewacko, the politicians enforcing unjust laws are the ones who are corrupt. An unjust law is no law at all and can (and should!) be routinely violated. Your fetish for respecting unjust laws is… disturbing. I’m glad Anne Frank never tried to hide in your attic.

TLB's non-response,

Notice: the comment from Micha Ghertner is not a new low for libertarians, just one of a very long series of extreme lows.

I hasten to add that since I don’t know what the situation is in their universe, in ours we will always have borders and enforcement for them, otherwise billions of people would try to come here with (to we sane people) predictable results. Also, in our universe living in MX is not akin to facing going to the gas chambers.

I mean, really.

Notice how the conversation subtly shifts away from the issue of whether or not one has a duty to follow an unjust law, and to the separate issue of what the utilitarian consequences of open borders might be. TLB clearly does not want to answer the question asked of him.

Complain all you want, TLB, but you have ignored the question. Does an unjust law demand respect or not? Is it corrupt to violate an unjust law, or is it corrupt to enforce an unjust law? The Anne Frank analogy points directly to these questions. You don’t wish to answer because answering means acknowledging either than unjust laws demand no respect and that to enforce them is itself corrupt, or it means acknowledging that you would have turned Anne Frank in to the authorities. In the first case, you would be contradicting your own stated “enforce the law” fetish; in the second case you would look like a monster. You choose.

And your claim that “billions” (plural!) would try to enter and live permanently in the U.S. in the absence of international apartheid belies a tremendous ignorance of economics. World population is currently 6.7 billion. If we take your claim on its own terms, and assume that immigrants make conditions in the U.S. less attractive and not more, then it is preposterous to assume that 25% or more (i.e. “billions”) of the world’s population would immigrate here, unless we first ignore the dynamic effects of immigration itself. The more people arrive - assuming as you do that immigration is a net harm - the less attractive immigration becomes to potential immigrants, and thus immigration tapers off at an equilibrium.

But, then, explaining basic economics to anti-immigration bigots is never an easy task.

Now, at this point I figured the conversation was pretty much over. I never really expected TLB to answer my question, because to do so would either be to admit that he would have in fact worked with the Nazis since he has such high respect for "The Law", or it would mean he would have to acknowledge that not all government-made laws are worthy of respect, which would remove the anti-immigrationist's main talking point. I made the argument for the benefit of any inlookers, who were not as fully convinced as TLB was that laws deserve respect no matter their content and no matter their congruence with actual justice.

But commenter Ben jumped right in with what inspired this digression on Godwin's Law:

Micha, you’ll want to study up on Godwin’s Law to avoid derailing a potentially interesting conversation. This thread is officially over and you’ve officially lost.

My response:

Sorry, Ben, but Godwin’s Law cuts both ways. It is true that one should not overuse extreme analogies, especially when they are totally inappropriate and uncalled for given the specific situation, but at the same time, this cannot mean that all extreme analogies are at all times inappropriate, or else whatever we might potentially learn from past tragedies would be forever lost as a source of moral education and wisdom.

Invoking Godwin’s Law when a Hitler, Nazi, or Holocaust analogy is actually relevant is just as much of a logical error and conversation stopper as invoking a Nazi analogy when doing so is irrelevant to the argument. Godwin’s Law does not and cannot mean that all discussion involving what we might learn from the experience of the Holocaust is totally out of bounds for rational discussion.

And the Anne Frank analogy is not just completely relevant to this particular discussion, it is also frequently used in moral philosophy as an example of what is wrong with overly-legalistic ethical systems such as strict interpretations of Kantian deontology. If it is the case that one must never tell a lie no matter the consequences, then it must also be the case that one must give an honest and correct answer to Nazi officers if they ask you if you are hiding any Jews in your attic. And since most people rightfully recognize such a conclusion as morally outrageous, we are able to see what is wrong with strict obedience to immoral government laws.

Monetary Inequality vs. Functional Inequality

From a comment thread at Econlog, Grant writes:

I care about inequality - I think it would be great if everyone on Earth had access to good food, water clothing, shelter, water and transportation - but I'm no left liberal. I happen to think the best way to go about equalizing the world is freer markets and open borders.

I think its important to distinguish between monetary inequality and functional inequality. A S500 Mercedes is far more expensive than a Toyota Corolla; there is a large amount of monetary inequality there. But functionally, the cars aren't that far off. The Mercedes is more comfortable, but the Toyota is more reliable. Both do a damn good job at getting people from A to B, and in fact the Toyota may even be better at that than the Benz. In many state-run industries such as health care, the justice system and education, monetary inequality does lead to large disparities in outcomes, but in most cases I don't think thats true at all.

I would take the same position that Milton Friedman did, that markets are the best way to alleviate real inequality in society, and not any nebulous definition of "economic" inequality.

I'd still like to see something that shows how inequality across 300 million people makes some unhappy. People organize themselves into social groups based on socio-economic status. Why would it make some poor people - who's peers are generally all poor - unhappy that Warren Buffet or Vladimir Putin are rich? And if it does, should that externality be viewed as any more legitimate than a racist man who is unhappy because he has a black neighbor?

Two points are worth reiterating here. First, his observation that monetary equality is much more salient in state-run industries, and much less so in a free market. So by moving more and more economic transactions under the umbrella of government, people concerned with power inequalities are actually shooting themselves in the foot.

Second, the observation that soaking the rich simply for the sake that they are rich - deriving from base jealousy - is a form of bigotry and should be regarded as such. To the extent that bigoted preferences are thwarted, that is a good thing, as satisfying bigoted preferences necessarily harms others - bigotry is a zero-sum game. The best way to ameliorate bigotry and envy is not to satisfy the preference, but to eliminate the preference through moral education.

The Economic Clockmaker Argument

Okay, I know harping on this same point must be getting a little tiring for some of you, but economic creationists just keep setting themselves up again and again for the same sort of critique. It's worth reiterating as much as possible what is wrong with economic creationism and what it shares with biological creationism.

Muirgeo writes,

I’ve been on the side of trying to convince creationist of Darwin’s theory but did natures emergent order give us our great crop yields or did planning, logic, research and an understanding of and manipulation of evolution do the trick?

Yet again, Muirgeo demonstrate his failure to understood the main point Hayek is making in that essay. Muirgeo is essentially making the watchmaker argument, except in this case for economics instead of biology. Just as the biological creationist observes that watches don't occur in nature and must be designed, so therefore the parts of nature which seem even more complex than a watch must be designed, so too Muirgeo observes human technologies such as farming techniques and concludes that since these techniques are designed, the price system, which is many orders of magnitude more complex, must be subject to the intentional dictates of centralized command-and-control.

Crop yields and the American economy are not the result and would not be as successful as they are were it not for planning. Left to nature and emergent properties we’d still be living in tribal units like the native American’s our good planning displaced.

Again, this is essentially the same as when a biological creationist says something like, "If left to nature and emergent properties, watches would not exist." Well, yes, but that clearly misses the point of biological evolution, just as Muirgeo has clearly missed Hayek's point about the information signals embedded in the price system.

And he will continue to make this same mistake, over and over again, because he does not want to understand the importance of the price system and the impossibility of central planning on a large scale. Until a creationist is willing to accept that his worldview might be wrong and that God/a central planner need not exist (at least to the extent creationists believe is necessary), no amount of explanation of emergent phenomenon will be sufficient. It amounts to an ideological unwillingness to understand.


"Fryer grease has become gold," Damianidis said. "And just over a year ago, I had to pay someone to take it away."

Amazing. An increase in the price of petroleum leads to an increase in the demand for substitute goods such as biodiesel grease. Who whudda thunk?

Ought Implies Can - The Best Argument For The State

Paul Gowder makes what is one of the strongest arguments against anarchy and for the state in response to Crispin Sartwell's anarchist challenge. Summarizing his own longer and detailed argument, Paul puts it like this:

I’d submit that the impossibility of anarchy, which you accept (assert) is good reason to say the state is legitimate, on the “ought implies can” principle.

Which just takes us back to Will Wilkinson's original deontological/consequentialist distinction.

The problem here, I think, is that deontology is simply blind to possibility arguments. If you as a deontologist maintain that aggressive coercion is always wrong, than it matters not to you if it just so happens to be the case that a society in which there is no legitimized-by-the-state aggressive coercion simply cannot exist. The fact remains that aggressive coercion is wrong, even if removing it entirely remains impossible.

Paul (and Will) are asking deontologists to accept this impossibility (and some do, at least for the sake of argument), and then make the second step to choosing between preferred possible worlds. But deontologists who are true deontologists, deep within their bones, will refuse to take this second step.

So when Paul writes,

Moreover, don't be deceived by the fact that I speak of states of affairs -- this isn't a premise that is only limited to teological normative standards. A deontologist could say that the best possible state of affairs by that normative standard is one where nobody has violated side constraints, etc.

He is simpy asking too much of deontologists. They will indeed be "deceived" by this sort of talk, because deontology is sufficiently divorced from possibility claims of likely results; it is simply a guide to just action.

And Paul's argument is even weaker than mere possibility. In the comment thread to the post, Paul seems to concede that he is not necessarily talking about mere possibility:

It seems like "ought implies can" ought to demand more than just metaphysical possibility, though. For example, it's not metaphysically impossible for us to establish a mars colony by 2010, but presumably we'd reject any normative argument that led us there on grounds of practical impossibility.

But this is exactly what a strict deontologist would reject. If the deotological argument leads us to the conclusion that we are morally obligated to establish a mars colony by 2010, then we are morally obligated to establish a mars colony by 2010, even if this is practically impossible, and perhaps even if it is logically impossible. The deontologist might simply respond that there is no practical or logical guarantee that justice is always possible.

Of course, by conceding this, the deontologist makes the case for deontology much weaker. If deontology is so far divorced from "facts on the ground", then it seems not very useful for determining the right course of action - if no courses of action are permitted. And what good is it as a normative ethic then?

Incidentally, Kitt Wellman gives a nearly identical argument in his book, with A. John Simmons, Is There a Duty to Obey the Law?

This is why I think libertarians should focus on consequentialist concerns, at least to some extent. Unless someone is already a gung-ho deontologist (and very few people are, when it comes down to it), a focus solely on legitimacy concerns while ignoring possibility is not going to convince.