Notes on What It Means To Be A
Libertarian by Charles Murray
1. Definition of the State: (5)
a) The State (i.e., the government) is that social
institution which asserts and maintains (with some measure of success) a
monopoly on the
authorization of the use of coercion.
The use or threat of coercion is sometimes called, ‘the police power.'
2. Libertarian Principles I & II (6-7)
In a free society, individuals may not initiate the use of
force against any other individual or group
In a free society, people may not be impeded from engaging in
voluntary and informed transactions. That is, in a free society, there is
freedom of contract.
3. Three Legitimate Uses of the Police Power:
a) preventing criminal harms (criminal law) and non-criminal
harms (tort law). Non-criminal harms are those done willfully or through
negligence.
b) enforcing contracts
c) providing public goods
P is a public good for population X if and only if:
(1) P is jointly consumed by the members of X, that is, consumption of P by
one member of X does not diminish the ability of other members of X
to consume P
AND
(2) Consumption of P is non-excludable, that is, it is not technologically or
economically feasible to exclude members of X from consuming P.
These conditions are logically distinct. A good can be nonrivalrously
consumed and yet excludable. Seeing a movie in a theatre in which there are
empty seats would be an example of this, since one person's consumption of the
good does not inhibit consumption by others, but theatre owners
can keep out non-payers.
On the other hand, a good can be nonexcludable and yet rivalrously consumed.
A Peeping Tom may not be able to exclude other Peeping Toms from
enjoying his view, but consumption of that good (enjoying the view) by other
Peeping Toms would inhibit his consumption of the good.
To be rational is to take effective means to one's ends, whatever those ends happen to be.
P creates a public goods problem for a population X of rational
individuals if and only if the following five conditions are met:
(1) P is a public good for group X
(2) Each person in X believes that the benefits of the good outweigh his or her
proportionate share of the costs,
(3) The good is so costly that no one individual could afford to provide it
himself or herself, or find it worth his or her while to provide it,
(4) Each individual's contribution is so small, relative to the costs of
providing the good, that any one person's failure to contribute her share would
not have a noticeable effect on whether or not
the good is provided.
(5) Contribution to the provision of P is voluntary.A public goods problem
arises because each person reasons as follows:
Either enough others will contribute to the provision of this good or they will not. If enough others do contribute, my contribution will be wasted, since it will be unnecessary. On the other hand, if enough others do not contribute, my contribution will also be wasted, since the good will not be provided. Even if my aims or goals are not selfish, it would still be a wasted contribution. After all, I could have spent any amount I might have contributed to the provision of the good on something else, including giving it away to charity.
Everyone reasons like this and the good does not get provided, even
though it is worth it to everyone.
Notice that this does not presuppose selfishness on the part of the
people involved–only that each person in the group is rational, in the sense
defined.
A public goods problem can be solved through a tying arrangement if provision of
the public good can be linked to a private good, so that those who do not
purchase the private good do not get the public good. Example: Microsoft
Windows. The operating system is a public good but it is tied to a non-public
good (the personal computer).
Some libertarians believe that it is appropriate for the state to solve public
goods problems, but if and only if they cannot be solved through some sort of
tying arrangement.
4. More on Public Goods:
a) One test of a public good is whether or not it benefits the entire community.
If it does, it is a public good. If it doesn't, it isn't. Example:
Education
b) Something can be treated as if it were a public good if it is not feasible to
charge people for the service in question. For example, the use of local
streets and highways can be treated as a public good because
it is not feasible to charge people for their use of them. It is much simpler to
charge
people a gasoline tax aud use the proceeds to maintain the
roads.
c) He gives you some "tests" for public goods on p. 13.
5. Some Other Exceptions:
a) Natural monopolies. There are some situations in which it
is most efficient for one firm to supply all of a product or service. Water
works.
b) What is interesting about natural monopolies is that
technological advances tend to make what was once a natural monopoly no longer a
natural monopoly. Example:
Long-distance telephone service.
c) See The Half-life of Policy Rationales : How New
Technology Affects Old Policy Issues, edited by Fred E. Foldvary and Daniel
B. Klein.
HC 110 T4 H35 2003
d) Libertarians favor The Principle of Subsidiarity: The
legitimate functions of government should be performed at the most local
feasible level.
Why? Minimizes abuse.
6. Why Libertarianism?
a) Murray believes that the rationale for the two basic
libertarian principles are connected with the pursuit of human happiness.
Mindful human beings
require freedom and personal
responsiblity. Not all libertarians agree about this. (E.g., Some libertarians
believe that the justification for a libertarian
state is that only a libertarian
state respects human rights.)
b) Much social policy is based on the opposite assumption,
viz., that people are at the mercy of forces beyond their control.
c) What about those who are not "mindful"? Murray
says that for them, they can find their own communities, which might be highly
paternalistic.
7. Freedom:
a) Freedom of Association–freedom for the "little
platoons" of Burke. This means you can't have laws prohibiting housing
discrimination, since
people should be free to associate
with whomever they want. Diversity/conformity (23)
b) Economic Freedom: Economic freedom limits government power
(25).
c) Property Rights: We think of property as a thing but it is
actually a complex of rights, terms and conditions, as indicated previously.
There is also
intellectual property. (28)
d) Freedom of Personal Behavior: Government restricts this
freedom when it engages in paternalism.
8. What Freedom is Not: (30)
a) License: having the right to do something but only if it is with your own
property.
b) Freedom of association does not require that others associate with you.
c) Freedom is not choice among unlimited options. And all choices have costs,
either monetary or in terms of foregone alternatives (opportunity costs).
9. Satisfactions and Personal Responsibility (31.3-32.1) Contrast
theoretical and personal responsibility
a) Theoretical responsibility is what polticians talk about
when they speak of the nation as a family.
10. Satisfactions of Social Life (32.3)
a) degree of effort
b) importance of the function it serves
11. Case for limited government (35.3)
12. An Image of Limited Government: (36)
a) State Dept., Justice Dept., Defense Dept.
still exist. Same with the EPA and the Park Service.
b) Tuition vouchers and the school choice
movement: public goods rationale
c) What gets eliminated: pp. 38-40.
The Trendline Test
13. The Trendline Test: (47-50)
a) At the beginning of part II he discusses
something called the Trendline Test. What is the Trendline Test? (ask them).
b) This test is about giving you before and after
pictures of government intervention. Consider any of the following:
(1) poverty
(2) education
(3) health
(4) safety
(5) income
(6) unemployment
(7) labor force
participation, etc., etc.
14. Results of the Trendline Test for Various Programs/Parameters:
a) Three sorts of results:
(1) improvement:
especially in the environment around the early 70s.
(2) deterioration:
this includes most of the social indicators, such as crime, the family (e.g.,
divorce rates), education, welfare, etc. Why is that?
These are hard problems. No one really knows how to solve them. Very
often, government action makes things worse.
(3) no change:
This is true of health and safety interventions. In many of these cases, there
had been secular decline in health and safety issues.
(secular = long-term)
15. Health and Safety Regulation:
a) OSHA would be eliminated or privatized.
b) What would be put in their place? Not nothing.
Rather, it would be tort law. Torts are non-criminal harms, such as those that
result from the use of
defective products
c) Workers' compensation: 3 statutory
defenses: fault requirement, fellow servants rule, assumption of risk, defense
of contributory negligence left
workers high and
dry. WCI was instituted. OSHA is a layer on top of that.
Defects can include "failures to warn."
d) Tort law is part of the common law, which is
(in a sense) unwritten. Two standards are operative in tort law: (i) negligence
standard (e.g., doctors),
and (ii) strict
liability (products liability). Strict liability applies in the case of
defective products. Negligence standard applies to provision of services.
e) apply this to OSHA, the FDA, the CPSC. Mention
"risk homeostasis."
f) occupational licensure
16. Labor Law:
a) Murray favors abolishing wage and hour laws,
family and medical leave, and all forms of anti-discrimination law.
b) Currently, the law prohibits discrimination
based on race, color, religion, national origin, gender (two forms of sexual
harassment: quid pro quo and
hostile
environment), age, and disability
17. Land Use Regulation:
a) Something Murray does not talk about.
b) The ESA and Sec. 404 of the CWA.
c) Libertarian solution: Take and Pay
18. Murray's Basic Proposal: Allow government to regulate but don't
require that businesses comply.
a) This applies to banking regulation, insurance
regulation, the FDA, even the FAA.
b) Risk homeostasis
19. Government Paternalism:
a) A definition:
To act paternalistically
is to prevent someone from doing what s/he wants because one believes that it is
in that person's best interests.
(1) Notice that the motive is
crucial. Without the motive, it is not paternalistic. If I prevent you from
doing what you want because I think it is in
my best interests, it is not paternalistic.
(2) Examples of government
paternalism?
b) Murray's discussion of government paternalism
is interesting because of what he says at 74.3. There is no natural stopping
point. This feeds into my
point about adverse
selection for gov't regulators. That's not the usual complaint.
20. Unions and Collective Bargaining:
a) He makes the point that firms that kept unions
out usually did so by extra-legal means. What's the significance of that?
b) What he does not mention is that companies
that wished to keep unions out had one very effective method–a method he does
not discuss.
This is the
so-called ‘yellow dog' contract.
c) He does concede a point about bargaining power
differentials at 77.2
Tolerance and Discrimination
22. Freedom of Association:
a) Must include the freedom not to associate.
b) The term ‘discriminate' just means to make distinctions and act on those
distinctions. He gives some innocuous examples on 82-83.
c) Government, however, should never be permitted to discriminate for the simple
reason that it has the police power behind it.
d) Jim Crow laws.
e) 1964 Civil Rights Act–the problem was that it made discrimination the
default explanation in any employment decision.
Education and Health Care
22. Education:
a) Per pupil spending is bears no statistically
significant relationship to educational outcomes, once you control for other
factors, notably socio-
economic status,
education levels of parents, etc., in a word, home environment.
b) There was some controversy about this last
time. To say that once you control for socioeconomic status, there is no
correlation between the amount
of funding and
educational achievement means that, while there is a correlation between high
socioeconomic status and high educational achievement,
it is not because of
higher levels of funding. That is, there is no causal connection between the two
factors. Rather, the explanation is that wealthier
parents are more involved
in the education of their children than less well-off parents. This might be
because poorer parents are working two jobs and
have less time to be
involved in their children's education or there might be other factors, such as
their own lower levels of educational achievement.
It is true that wealthier
school districts spend more per pupil than less well off schools, but that does
not seem to have much effect on the level of
educational achievement.
A lot of that spending goes for "bells and whistles." (Mountain Brook
City Schools Foundation example?)
c) Libertarians favor school choice, including
charter schools, private schools, etc. –all funded by vouchers.
23. Health Care:
The big question people ask these days is why
health care is so expensive. There are a number of reasons:
a) Technological developments have made it
possible to diagnose and treat conditions that were undiagnosable and
untreatable in earlier times.
(e.g., MRIs, and new
drugs)
b) Government-related causes of the high cost
of health care:
(1) The prescription
drug requirement and the requirement that drugs be proved efficacious. The
prescription drug requirement and the requirement
that drugs be shown to be not only safe but also effective both add greatly to
the cost of health care. The clinical trials needed to show efficacy
are the most expensive part of the approval process, which, all told, comes to
about $1 billion for each new drug.
(2) insurance mandates:
the government requires that insurance policies cover certain conditions and/or
treatments. Why? Because politically
powerful interest groups have mandated coverage of certain conditions. A new
analysis prepared for the National Center for Policy Analysis
by the actuarial firm Milliman & Robertson estimates the costs of 12 of the
most common mandates and finds that, collectively, they can increase
the cost of insurance by as much as 30 percent. The explosion of mandated
benefits: Although there were only seven state-mandated benefits in
1965, there are nearly 1,000 today. While many mandates cover basic providers
and services, others require coverage for such nonmedical
expenses as hairpieces, treatment for drug and alcohol abuse, pastoral and
marriage counseling. These mandates apply only to those health
insurance policies controlled by state health insurance laws - usually policies
purchased by small businesses and individuals. Most large
companies avoid state mandates by self-insuring under the Employee Retirement
Income Security Act (ERISA), which exempts self-insured
companies from state oversight. However, the federal government's new mandates -
banning "drive-through" baby deliveries and requiring that
any cap on mental health benefits be the same as the cap on physical health
benefits - apply to all insurance. Moreover, Congress appears likely
to pass even more mandates in the future. How much do mandates increase the cost
of health insurance? The Milliman & Robertson analysis of
12 of the most common mandates is based on policies in a representative state.
"We conclude that a small business employing 25 people - with a standard
mix of 40 percent single and 60 percent
family coverage - could see its premiums rise by $20,000 a year. This is why so
many people lack insurance."
(3) Tax-free
insurance and flexible spending accounts: Here's a complication that most
people are unaware of: During WW II, wages were frozen.
The only way some companies could get the workers they wanted was to offer
better health insurance coverage. This is how our employer-
based health insurance got started. Companies can write off their health
insurance coverage against their profits. This means that health
insurance costs are essentially non-taxable. And, even employee contributions to
health insurance are not taxed. Consider also that some
employers, such as UAB, have Flexible Spending Accounts for medical co-pays and
deductibles. What is the effect? You are paying for
medical care with cheaper dollars, since they are not taxed. Who benefits?
Provider groups. Hospitals, doctors, dentists, optometrists,
opticians, etc. If health care benefits were taxed, it would be unlikely that
people would get all their health care through their employers.
Insurance would be for catastrophes only and routine health care would be paid
for out of pocket. People would no more insure themselves
for routine medical care than they would insure their cars for routine
maintenance.
(4) Why don't
people insure their cars for routine maintenance? Answer: The twin
problems of adverse selection and moral hazard.
(a) Adverse selection describes a situation where an individual's
demand for insurance (either the propensity to buy insurance, or the
uantity purchased, or both) is positively correlated with the individual's risk
of loss (e.g. higher risks buy more insurance), and the
insurer is unable to allow for this correlation in the price of insurance.
Usually, this is because there is asymmetric information.
(b) Moral hazard is the prospect that a party insulated from risk
may behave differently from the way it would behave if it were fully
exposed to the risk. The classic example is deductibles on auto insurance.
(5) Libertarian
solution: Tax-free medical savings accounts.
c) Non-government-related factors
leading to an increase in health care costs: The biggest factor, in my opinion,
is that people don't want to make
trade-offs
between health care and other goods. I suspect most people like the fact that
they don't have to choose between health care and other
goods. But
they might be forced to do so if health care benefits were taxed. Why? Because
businesses would simply cut back on their coverage to
control
rising costs, putting more of the burden on families to come up with the
resources. The current system involves a kind of radical
egalitarianism. No one with health insurance pays much out of pocket.
d) The key fact is that the demand
for medical services is essentially infinite.
The Environment:
1. Air and water pollution
2. Wetlands, Endangered Species: benefits of biodiversity. Climate change?
3. Luck Egalitarians (125)
4. Almost everyone should have enough. Those who don't can get help from those who do. (126)
5. Social Insurance:
a) compulsory
b) not actuarily fair
c) taxpayer subsidized
d) Examples: Social Security, Medicare.
6. NIT and the Abolition of Welfare: 128-131
7. Provision for Old Age: 132