From the category archives:

Libertarianism

Biasing students in econ 101

by Jacob Grier on June 9, 2010

Does economics education bias one toward a free market perspective? Patrick Emerson thinks it might:

I think a little economics education leaves you with the impression that the answer to all public policy questions is free markets. This is because in intro classes, we often only have enough time to study and understand markets and their wonderful aspects and about the distortions that taxes and price controls create, often leaving very little time to talk about market failures. This can be true of intermediate classes as well. Later in economics classes, market failures come up all the time and you start to get an appreciation of the limits of markets. But those that only take one or two economics classes will be inclined to believe that market failures are really not that big a deal, after all they were just a quick end note in the class… But I also believe that students self-select into economics classes and that those with free market, anti-tax attitudes will find a lot to like in economics classes. In general I think that professors have very little influence on the core beliefs of students and that mostly student gravitate to professors that teach things that resonate with those core beliefs.

For the most part I agree; if studying economics doesn’t make one appreciate markets, then one probably hasn’t been paying attention. But there are some biases pointing the other way as well.

Perfect competition — Introductory economics begins with the concept of perfect competition, an unrealistic model that nonetheless helps us think clearly about how markets work. Sometimes this is misunderstood to mean that all of economics rests on an weak foundation. A post at Blue Oregon is typical:

Free market economists use models that assume that people are given complete information and make rational decisions. How absurd. No one has complete information, most people have terribly unreliable information, and people make stupid decisions all the time.

Well, I guess we can just ignore economists then!

Market failures — The models taught in econ 101 make it easy to find market failure everywhere in the forms of monopolies, unprovided public goods, and positive and negative externalities. Some of the more compelling defenses of free markets stress that markets are needed precisely because our information is imperfect, but I don’t think that perspective gets much emphasis in introductory economics courses.

Government solutions — When these failures do crop up government intervention is assumed to be the answer. Break up or regulate monopolies, provide public goods, subsidize or tax the activities that create externalities, and voila! Problems solved. Government is rarely treated as being run by self-interested individuals with limited information and therefore susceptible to the same sorts of errors as the private sector. There are lots of government solutions, rarely government failures. How many intro courses even mention public choice theory?

I think Patrick’s right in saying that “professors have very little influence on the core beliefs of students.” If one is inclined toward free markets there is plenty in econ 101 to support those views. If one is inclined toward government intervention econ 101 also makes it easy to find roles for it. A richer education would place more emphasis on putting the simplified models taught in class into their proper context.

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Fair Trade follow-up

by Jacob Grier on May 14, 2010

Following up on last month’s post about libertarians and Fair Trade coffee, it’s worth noting that leading roaster Counter Culture Coffee has released its annual transparency report for its Direct Trade certified beans. It’s available here in PDF format and is very cool. For every coffee in the program it tells you which employee visited the farm, when they last visited, the price paid for the beans, the beans’ cupping score, the number of years CCC has been buying from that farm, and a paragraph-length description of their work at each location. You really can’t beat that level of transparency.

To put the numbers in context, here’s a quick summary: The minimum price required for Fair Trade certification is $1.26 per pound. Counter Culture’s Direct Trade certification has a minimum of $1.60. The actual lowest price the roaster paid last year was $1.65. They paid as high as $4.45, with many coffees falling somewhere above $2 or $3.

As I said before, I’m not reflexively against Fair Trade, but I don’t want consumers to think it’s the best or only game in town. When you put that program up against the Direct Trade programs of the best specialty roasters it’s easy to see why many coffee lovers prefer the latter model.

[Via @CoffeeGeek.]

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The Watts case and jury nullification

by Jacob Grier on April 30, 2010

I’ve been following, from a distance, the case of Canadian sci-fi writer Peter Watts. Watts’ car was searched at the US border and he was beaten, pepper sprayed, and detained when he questioned the purpose of the search. I’ve refrained from commenting until all the facts were out, but with the trial concluded there’s little to vindicate his treatment and the government’s refusal to release video of the incident lends no credence to the case against him.

A jury convicted Watts of resisting customs officials. Fortunately the sentencing judge chose not to imprison him. Read Peter’s own account for a humorous take on the hearing, his friend’s for a more touching one.

One of the jurors who convicted Watts went so far as to advocate against a jail sentence. Regrettably, the jurors felt that they had no choice but to throw Watts at the mercy of the judge. Two quotes from jurors:

As a member of the jury that convicted Mr. Watts today, I have a few comments to make. The jury’s task was not to decide who we liked better. The job of the jury was to decide whether Mr. Watts “obstructed/resisted” the custom officials. Assault was not one of the charges. What it boiled down to was Mr. Watts did not follow the instructions of the customs agents. Period. He was not violent, he was not intimidating, he was not stopping them from searching his car. He did, however, refuse to follow the commands by his non compliance. He’s not a bad man by any stretch of the imagination. The customs agents escalted the situation with sarcasm and miscommunication. Unfortunately, we were not asked to convict those agents with a crime, although, in my opinion, they did commit offenses against Mr. Watts. Two wrongs don’t make a right, so we had to follow the instructions as set forth to us by the judge.

And:

Peter,

I believe your description of the trial and deliberations is more accurate than you could know. As a non-conformist and “libertarian” (who has had some experiences not unlike yours) I was not comfortable with my vote, but felt deep inside that it was consistent with the oath we took as jurors. I believe nearly all the jurors searched for a legitimate reason to vote differently. In the end it came down to the question “Was the law broken?”. While I would much rather have a beer and discussion with you than Officer B. I never the less felt obligated to vote my conscience. I also believe most, if not all, the jurors sincerely hope that you are handled with a great degree of leniency, we, unfortunately have no say in that matter.

It’s great that Watts was lucky enough to have a sympathetic judge but tragic that the jurors who convicted him felt compelled to do so. If there is ever a time for jurors to stand up against prosecutorial indiscretion it’s in cases in which the defendant has been abused by agents of the state. Cases like this are exactly why we have citizen juries. It’s not enough to convict and hope that, as happened here, the judge will make the right decision instead of siding with his fellow authorities. Even though Watts avoided a jail sentence he will have to bear the costs of a felony conviction, including infringements on his right to travel.

Unfortunately current law generally forbids discussion of jury nullification within the courtroom. I encourage everyone who may serve as a juror to read up on their rights and responsibilities so that they can render an informed verdict should they sit on a case such as this one.

Previously:
Oregon’s low bar for conviction
Filan doesn’t go far enough
Dawkins doesn’t get juries

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A quick Tax Day post

by Jacob Grier on April 14, 2010

In typical fashion I put off doing my taxes until tonight. That’s a solid 12 hours ahead of when I did them last year. In untypical fashion, I knew where I’d put all the paperwork needed to complete them. It’s almost like I’m becoming a real adult.

This year was also notable for being the first in recent memory in which I’m receiving a refund, though for the regrettable reasons that I did no paid freelance writing in 2009 and took a capital loss on a mutual fund that I had to sell while recovering from my move cross-country. If I’d realized I was getting a refund I’d have filed sooner. While I’m happy to discover I have a check coming my way, Megan McArdle helpfully explains that getting refunds is not a good thing:

Getting a “refund” on your taxes means that you have just made an interest-free loan to the government. Do you relish the opportunity to make interest-free loans to anyone else, just for the sheer joy of eventually getting your own money back? I hope not.

As it happens I generally only give interest-free loans to people with guns and prisons at their disposal.

I wrote last year about my desire to abolish mandatory withholding entirely. Read the whole thing here or just this excerpt from Charlotte Twight about how withholding manipulates taxpayers to increase the size of government:

We have seen that, on many levels, income tax withholding increases transaction costs to the public of understanding the magnitude of the income tax and of opposing it politically. Government officials always have regarded withholding as a seemingly “painless alternative” (U.S. House Hearings 1980: 35). Lacking an understanding of the concept of present value, many taxpayers do not perceive that withholding causes the real burden of their tax liability to be greater. Indeed, the common practice of overwithholding associates the payment of taxes with an apparent financial benefit rather than cost, distorting taxpayers’ assessments of the actual costs and benefits of government activity. Consistent with a transaction-cost-manipulation model, the expected return of such overpayments makes people feel “happier’” about sending in their tax returns on April 15. The very mechanism of withholding deflects blame from the government by requiring employers to initiate and bear the cost of the forcible extraction of people’s income. Piecemeal collection each payday from income the taxpayer never sees obscures the magnitude of the annual tax. And, because it is a forcible extraction, it raises the transaction costs to the public of expressing political resistance to taxes by not paying them.

And on a lighter note, here’s Reason’s Nick Gillespie and Meredith Bragg reminding us that all this tax money is at least going to a good cause:

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Libertarians and Fair Trade coffee

by Jacob Grier on April 13, 2010

Henry Farrell asks:

[...] why are so many libertarians opposed to fair trade coffee?

It would seem to me that fair trade coffee is fairly hard to argue with on the principles of consumer sovereignty (i.e. the claim that consumers know their own interests best, and are able to realize them through the market mechanism). If consumers want to pay a premium for coffee that has been produced ‘fairly,’ then this should be no more troubling for libertarians than consumers wanting to pay a premium for e.g. luxury chocolate (which often is made from the same basic material as very-good-but-not-horrendously-expensive chocolate), and arguably less troubling.

Then Jim Henley piles on too:

Where I was going with that when planning out the post is, if one isn’t careful, the appreciation of the ironic power of self-interest to fulfill social needs can slide into, first credulity – there’s got to be an irony in here somewhere! meaning, almost anywhere – and then decadence: mere contrarianism. At worst, contrarianism that isn’t just sloppy but smug: proud of itself for asserting ironical, “politically incorrect” claims that widely recognized beliefs and decencies are actually myths and vices. Tee hee! Look how upset everyone gets when I tell them how wrong they are to hold their comforting nostrums!

They’re both right that Fair Trade is just another form of voluntary free trade and that the hostility some libertarians express toward the idea of paying more for coffee to help poor farmers is distasteful at times. However at the risk of being one of those smug contrarians Henley dislikes so much, I’m going to defend the libertarians on this one. Partially, anyway.

The simplest reason to object to Fair Trade coffee is that it’s just a stupid name. It suggests that all other coffee is unfair and exploitative. As a sign at one coffee shop I visited put it, “Fair or Unfair? It’s that simple.” Well, it’s not that simple. And if, as I do, you think the insights of Adam Smith, David Ricardo, and other economists are hard-won intellectual achievements, then a label that implicitly opposes those ideas is going to rub you the wrong way. This could have been avoided if we labeled Fair Trade as something like “Charity Coffee” instead, which would be more accurate and avoid disparaging any economic theories. But then it might not have caught on as well because buying it wouldn’t let people signal their opposition to globalization, which brings us back to why so many libertarians dislike Fair Trade in the first place.

That’s probably as far as your average capitalist goes in his reasons for disdaining Fair Trade coffee. But if you’re actually into coffee, you know that some of the smartest critiques of Fair Trade are coming from good-hearted liberals working in the industry. They’ll tell you that Fair Trade is out of step with the current market for specialty coffee.

The first complaint you’ll hear about Fair Trade is that it doesn’t do enough to encourage quality. I’ve had some very good Fair Trade coffee and I’ve had some that’s terrible; the label doesn’t promise anything. It sets a price floor without any real link to cultivating better beans or promise that the roaster knows how to handle them. Even worse, by mandating a co-op model of production, Fair Trade can reduce incentives for individual farmers to improve their crops. This may not matter if consumers are buying Fair Trade coffee just for charity, but over the long-term they may not continue paying more for the label if they’re not perceiving higher quality in the cup.

A bigger objection to Fair Trade is that it’s no longer the best deal for farmers. The Fair Trade minimum of $1.26 per green pound is often higher than commodity coffee prices but well below what premium coffee roasters will pay. For example, Counter Culture’s Direct Trade program pays a minimum of $1.60 per green pound with additional incentives for exceptional crops.

There’s much more one could say in criticism of how Fair Trade certification works; there’s no need to repeat them here but see this recent Guardian article or Kerry Howley’s excellent piece from Reason a few years ago if you’re interested.

What’s frustrating about the successful branding of Fair Trade is that it’s used as a cognitive shortcut by consumers for what qualifies as an ethical coffee purchase. I speak from experience selling coffee in Washington’s Georgetown neighborhood. The type of customers some libertarians enjoy mocking would often come in asking for Fair Trade beans. Sometimes I could engage them and explain that what we were offering was better than Fair Trade, that farmers got more money for the beans and the quality of the coffee was outstanding. Other times I couldn’t and they walked out for another shop, likely ending up doing less good for farmers and with a worse cup of coffee. Customers’ loyalty to Fair Trade can be just as uninformed as some libertarians’ knee-jerk opposition to it.

Here’s Jim again on why Fair Trade seems like such a bad idea to people who’ve taken to heart Adam Smith’s lesson that following one’s self-interest is often the best way to do good in the world:

[...]something like Fair Trade will seem like it should be the kind of thing where there must be a catch. Here are people trying to act out of benevolence and still getting dinner! It would make perfect sense – and be a lot of fun! – if these do-gooders were actually doing harm.

But by this point, you can start getting lazy. Like, assuming that fair-traders must be screwing up “price signals” that are the market’s way of telling poor foreign farmers to stop farming.

I’m not convinced that buying Fair Trade actively does harm, though excess production is a legitimate concern. If you’re shopping at Costco and debating between a big bag of Procter and Gamble’s regular coffee or their Fair Trade beans, you’re probably making some farmer marginally better off by choosing the latter. Fair Trade may play a useful role in mass market coffee. However if you want to pass the maximum of your purchase price onto coffee farmers, your best bet is to buy the highest quality coffee you can from roasters like Counter Culture, Intelligentsia, or Stumptown (to name the usual three, though there are many others).

In fact, it doesn’t even matter whether you care about coffee farmers or not. If you selfishly pay for quality in the cup you’re very likely buying beans that brought more revenue to them than Fair Trade would have. Adam Smith was right and so, sometimes, is the libertarian’s ironic intuition.

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Alcohol taxes and the Overton window

by Jacob Grier on March 31, 2010

We boozehounds on Twitter were abuzz today about a proposed California ballot initiative that would drastically increase taxes on all forms of potable alcohol:

A new initiative that would increase the tax on alcohol was cleared for signature gathering today by the Secretary of State’s Office. And it’s not a modest tax increase, it’s huge. Tax on a six-pack of beer would increase from 6-cents to $6.08. And say goodbye to two-buck chuck–a tax on a 750 ml bottle of wine would go from 4-cents to $5.11. And the tax on a 750 ml bottle of distilled spirits would increase from from 65-cents to $17.57.

I find it hard to believe that this would pass in a state that has so much riding on its alcohol industry and I think that’s sort of the point. Consider the idea of the Overton window:

The Overton Window is a concept in political theory, named after its originator—Joe Overton—former vice president of the Mackinac Center for Public Policy. It describes a “window” in the range of public reactions to ideas in public discourse, in a spectrum of all possible options on an issue. [...]

Overton described a method for moving that window, thereby including previously excluded ideas, while excluding previously acceptable ideas. The technique relies on people promoting ideas even less acceptable than the previous “outer fringe” ideas. That makes those old fringe ideas look less extreme, and thereby acceptable. The idea is that priming the public with fringe ideas intended to be and remain unacceptable, will make the real target ideas seem more acceptable by comparison.

Now it’s possible that the sponsors of this initiative, Josephine and Kent Whitney, truly believe this is a reasonable tax increase. But I doubt that winning the vote is the only goal of this initiative. The aim is to get lots of news coverage for their far-out idea and thereby make smaller tax increases seem reasonable by comparison. So if you don’t want them to succeed, don’t take them too seriously.

Additional note: The Overton window is often described in a very cynical, manipulative context. In contrast, the late Joe Overton’s peers at the libertarian Mackinac Center use it to explain how think tanks can change public policy for the better. They see shifting the window as the noble aim of libertarians working in a world often hostile to free markets and individual liberty. As Nathan Russel wrote for the Center:

A long-term focus on shifting the Overton window allows a think tank to follow its ideals and perform a genuinely positive public service, instead of being constrained to merely advocating those policies that are currently possible. When the window of political possibilities is moved along the political spectrum, the impossible becomes desirable and the simply desirable becomes imperative. This is the true influence of a think tank — shaping the political climate of future legislative and legal debates by researching, educating, involving and inspiring.

[Hat tip to Rumdood, who tweets, "Look, I'm OK with a modest increase in taxes on booze, but from $.65 to $17.57 for a 750mL bottle of rum is insane." Manipulation of the Overton window in action? See also Jeff Woodhead and Chad Wilcox on the Overton window and health care reform.]

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Health care reform’s unseen costs

by Jacob Grier on March 23, 2010

Chad Wilcox nicely sums up why many libertarians lament the passage of the health care reform bill:

A libertarian professor I know once said he believed that libertarianism’s greatest intellectual contribution is a recognition of the unseen. We’ll never see what open competition could have done to health costs in markets for health care left free of government interference. We’ll never see how the voluntarily uninsured would have spent the money they’re now required to spend on plans. We’ll never see how many lives could have been saved or how much healthier we could be in a world with technological innovations that are more costly and burdensome to develop as a result of government. I’m not saying there will be no technology and no innovation, I’m saying when we make these choices “as a society ” we sacrifice the unseen what-could-have-been for a “bird in the hand is worth two in the bush” philosophy that defies the most basic tenets of economics.

Like many libertarians, I think it takes a remarkably credulous faith in government to think that this bill is fiscally responsible. But what really disappoints me about it is that it fundamentally rejects the sort of reforms I’d favor and puts up new barriers to their enactment. Specifically, I’d like to see us move away from insurance as the primary means of paying for routine health care. This bill takes the opposite approach with its individual mandate that everyone purchase insurance, immediately inviting aggressive lobbying on behalf of providers to expand minimum levels of coverage. It additionally weakens Health Savings Accounts first by increasing the penalty for making non-health care related withdrawals, then by further limiting the amount people can contribute to them. One of the few nods in the direction of penalizing excessive insurance is the so-called “Cadillac tax” and it doesn’t even go into effect until 2018 so who knows if that will survive.

The seen costs of this health care bill will become all too apparent in the deficits to come. It’s the unseen costs of making it much harder to try out the market-oriented ideas of people like Milton Friedman, Michael Cannon, Arnold Kling, and yes, John McCain, that are most depressing.

Previously:
Bartenders for McCain?

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The problem of progressive arrogance

by Jacob Grier on August 10, 2009

Rich Rodgers had a post at Blue Oregon this weekend lamenting the fact that some people stubbornly refuse to get on board with the public option for health insurance. He suggests that in the face of such irrationality there’s nothing to do now but agree to disagree. Maybe he’d have more luck convincing his opponents if he treated them with a little more respect. Here’s his opening:

Free market economists use models that assume that people are given complete information and make rational decisions. How absurd. No one has complete information, most people have terribly unreliable information, and people make stupid decisions all the time. Witness the election of George W. Bush in 2004.

There are many intelligent people who describe themselves as free market economists. One or two of them have probably noticed that in the real world people don’t have perfect information. Yet those silly economists persist in their crazy beliefs! Perhaps that’s because they realize that simplified models are often useful starting points for understanding the world. The arguments of free market economists don’t depend on perfectly informed buyers and sellers any more than the designs of engineers depend on perfectly frictionless surfaces.

If Rodgers bothered to look into what libertarian economists actually think he’d see that it’s often the absence of perfect information that drives them to support markets. If knowledge was easily obtainable there’d be little reason not to hand over power to enlightened planners; we’d just figure out what’s efficient and do it. Unfortunately no one person or agency has that much information, so we use markets and price signals to coordinate the dispersed and incomplete knowledge of market actors.

At the risk of being overly generous, I’m assuming that Rodgers doesn’t think we should set up public options to pay for our groceries, our oil changes, our TV sets, or any of countless other goods we consume on a daily basis. We manage to handle these transactions fairly well on our own despite our lack of omniscience. In some arenas, at least, the free market model works pretty well. It’s possible that health care isn’t one of them, but Rodger’s opening canard doesn’t provide any reason for thinking so.

Ironically, one of the leading arguments against free market health care is that consumers have too much information, causing adverse selection and the unraveling of insurance markets. That’s a challenging point! Alas, it’s not the sort you bother making when you start from the assumption that your opponents are stupid.

(It’s also telling that Rodgers’ example of uninformed, stupid decision-making was the election of George W. Bush, a decision that was political, not economic. In the political sphere people are free to make stupid choices because the personal cost of being wrong is virtually nil. This is a reason to be skeptical of further politicizing health care.)

But that’s just the first paragraph. After Rodgers unfairly dismisses free market arguments he goes on to say that people who oppose the public option are dupes of the insurance companies:

The insurance industry is massively funding the campaign against health care reform, especially reform that includes an option for publicly administered insurance. They want to keep making a lot of money, so they prefer to keep things the way they are. The industry is abetted by its mouthpieces on Fox News, talk radio, and in the op-ed pages of the Wall Street Journal. Their teams of strategists are rolling out some rabid crusaders to try to stop the conversation, apparently encouraging them to use tactics as close to brute force as the law will allow (and then some).

This illogical outrage and outrageous behavior obviously didn’t spring up overnight, it’s been cultivated for years by political strategists and interest groups on the right. The rabid dogs know what they’re doing–they know their role, even if they can’t control themselves. If you sat these birthers and screamers and Glenn Beck fans down and asked them to explain how the universe is put together, the story you heard would be scary and wrong, but they would believe every word of it.

While it rests uneasily on an old foundation of philosophical principles, the right’s current ‘platform’ on health care is a twisted-up mess of distortions and opportunity-driven sound bites. It makes very little sense for an ordinary working person to adopt a stance against public health insurance–what exactly is so great about private health insurance?–but rational decision-making has nothing to do with this. People are committed to being on a team, and they will fight for the team.

It’s great sport to mock the fringe elements of one’s ideological opponents — and the conservative movement certainly deserves some mocking right now — but picking on the nutjobs is no substitute for engaging with actual arguments. And if Rodgers looked beyond FOX News he’d find that arguments do exist. Free market economists have a coherent perspective on health care that’s in fact deeply critical of the current system. And the reforms they suggest, such as expanding HSAs, shifting the tax exemption for health insurance from employers to consumers, and eliminating barriers to competition among states, are logical extensions of that perspective, not cover for the interests of insurance companies.

Does Rodgers consider those arguments? Or does he instead suggest that his opponents are a bunch of country rubes? If you guessed the latter, you’re correct!

The current debate in DC has focused on 1) a national public option for everyone or 2) state-by-state decisions on whether a public option is available. Neither of these approaches successfully take into account the reality that people are bitterly divided on the issue, and will stay that way. One answer to the dilemma might be to create a national public health insurance option, but give local communities the choice to opt in or out. Union County can vote in or out. Multnomah County, same choice. Equity can be ensured via the tax code.

It’s a foregone conclusion that the major urban areas will all opt in. Both coasts will be in. In parts of the country where the political divide is intense, communities will have their say; e.g. rural Georgia will probably be out, and Atlanta will opt in. With most cities in, the population base will be plenty large enough to ensure maximum bargaining power. And the conservative communities that are whipped into a frenzy can sit this one out.

I’m picking on Rodgers here, but only because his post exemplifies the tendency I’ve seen in many progressives to ignore the best arguments of their opponents, focus on the extremes, and assume that ordinary people who disagree with them are victims of their own ignorance. This is its own kind of tribalism and with that attitude it’s no wonder disagreement seems so intractable.

I’m not writing this post to defend any particular perspective on health care. I obviously lean to the libertarian side, but this isn’t an area in which I claim any expertise. All I’m suggesting to progressives is that if they want to win over skeptics like me, demonstrating that they’ve engaged with free market arguments would be a better place to start than insulting our intelligence.

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Smoking bans and libertarian failure

by Jacob Grier on June 15, 2009

What a surprise for me to wake up to this morning: Other bloggers are writing about smoking bans! Marc Ambinder got the ball rolling, but Megan McArdle’s post is of the most interest:

[The lack of smokefree bars] seems like a market failure. You can explain it through preference asymmetry and the profitability of various customer classes: heavy drinkers are more likely to also be heavy smokers, and they are the most profitable customers. Bar owners don’t want big groups of people who are going to take up three tables for an hour and a half while nursing one white wine spritzer apiece. They want people who are there to drink. In a competitive equilibrium, they couldn’t afford to go non-smoking because they’d lose their most profitable customers to all the other bars.

You can explain it, but this doesn’t seem like a good market outcome by any measure. Let me be clear, I’m still against the smoking ban, even though I personally vastly prefer smoke-free environments; I think interfering with property rights like this has even heavier costs. But I also recognize that I’m in a minority. And I think that politically, if not intellectually, the success of smoking bans is a heavy blow to libertarian credibility.

It’s true that in pre-ban cities it could be frustratingly difficult to find good smokefree bars, but I wouldn’t go so far as to say this is a blow to libertarian credibility. For several reasons the market failure Megan describes is somewhat illusory.

First, trends toward smokefree businesses were already in place in many jurisdictions before their smoking bans took effect, especially in areas that were late to pass them. Smokefree DC’s website listed more than 200 non-smoking, non-fast food restaurants in the city limits prior to DC’s ban. My tally from a similar list here in Oregon showed more than 400 smokefree bars and restaurants in Portland in December 2008, one month before our statewide ban took effect. During recent debate about Virginia’s upcoming ban the Virginia Hospitality and Travel Association reported that 67% of restaurants were already voluntarily smokefree, a number that included many nightlife spots. Markets are providing smokefree options, just not with the immediacy and completeness that health activists prefer.

Another limiting factor is that it’s hard to measure actual smoking preferences solely by the popular support of smoking bans. There is no cost for a non-smoker to loudly proclaim a preference for smokefree environments when the opportunity arises to attain them by force. Even if a person has only a slight preference for avoiding smoke exposure, he has no reason to oppose a ban (unless he values quaint ideas like respect for property rights, freedom of association, and diversity). As I’ve written before, a non-smoker’s revealed preferences may be very different:

To find out if people really demand smokefree spaces you have to offer them some trade-offs. Are they willing to travel a little further to avoid smoke? To go to a slightly more expensive place? To go where the crowds are less hip? If not, then they probably don’t really care about smoking, even if they say they do in the abstract.

Of course, there’s no need to set up experiments to figure this out. The experiment was conducted thousands of times each day among the competing bars and restaurants in, for example, pre-ban DC. The conclusion they reached is that some smokefree establishments can be viable, but that most people either enjoy smoking or tolerate being around it. Owners would probably have continued to shift toward smokefree policies over time, but there’s no good reason to think that the slow trend in that direction was out of touch with actual consumer preferences and needed to be hastened by a ban.

These considerations cease to matter when smoking policies get taken out of the realm of economic trade-offs and into the realm of winner-take-all politics. With a smoking ban on the table, previously tolerant individuals become rabidly anti-smoker. They exaggerate their annoyance with tobacco smoke. Perhaps they even fool themselves about the true extent of their dislike, given that before the ban they made few attempts to find smokefree alternatives to their favorite hangouts. With non-smokers in the majority, they face little opposition to imposing their will on the smoking minority.

In that post I stated the issue a little too strongly. Some people (like Megan) really do have deeply held non-smoking preferences and bar owners take time to notice and respond to changing consumer demand. However, the discrepancy between people’s stated and revealed preferences should make one cautious about describing the situation as a market failure, and certainly not as a failure that can only be corrected by making every business smokefree. (DC Councilwoman Carol Schwartz’s proposed tax credit to businesses that forbid smoking would have been a much more sensible remedy.)

I do think Henry Farrell is correct to note that prominent early smoking bans helped create a sudden shift in norms. By changing expectations and spreading fear of secondhand smoke they made non-smokers much more willing to demand smokefree environments, whether by denying their patronage or through the political process. But this is not a failure of markets or of libertarianism; before the norms changed markets were probably doing a fairly good job delivering what their customers felt they could justifiably demand.

Also, while the success of early bans in changing norms is a testament to government’s occasional ability to enact social change, it is not a point in favor of further bans. Now that a market for smokefree bars and restaurants is firmly established, the case for comprehensive bans in jurisdictions that do not have them is much weaker. So is the case for existing bans; their work completed, they should be loosened or repealed to allow the preferences of smokers to once again find expression in the market.

Update: Jonathan Adler weighs in with a similar argument. Stephen Bainbridge reflects further on the ability of law to alter social norms. Patri Friedman explains how California’s ban triggered favorable changes in Vegas poker rooms.

Update 2: Brad Taylor puts the argument in graph form.

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Motorhome Diaries update

by Jacob Grier on May 16, 2009

The guys have published the full account of their detainment and it reflects some pretty appalling treatment from the Jones County police, including being pepper sprayed, having their vehicle searched without consent, and being locked up without being read their rights, being informed of the charges against them, or allowed to contact help. Read it all here.

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MHD crew arrested on the road

by Jacob Grier on May 14, 2009

One of the surprise treats from my weekend family trip to Austin was crossing paths with my friends Jason and Pete from Motorhome Diaries, along with their new companion Adam. Together we had a great time crashing a Southwestern University frat party on Friday. (Personal discovery: I have a lot more fun at frat parties now than I did when I was actually in college.)

But it was only a matter of time before the RV of freedom hit a speed bump. All three have been arrested following a traffic stop that they documented with cameras and video cameras. The reasons for arrest in Jones County, Mississippi:

Adam Mueller - Disorderly Conduct and Disobeying an Officer
Pete Eyre - Possession of a Beer in a Dry County
Jason Talley - Disorderly Conduct, Disobeying, and Resisting Arrest

Obviously we don’t have the full story yet, but knowing these guys I’m going to guess that “disorderly conduct” is code for asserting their constitutional rights and not duly respecting the officers’ authoriteh. Pete was probably the calmest of them all, making possession of beer the only thing police could think to charge him with. (And speaking of which, it’s 2009! WTF is wrong with a county in which adults can get arrested for possession of beer?)

The guys are expected to be arraigned tomorrow. Hopefully they’ll get out soon and be able to report all the details. In the meantime, you might want to give them a little support at their PayPal link.

Previously: Pete videotaped an Arlington, VA officer illegally parking and was then trailed by that officer as he attempted to walk home.

Update: More details in the morning once the guys have their computers back. In the meantime, from @jdtalley’s Twitter feed: “The #MHD crew has been released from Jones County jail. I was pepper sprayed and choked for refusing to give ID.”

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Liberty on the Rocks comes to the Horse Brass

by Jacob Grier on April 21, 2009

The constant political happy hours and events were a bit overwhelming when I lived in DC, but now that I’m on the West Coast I do miss the regular gatherings with smart, politically active people. Fortunately, a little bit of DC-style socializing is coming to Portland next week:

Liberty on the Rocks!

Life, liberty – property – and the pursuit of happiness. Meet others who are interested in the same.

Wed., April 29
Horse Brass Pub
4534 SE Belmont St.
Portland, Oregon
5:00 to 7:00 pm

This is a social gathering. No formal program, no speakers, no dues. We’re simply building a social network that began in Denver, and has taken hold in San Francisco, Washington, DC and elsewhere.

I know Kurt, the organizer, and of course the Horse Brass is one of my favorite bars in Portland. If I can get my bar shift covered on Wednesday I will definitely be there, and hopefully I’ll see you there too.

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Tax me baby one more time

by Jacob Grier on April 15, 2009

The folks at Blue Oregon love love love paying taxes. “It’s an honor and a privilege to do so,” wrote Carla Axtman on Monday. Today Steve Novick goes even farther and willingly pays more than he is required to:

In completing my tax forms, I decided to make a symbolic statement of concern about what’s going to happen to our state: I didn’t take the $50 tax credit for political contributions, even though I made several times that amount in political contributions. I’m not exactly rolling in dough these days - I made a little over $40,000 last year - but I figured the state needs the $50 more than I need to be subsidized for making political contributions I would have made anyway.

As a libertarian I’m glad to see Steve spending his income however he sees fit. I’ll also give him credit for putting his money where is mouth is and voluntarily raising his own tax bill; I wish other tax advocates were equally consistent.

But that said, this is a very weird thing to do. Steve wants to see children educated, the elderly cared for, addicts treated, and the sick provided with health care. These are all noble goals. They’re not, however, goals that only the government can achieve. Charities address these needs too, and by contributing $50 to them Steve could ensure that his donation is directed to the right ends.

Instead he donates to politicians who share some, but perhaps not all of his views, who might get elected and who might succeed in putting his agenda into action. Then he gives them even more money that might or might not get spent wisely. At the end of this process, I wonder how much of his political contributions actually end up benefiting the people he wants to help?

Steve gets near the truth when he says that the Oregon tax credit for campaign contributions is “subsidizing the political contributions of the relatively wealthy.” It’s a subsidy for the politicians too, transferring money from the state treasury to their own campaigns. It’s a neat trick: the relatively wealthy get to feel good about donating to their favored politicians and the politicians get more money to crow about the good things they’ll accomplish in office.

The downside of having such an active government is that we tend to forget about civil society’s private solutions to public problems; the importance of people wielding the levers of power looms too large in our view. Steve’s extra $50 in taxes is, as he says, a “small symbolic gesture.” I’d humbly suggest that a more effective gesture would be cutting out the political middlemen and donating that money to a cause that directly addresses his concerns.

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On the road

by Jacob Grier on April 9, 2009

My friends Jason, Tom, and Pete are embarking on a fantastic adventure:

The Motorhome Diaries is the story of three friends who took to the road in April 2009 to search for freedom in America. Along the way the friends — Jason, Pete and Tom — interact with individuals and groups from diverse backgrounds and viewpoints at college campuses, homes, businesses and organizations that are united by one thing: increasing individual freedom and responsibility and decreasing the scope of government.

Their story takes place in a 30 foot used motorhome affectionately dubbed M.A.R.V. (Mobile Authority Response Vehicle). Driving from the urban jungles to picturesque small towns and everywhere in-between, they connect with those who reject government violence in favor of a voluntary society. Through the stories of the individuals they interview they explore the historic shift in power from individuals to the government and the growing movement of those who are fighting back to reclaim their liberties.

They consider their project to be a near-real time documentary since they will post quickly edited videos online so their trip can be viewed on MotorHomeDiaries.com. There, you can read their frequently posted blog and tweets. Videos, photos and media will be posted rapid fire.

Sounds great, but where is Portland on the itinerary? Clearly an oversight!

Follow their travels at MotorhomeDiaries.com

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Reassessing Atlas

by Jacob Grier on March 26, 2009

Like many libertarians, I have a love/hate relationship with Ayn Rand’s books. There’s no doubt that reading them in high school was a transformational experience that, along with studying economics, put me on the path toward liberal ideas and political advocacy. But the books can be a little too transformational, luring inquisitive minds into the trap of ideology; I’d suggest that young people reading them do so with a healthy dose of criticism. Reading news like this, however, tilts the balance strongly in Rand’s favor:

The House voted this week to reauthorize and reform national service laws, which could open the door for compulsory national service. The plan will explore whether to establish a “volunteer corps” to see if “a workable, fair, and reasonable mandatory service requirement for all able young people” should be developed.

Translation: Think military draft, only you don’t get a gun and you still have to do it if you have flat feet.

At a time when the government is seriously considering coercing all Americans to toil in its service, I’ll take my doses of radical individualism wherever I can find them. Leo Grin captures what’s great about her books in an otherwise critical roundup of perspectives at NRO:

At base, Rand’s fiction is the stuff of fantasy and myth, in the best sense. Howard Roark and John Galt fill outsized roles once occupied by the likes of Achilles and Odysseus, Arthur and Lancelot. Impossibly brave and resourceful, towering in their loves and hates, they stand as sterling exemplars of treasured traits. The need for such larger-than-life heroes is evergreen.

How quickly we have forgotten the unutterable darkness of the shadows cast by various strains of collectivism throughout the 20th century! More than a hundred million dead, entire populations subjected to inhuman servitude: Against that monstrous, encroaching gloom, Rand crafted tales that sanctified freedom and individualism, burning away the saccharine happy-face of liberalism and exposing the fangs and poison sacs beneath. True, outside of Rand’s fevered imagination, Atlas is unlikely ever to shrug with such thunder and panache. But for more than 50 years, countless readers have been quietly transformed by the strength and resonance of her capitalist clarion call.

Still relevant in the Age of Obama? With all due respect to Whittaker Chambers, if we didn’t already have her, we’d have to invent her, double-quick.

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Liberty on TV

by Jacob Grier on March 20, 2009

Cable is one of the things I gave up when I moved to Portland. And since I don’t get decent broadcast reception in my apartment, this means I’ve given up TV entirely. By the time I arrived here there was very little left that I wanted to watch. I lost interest in Meet the Press after Tim Russert’s death, Boston Legal had only a few episodes remaining before cancellation, and aside from Top Chef everything else I watched just served as a distraction while at home. I’m happy to say that I don’t miss it at all.

It’s unlikely that I’ll go back to TV anytime soon. Much of what I want to watch is online already and, if I wanted to watch TV series, Netflix is much cheaper. I miss out on contemporary quality shows like Battlestar Gallactica, but cable competing with Netflix is essentially current television shows competing with all television shows that have come before. Given that I haven’t watched any of the acclaimed series from HBO or Showtime that have come out in the past decade, there’s not much reason for me to pay for cable instead of catching up via DVD.

All of which is a long way of saying that last Friday’s John Stossel and Drew Carey special Bullshit in America is the first show in a while to make me wish I could watch at home. (Or even better, in a room packed with friends in DC — Portland isn’t the kind of city that airs 20/20 in its bars.) Luckily, the show is available on YouTube. The arguments are oversimplified, of course, but they offer a much needed perspective in the mainstream press. Here’s my favorite segment, on federal medical marijuana raids:

President Obama and AG Eric Holder have admirably promised to end raids on medical marijuana dispensaries that are legally recognized by their state governments. However Charles Lynch, featured in the video above, remains a victim of federal prosecution. He will be sentenced to a minimum of 5 years in prison on Monday. If Obama is serious about respecting state law, he will issue a pardon in this senseless case.

The rest of the special and Drew Carey’s Reason.tv videos that inspired it can be viewed here.

Speaking of online videos, my friend Caleb Brown has put together what may be Cato’s best production yet. Here he tells the story of Susette Kelo, whose little pink house was notoriously seized by the city of New London with approval from the Supreme Court. Today the lot where her home once stood remains empty, a testament to government waste and eminent domain abuse.

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Who is John Galt?

by Jacob Grier on March 10, 2009

There’s been a lot of talk lately about free market types “going Galt” to protest current economic policies. This provokes my friend Jeff, and many others, to say “Go ahead, be my guest.” They’re right that few productive people are really going to venture off into the wilderness and watch the rest of the world descend into chaos, and that adolescent power fantasy is undeniably part of Atlas Shrugged’s appeal. But there’s a more sophisticated reading than that, one that’s relevant to current debates. Jason Kuznicki puts it very well in the third item of this post:

Ayn Rand hated F. A. Hayek, but in a weird way, the Hayekian idea of the entrepreneur — a little guy who happens to stumble onto a tiny, useful bit of knowledge, and who finds himself free to employ it — is a better fit to the relatively more sophisticated view of Rand’s work, which holds that Atlas is just a metaphor, not a blueprint for world takeover. Schumpeter’s heroic entrepreneur is, I think, empirically wrong, but better suited to a literal reading of Atlas.

Who is John Galt? An ephemeral process. And if you could follow that, well, you get the libertarian gold star for today.

I won’t pretend to have any great insight into how current policies will affect that process; Jim Manzi takes a stab at it here, arguing that they could be very detrimental to entrepreneurship. Even if, like Jeff, you’re not concerned about losing talent, losing investment capital and reducing the rewards to innovation should be a significant concern.

A fascinating paper from Tyler Cowen is worth contemplating here (”Caring About the Distant Future: Why It Matters and What It Means,” [pdf]). He makes the underappreciated point that economic growth isn’t simply cumulative; growth provides the fuel for further growth in an exponential process. To oversimplify, a few years delay in getting Edison’s bulb to market is a few years in which other entrepreneurs toil less productively in the dark. From the paper:

Just as the present appears remarkable from the vantage point of the past, our future may offer comparable advances in benefits. Continued progress might bring greater life expectancies, cures for debilitating diseases, and cognitive enhancements. Millions or billions of people could have much better and longer lives. Many features of modern life might someday seem as backward as we now regard the large number of women who died in childbirth for lack of proper care. It is a simple failure of imagination to believe that human progress has run its course. [...]

The importance of the growth rate increases the further into the future we look. If a country grows at 2 percent, as opposed to growing at 1 percent, the difference in welfare in a single year is relatively small. But over time the difference becomes very large. For instance, had America grown 1 percentage point less per year between 1870 and 1990, the America of 1990 would be no richer than the Mexico of 1990. At a growth rate of 5 percent per annum, it takes just over 80 years for a country to move from a per capita income of $500 to a per capita income of $25,000, defining both in terms of constant real dollars. At a growth rate of 1 percent, such an improvement takes 393 years.

Robert Lucas put it succinctly: “The consequences for human welfare involved in questions like these are simply staggering: Once one starts to think about [exponential growth], it is hard to think about anything else.”

Again, I’m not bringing this up with regard to any particular policy. But we are living in a time in which drastic measures are being taken in response to an immediate economic crisis, the costs of which will be felt for decades to come. The impact these policies will have on the ephemeral process of market production deserves attention. Conservatives and libertarians threatening to “go Galt” aren’t merely expressing selfish frustration at having to pay more taxes; they’re calling our attention to the vital moral imperative of considering long-term growth.

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