Into the Darkness

In 1940 the American author Lothrop Stoddard published an account of wartime Nazi Germany called “Into the Darkness.” Although the book is supposed to be an objective account, it is not difficult to note the restraint the author needs to exercise to not be more critical, if not scathing, about many aspects of the Nazi regime. But with a few exceptions, the style of the book is clinical and dry, which make his descriptions of the effects of the Nazi economy even bleaker.

Because Stoddard devotes a lot of space to describe Germany as it is experienced by the average German family, we learn a lot about the  effects of the socialist war economy on the freedom and wealth of its citizens. Stoddard wrote his account in 1939 and one can only imagine the devastation the socialist war state was about to inflict on its citizens when the accumulated effects of socialism,  repression, war, and international isolation fully materialized. As such, Stoddard’s book makes a good empirical companion to Ludwig von Mises’ “Omnipotent Government: The Rise of the Total State and Total War. (1944),” a classical liberal critique of Nazi Germany.

The title of the book refers both to the perception of Nazi Germany in the US and the war imposed blackouts. The blackouts, the winter cold, and the shortages of even the most basic necessities (let alone luxury goods) do not always produce a content journalist. It is telling that when the author expresses sincere enthusiasm, it is when he leaves Nazi Germany for neutral Hungary:

“Until we reached the border, of course, the windows were kept tightly curtained. Then the train stopped, started, stopped once more. Cautiously I peeked past a corner of the curtain. We were in a brilliantly lighted station bearing the big neon sign Hegyeshalom. On the platform stood policemen and railway officials in strange uniforms. Through the uncurtained windows of the station I could see a restaurant with counters laden with foodstuffs. I was in Hungary–a land of peace and plenty! Standing up in my compartment, I gave three loud Ellyens! Which is Magyar for Hooray!

To enter Hungary from wartime Germany is literally to pass from darkness into light. The sense of this grew upon me with every kilometer the train made toward Budapest, the Hungarian capital….Another wonder was the approach to Budapest–a great city twinkling and sparkling with lights. To one fresh from blacked-out Germany, it seemed like fairyland.”

In the final chapter the author reflects:

There are so many genial aspects of American life which we thoughtlessly take for granted until we are suddenly deprived of them and are plunged into alien surroundings where we have to fuss and plan and almost fight to get the bare necessities of existence.

A positive-sum game against nature

Whenever there is a major economic event (a rapid decline of stock prices, a spike in the price of oil, high unemployment, etc.) the media can be counted on to feature a person who was predicting these events all along. This should not be surprising because there are so many professional economists and commentators who cannot restrain themselves from making economic predictions that a few of them will turn out to be correct. But what is surprising is that so few journalists seem to be able to distinguish between skill and luck. This is one of the major themes of Nassim Nicholas Taleb’s seminal Fooled by Randomness: The Hidden Role of Chance in the Markets and in Life.

If you are an obscure, but aspiring, economist, what are your options? In the June 2009 issue of The Freeman, Anthony de Jasay writes (p.33-34):

What is left for the 250,000 other, less-distinguished economists to do to gain fame and fortune? They too can offer forecasts and might put them on some record. If they place them in the cluster and the actual outcome is in the cluster, they remain unremarked and neither gain nor lose anything. If they go way outside the cluster and the outcome is in the cluster, nobody will remember the wrong forecast made a year earlier. They will again gain nothing and lose nothing. If their forecast is in the cluster and the actual outcome is way outside it, they will be in the good company of their 500 more-distinguished fellows and will again remain unremarked.

The rational choice for such an undistinguished economist is to make extreme predictions, corroborated with pessimistic scenarios that make such forecasts plausible.  If the economist is wrong, nothing (or little) is lost; if he is right, great publicity and riches can be expected. In technical terms, “he has access to a positive-sum game against nature.” On a more serious note, Jasay writes that “such forecasts are the best method of deepening the gloom, frightening the credulous, and making the worst more probable.”

Common political fallacies

In Cato Journal, Volume 28, No. 1 (Winter 2008), the independent scholar Anthony de Jasay reviews four common fallacies (as presented in the works of John Stuart Mill, Ronald Dworkin, John Rawls, and Armen Alchian) that many social scientists and political journalists keep repeating without rigorous analysis.

The first fallacy is that production should be governed by the laws of economics, but that distribution needs to be decided by society. As de Jasay points out,

“Output is distributed while it is produced. Wage earners get some of it as wages in exchange for their efforts; owners of capital get some of it as interest and rent in exchange for past saving. Entrepreneurs get the residual as profit in exchange for organization and risk bearing. By the time the cake is “baked,” it is also sliced and those who played a part in baking it have all got their slices. No distributive decision is missing, left over for “society” to take.”

Although these slices can be distributed again by society, this will constitute a secondary redistribution, usually involving coercion.

The second fallacy is that the aim of public policy should not be equality of outcomes, but equality of opportunity. Such “equality at the starting gate” assumes that equality of opportunity and equality of outcome can be separated. But unless opportunities are equalized at the point where acquired advantages are at a minimum (at birth), maximizing equality of opportunity would require stripping away the advantages people have acquired before the starting gate, and continuous intervention in outcomes to equalize opportunities between generations.

The third fallacy is that in a just society individuals must have a right to the greatest possible liberty compatible with the same liberty for all. As de Jasay has pointed out in detail in his writings, the proviso “compatible with the same for others” is meaningless because it is without substance. In its current form it means that I am at liberty to do anything I want (including violence and theft), provided others have the same liberty as well. Clearly, this is not what advocates of this position intended. More troubling to de Jasay is the fact that liberty is presented as a “right”:

“What is deeply worrying about this thoughtless misuse of the word “right” is that it can be straightened out at a single stroke by simply assuming that every feasible act is prohibited unless we are somehow granted a “right” to perform it, in which case it becomes a liberty. It takes a right to lift it out of the universe of prohibitions.”

The fourth fallacy is that society has a right to modify, transfer and revoke property because property rights are granted and defended by “society.” As has been discussed in the first fallacy about production and distribution, redistributing property would be tantamount to ignoring the fact that all who have helped to produce property have already been remunerated in the process. As in the case of a “right to liberty”, the “right to” part is redundant:

“Like all liberties, the kind we call property exists and is exercised within the rules that prohibit certain wrongs (torts). Staying as it does inside the rules, it needs no separate right to exist and be exercised. Nor does it make sense to think of an obligation imposed on all not to do against property what the rules prohibit them from doing anyway.”

Anthony de Jasay: Parrot Talk: The Repetition of Common Fallacies (PDF)

Rights: nonsensical, empirical and hypothetical

If there is one thing that characterizes contemporary political discourse, and contemporary political liberalism in particular, it is the obsession with “rights.” Individual rights are absolute, or “trumps,” that do not permit to be overridden by collective goals, and can only be defeated by another trump. But since every right implies a corresponding obligation (a cost), increasing the number of rights we have also increases the number of obligations. If many of these rights are perceived to be equally important, or to be weighed differently in different circumstances, the scope and depth of collective choice will expand and creation and enforcement of rights will come to reflect the moral and political fashions of the day. Of course, this will largely defeat the trump-like nature that rights were supposed to have in the first place.

The fundamental question is where these “rights” come from in the first place. Rights are supposed to be “self-evident,” can be deduced from God’s will, the logic of reason, or the nature of man, etc. Unfortunately, attempts to find a solid foundation for rights have not been very fruitful, and even philosophers that agree on the same foundation for rights have often derived wildly different conclusions about the nature of those rights. But despite the failure to find objective evidence (either empirical or logical) for the existence of rights, “rights-talk” increasingly dominates public discourse. This is not just confined to modern “egalitarian” liberalism but has been a dominant feature of libertarianism as well, as evidenced by the writings of Ayn Rand, and Murray Rothbard, and the early Robert Nozick.

How do we reconcile the popularity of “rights-talk” with the lack of evidence for the existence of rights? The most obvious explanation is that by presenting an individual preference in the form of a “right” we depersonalize the nature of the claim. The “right” element confers credibility because it evokes truth, not individual preference. This effect is further enhanced by the fact that historically a lot of rights were assumed to be “self-evident” or derived from God’s will. The liberal philosopher Anthony de Jasay notes that the popularity of rights may be explained by its feature of hiding its redistributive nature and costs:

“‘Rights’ survive and crowd ‘goals’ out of circulation even if both convey the same substantive message, because rights-talk cheers and gratifies all who are accorded rights by it, and threatens no one overtly. Goals, on the other hand, unless they are innocuous, usually suggest not only the promise of something beneficial, but also the cost of attaining it, the effort it takes, and sometimes (in the case of visibly redistributive goals) an implication that if some gain by it, others must lose. Rights-as-goals are presumably easier to propagate and fitter to survive in the public consciousness than goals tout court.” (Anothony de Jasay, Choice, Contract, Consent: A Restatement of Liberalism)

Right can exist in an empirical sense when they reflect a contract between individuals to perform or refrain from certain actions. But in this case rights follow from actual agreement. The evidence that such rights exist can be found in a (written) agreement. And the existence of such rights is usually confirmed by both parties because it is advantageous for them to accept the benefits and obligations of the agreement. The situation is different in the case of rights that do not reflect (implicit) agreement by the individuals who have to incur obligations and costs. Anthony de Jasay notes that “a ‘rights-based’ political theory in general, and rights-liberalism in particular, is losing determinacy and self-restraint when it loses sight of where the burden of proof lies.”

The existence of specific rights and obligations are often defended with the argument that they reflect a “social contract,” similar to a contract between two individuals. A major weakness of this line of thinking is, of course, that such a contract has never been agreed to in reality. This would not necessarily present a major obstacle in case the rights involved would be minimal and non-distributive, but most modern rights do not have this characteristic. For example, an agreement to abstain from harming someone can be complied with by doing nothing, but an agreement that says that “every person has a right to food and shelter” comes with far reaching obligations that will not likely generate universal agreement.

Some modern liberal philosophers (such as John Rawls) do not prefer a social contract so “trivial” and claim that more extensive rights can be justified by means of an hypothetical contract in which rights are derived behind a “veil of ignorance” in which individuals are deprived of information about the individuating characteristics of the citizens they represent. This raises the question of what the relationship is (or should be) between such agreements and what actual individuals would agree to in real life. The reason why such hypothetical agreements should create moral (and legal) obligations in real life is that they correspond (or should correspond) to our conception of justice. Unfortunately, such a justification runs into the same problems as the more straightforward derivation of rights earlier; it lacks objective empirical or logical content. So far the only credible attempt to derive rights (or explain their existence) from non-moral premises is found in Hobbesian contractarianism as represented by Thomas Hobbes, David Gauthier and Jan Narveson.

Justice as impartiality

One common answer to the question of what should characterize an acceptable theory of justice is that it should be “impartial.” This is generally understood to mean that a theory of justice should not be tailored to the interests of specific individuals (or groups of individuals). This raises two questions. First, do we have reason to accept such an account of justice? Second, what follows from such an account of justice?

One weakness of presenting justice as impartiality is that it assumes that people stand in need, or recognize the need, to justify their actions to others in a moral framework. But as the philosopher David Gauthier points out, such a need can be treated as

“the secularized residue of the doctrine that persons seek to justify their actions before God. But once that residue is being recognized for what it is, it surely loses all credibility. And so justice as impartiality lacks a plausible view of justification” (David Gauthier, “Mutual Advantage and Impartiality,” in: Impartiality, Neutrality and Justice : Re-Reading Brian Barry’s Justice as Impartiality).

If there is a prospect of reconciling practical reason and justice it needs to be found in the fact that all persons, whatever their values are, will need to choose justice as dictated by practical reason. The best candidate for such a theory of justice is justice as mutual advantage.

The other issue with justice as impartiality is what it would entail. Justice as impartiality is often linked to the view that the arbitrarinesses of nature should not be reflected in the rules of justice. The fact that a person is more talented or better off is not deserved and should be morally irrelevant. But what actually follows from that is that:

nobody deserves anything at all – neither the fortunate, nor the unfortunate. If justice is served by depriving people of what they came by as the result of morally arbitrary processes, then we must take everything from everyone…” (Jan Narveson, “Egalitarianism: Partial, Counterproductive, and Baseless,” (Ratio, Volume 10, Number 3, December 1997, pp. 280-295 (16).

If the rules of justice are decided in a framework that is impartial, the best guarantee for acceptance and compliance with the substance of those rules is that they reflect mutual advantage, in which no one is made worse off for the benefit of others. This conception of justice does not exclude acts that confer a unilateral benefit on others, but these acts should be left to the choice of individuals and not be enforced through coercion.