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July 28, 2004

Foreign Intervention

Apropos Randy Barnett's Volokh Conspiracy article about libertarianism and foreign policy, last week I was engaged in a conversation with some co-workers about the possibility of U.S. intervention in the genocide in the Sudan.

As a hawkish libertarian — not a "conservative", mind you — I'm something of an outcast among the orthodoxy at the LP and other hangouts, including sadly often the Mises Institute which sometimes seems more Rothbard- than Mises-inspired.

So what you're reading here is not the standard "big-L" Libertarian line. But I think they're wrong, sucks to be them, etc. This is the view from my ship. Arrr!

Disclaimers aside, I think it's important and useful to break down the question of foreign intervention into several more focused issues. This is not intended to be a comprehensive list; just what springs to mind quickly:

  1. Identification of evil
  2. Moral obligation
  3. Moral authority to intervene
  4. Legal authority to intervene
  5. Capability of intervention

1. Identification of evil

Libertarians support the non-initiation of force principle (NIFP), essentially that physical force should only be used in retaliation against those who have initiated its use. This is not strict self-defense; retaliation by proxy (e.g. police officers, the courts) is appropriate. So is action against threats of force.

A government that slaughters its own people is rightly recognized as evil. It is initiating force on a massive scale and is violating the (moral, if not legal) rights of its citizens instead of protecting them. Various Marxist nations went through this, and more recently we have the examples of Iraq and Sudan.

2. Moral obligation

This may vary considerably based on one's ethical system. I'm a consequentialist who thinks virtue ethics is necessary for reasons of mental economy (we need principles or we'd be stuck in analysis forever), but under this framework the misfortune of others does not necessarily create an obligation to help them unless altruism is one of your virtues. And if not, there may be plenty of self-interested reasons to intervene. (I hesitate to say that because someone's immediately going to think I mean oooooil — get a grip; there are many potential self-interested reasons.)

To support an intervention, you have to believe it's morally appropriate.

3. Moral authority to intervene

I'll crib this one from a previous article; see the quote at the end. It's morally acceptable to intervene against dictatorships when you intend to replace that government with one that respects individual rights. Or, if you're not feeling utopian, the government at least has to be improved so that it's not a dictatorship anymore.

4. Legal authority to intervene

For the United States, an act of Congress is required. (For Iraq, this was H.J.RES.114.ENR, an invocation of the War Powers Resolution.)

That's it. No approval from any international forum is required, period. The Constitution recognizes no higher authority. The rest of the world might bitch about it, but that's irrelevant from a legal perspective.

Besides, as Iraq demonstrated, they'll bitch about it even when you do get their approval. :) (Yes, I think 1441 was sufficient.)

5. Capability of intervention

This is the pragmatic consideration. "Don't pick a fight you can't win."

A related matter is one of setting priorities; if there are many places where intervention seems like a good idea, it isn't possible to do them all simultaneously. Pick an order. And, of course, there are the domestic economic effects of producing military goods instead of consumer or business goods. Resources are scarce, desires aren't.

Side issues:

I include the matter of deaths among your own forces in #5. It's a cost to be weighed against the benefits of success.

I include the accidental deaths of civilians under #1 — they're the moral responsibility of the aggressor, not the rescuer. On a smaller scale, think of a police sniper who accidentally hits a hostage. The criminal is morally responsible for that death because they're responsible for creating the dangerous situation.

Regarding Iraq, I believe all five criteria were met.

Regarding Sudan, I think today only #1 and #3 are met.

Are there any other criteria I should add to this list?

July 27, 2004

Overcoming Inertia

When does a person decide to take a risk?

I don't mean an everyday risk like driving or asking for a stranger's help or presenting an idea that may be badly received. I'm talking about big risks, life-altering decisions — like changing jobs, or moving a great distance, or ending a relationship.

There is inertia in the status quo. The good and the bad in the situation are already known. A change requires a fresh process of discovery and a lot of uncertainty, and this is uncomfortable. A "better the devil you know" attitude is the default (and is even healthy) until more information is available.

But what if you're not seeking that information? This is most likely to occur when it's someone else who is advocating the change. "They don't know my situation. Why should I follow their advice?" It's reasonable to be skeptical and to wonder if they have an ulterior motive. Indeed, you should be shocked if you discover they don't have an ulterior motive.

Given all this, what's the best way to overcome the inertia, uncertainty, and suspicion?

The methods of advertising seem nearest to the goal: Advertisers must get through the mental blocks and demonstrate benefit to the consumer. But advertising is generally about little things, a few dollars here or there, not about fundamental changes to a person's life.

Let's put my three examples together — how would you go about convincing a person to end a relationship and move across the country to start a new career? It's not as simple as arguing that they'd be happier in the new configuration. They also need to be convinced that the new configuration will be achieved. And that the instability during the transition will be worth enduring. As a life-altering decision or group of decisions, the bar is set extremely high.

I think I know abstractly what I need to do, but I'm not sure how to do it. I'd appreciate any recommendations of concrete advice for this sort of thing. Also, if I've omitted anything important in this analysis, I'd certainly like to hear about that too.

I'll be flattered if this gets me some useful e-mail, instead of the "link to this!" requests I've been getting more of lately. I'm no one's publicist.

Exception: If the thing you'd like me to link to is about the topic of overcoming psychological inertia related to big decisions, I'd be happy to link to it. :)

(Wishing again I had a commenting system, until reminding myself I'd rather not deal with comment spam…)

July 25, 2004

The Gold Standard: Yes, Please!

I just discovered the article Libertarians and the Gold Standard on The Calico Cat, whose author also writes at the Gold and Silver Blog. It's a month old, but about a subject that interests me enough to get a reply anyway. It argues that a return to the gold standard would hurt the United States and that libertarians should stop favoring it and focus on other issues instead. It begins with a tie-in to Atlas Shrugged:

The gold standard, or maybe more specifically gold currency, is strongly endorsed in Atlas Shrugged, Ayn Rand's huge 40,000 page novel. (I may have exaggerated the number of pages by a modest amount.)

Because libertarians and other free-thinking contrarians have great reverence for Ayn Rand, they tend to uncritically endorse her views, and there seems to be a strong trend of "return to the gold standard" thinking among libertarians.

While Atlas Shrugged is only a hefty one thousand pages long, he's right that it has special appeal. One of the characters is a pirate (Arrr!) named Ragnar Danneskjöld. And he's admirably (oooh, bad pun) good at acquiring gold through, uh, piracy. Yes, the book has pirates and gold! It gets a hearty endorsement from me.

And where else can you find such a marvelous plot that makes dialogue like this possible?

He extended the package to Rearden, flipping the burlap open. Rearden saw the starlight run like fire along a mirror-smooth surface. He knew, by its weight and texture, that what he held was a bar of solid gold.

He looked from the bar to the man's face, but the face seemed harder and less revealing than the surface of the metal.

"Who are you?" asked Rearden.

"The friend of the friendless."

"Did you come here to give this to me?"


"Do you mean that you had to stalk me at night, on a lonely road, in order, not to rob me, but to hand me a bar of gold?"


Alas, Ragnar doesn't have a very large role in the book. But enough about literature, let's get back to economics…

Even if we returned to the gold standard, what would stop another FDR from being elected in the future and abolishing it once again? The only true guarantee of freedom is an electorate that values freedom combined with a Constitution that protects freedom from the tyranny of the majority (something that our own United States Constitution has only partially achieved).

Well, some of us think there's a plausible argument to be made that the Constitution mandates a gold and/or silver standard, and that FDR's actions here were as unconstitutional as many other things he did. My preference would interestingly not be to mandate a gold standard, but rather to mandate commodity money and leave it up to the market to decide which commodity or commodities would be best. I also would not forbid fractional reserve banking, although I'm an advocate of 100% reserves.

At the moment, there just isn't enough gold to back the U.S. dollar at the current gold price of $402.60/ounce. The U.S. would have to engage in a massive gold buying program which would cause the value of the dollar to fall and the price of gold to rise until the United States had sufficient gold reserves. Once the world knew why the U.S. was buying, the price of gold would rise pretty quickly. This would amount to a massive transfer of wealth from the United States to those who own gold. How does this benefit the nation? A massive transfer of wealth based on a political decision is exactly the kind of government activity that libertarians should be opposed to.

Of course there isn't enough gold at current prices. The resumption of using gold for monetary purposes would represent an increase in real demand and would obviously increase prices. But why should this be considered bad for the United States? US gold reserves as of July 2004 are 8136.4 metric tons out of a world total of 31736.5 metric tons. This omits private holdings but let's please put that aside. Also putting aside the usual caveats about GDP figures, the 2003 US GDP was $10.98 trillion out of a 2003 GWP of $51.41 trillion. We have 25% of the world's gold but only 21% of the world's production. If the whole world were to go back onto the gold standard, we would be a net exporter of gold and would benefit from its increased value.

Supposing the price of gold rose to $2000/oz (an amount that a lot of the pro-gold websites seem to think gold is destined to reach), and the world knew it would stay there because we were returning to the gold standard, then this would make gold mining a lot more profitable, and there would be a huge investment in gold mining. But all that gold mining would be worthless activity that wouldn't enhance the world's actual productivity. Instead of investing in new computer chips or new factories, people would be investing in digging metal out of the ground. In fact, this activity is more than worthless, it harms the environment because large amounts of sodium cyanide are needed to extract gold from the ore.

It's commonly believed, even among Austrian economists, that the total money supply is basically irrelevant and that there's no benefit to increasing the quantity of money. However, there's an interesting recent paper in the QJAE that argues there are benefits to an increasing monetary gold stock. The paper is "On the Optimum Quantity of Money" by William Barnett II and Walter Block and can be downloaded from the QJAE archives. (Incidentally, I've posted about Barnett's interesting papers before.) The basic argument is that people would voluntarily add to the gold monetary stock in order to reduce transaction costs. The quantity issue is, I think obviously, a relevant factor even from the simple observation that the world was on a gold standard as opposed to a copper or platinum standard. Copper is too abundant, and platinum too rare. The fact that silver was commonly used in addition to gold is empirical proof that transaction cost concerns are strong — strong enough to drive the use of a different commodity for small transactions where transaction costs are most noticeable.

The paper also has the funniest academic footnote I've ever read. They footnote a mention of "market failure" with "The authors of the present paper have resolved never to employ that phrase in the absence of quotation marks." That's laugh-out-loud funny to someone like me. But as you surely already know, I'm a little weird.

There are a host of other reasons why a return to the gold standard is impractical for the United States. Constant deflation, bank runs, and depressions (including the Great Depression) have all been blamed on the gold standard. Writing about all of this is certainly beyond the scope of this essay. Instead, I will end this essay with advice for Libertarians. Stop supporting extreme positions such as a return to the gold standard and focus on core issues such as reducing the size of federal government, lowering taxes, and deregulating society, the issues that Ronald Reagan supported but the current administration seems to have abandoned.

Yes, the gold standard has been blamed for deflation, bank runs, and depressions, and the Great Depression. But it's a scapegoat in all of those cases. It's fractional reserve banking, and government complicity by means of things like bank holidays, that deserve the blame. Deflation — a decrease in the quantity of money -- is impossible under a 100%-reserve commodity money (except in the negligible amounts lost in shipwrecks and the like.) With 100% reserves, bank deposits are totally secure against bank runs. Finally, it's staple Austrian economic theory that while the proximate cause of depressions is deflation, the actual cause is malinvestments caused by previous inflation in unbacked fiduciary media — and there wouldn't be any under a 100%-reserve commodity money.

July 18, 2004

End of the Intifada?

Good news from Gaza — Yasser Arafat is not merely losing political support, but some are rising in open rebellion:

Gunmen burned down offices of Yasser Arafat's Palestinian Authority in Gaza Sunday, as anger spread over the Palestinian leader's overhaul of his security forces that many saw as falling short of genuine reform.

Read the whole article. This violence comes after Arafat refused to accept the resignation of the Palestinian prime minister (in his words "I totally reject your resignation and consider it nonexistent") whose attempts at reform have been stifled by Arafat.

The Palestinian Authority needs reform, and Arafat is blocking it. Almost simultaneously, Arafat nepotistically appointed his cousin to serve as chief of security:

… members of Arafat's own Fatah movement were infuriated, accusing Moussa Arafat of symbolizing the corruption and cronyism of the Palestinian Authority.

Arafat is the problem, and increasingly even the Palestinians know it. I look forward to the day Arafat is killed or otherwise removed from office. He must go. And when he does, and the PA corruption is squelched, there will at last be an opportunity for a genuine solution to the Israeli/Palestinian conflict. But not before.

It's worth adding that I believe two recent strategies of Israel have added considerable value.

The construction of the security wall contributes directly to safety, of course, but it also creates a psychological context of there being, in fact, two distinct areas: Israel and Palestine. This separation allows Palestinians to increasingly recognize that most of their problems are "over here" and not "over there" — they see that their own government is culpable.

The direct targeting of terrorist leaders has led to a decrease in Israeli deaths at the hands of suicide bombers. It isn't true that fanatical terrorism is a hydra and that you only inflame passions and produce more terrorists when you kill one. The passions are already inflamed. Killing the leaders stirs people up for a very short period of time, but the damage to the organization's ability to carry out operations is long-term.

UPDATE 2004-07-18 23:09:16 UTC: I should remember to check Israeli UN website before posting about Israel. Ambassador Gillerman spoke about the security fence on July 16th:

… one thing has become abundantly clear: the fence works. In those places where the fence has been erected it has succeeded in making it far more difficult for terrorists to take innocent life and sabotage the peace process. Scores of suicide attacks have been thwarted the latest just two days ago. Hundreds of lives have been saved. There has been a dramatic reduction of over 90% in successful terrorist attacks, a 70% reduction in citizens killed, and an 85% reduction in the number of wounded - all of which can be attributed directly to the security fence. [source]

July 14, 2004

Hey Kyle, What's Happening?

I've barely blogged since I went on vacation. It's not just writing, even my blog reading is way down. I've still managed to collect a huge pile of links I've thought about commenting on, but at this rate I may never get around to it.

I have a lot of things to keep me busy right now both personally and professionally, so I don't have the time for blogging I wish I had. (And you should see what all the distraction has done to my bowling game — I'm awful now!) The silver lining in all this is that I've started practicing piano again after having stopped for several months.

I probably won't have any significant blog output until after the discussion group, which incidentally was rescheduled for the 24th. My essay on the subject is coming along well and it's sure to offend most people, so I'm pleased with it. Do stay tuned, even if you tune in less frequently…

July 09, 2004

Economic Illiteracy

On my layover returning from vacation, I was eating at a restaurant in the terminal and overheard the person on the table next to me having a telephone conversation. She was getting help on some homework she was working on. Economics homework. My ears perked up.

Then I heard one of the items she was asking for help with. The question (I think it was a true/false) was something like, "exploitation is the primary cause of poverty."

Yeesh. At that point I decided I should sit this one out.

In the general sense, poverty isn't caused. Poverty is the natural state of man. You escape poverty with capitalism, as a quick glance at the historical record shows neatly.

Poverty can be "caused" by the destruction of capitalism, as in Zimbabwe today or under Stalin years ago. Some people, especially in America, link poverty to unwed childbirth. That is an important correlated factor but it's not a cause: these parents are largely already poor to begin with, and the child just makes it more difficult to climb the economic ladder. It would be more accurate to say unwed childbirth tends to prevent escape from poverty.

On the flight back to Oregon there was a young couple sitting next to me, and the girl was looking through a magazine. She saw something that set her off about Wal-Mart, and my ears throbbed with the standard insults that ensued. Fortunately these matters are well-discussed elsewhere and I don't need to fill space writing about them.

I also decided to skip that potential discussion. It was early in the flight, and I was planning on getting some rest, not arguing for the next three hours.

When I arrived back at work, a co-worker told me about an awful article on RFID he read that complains about how it will displace workers. Sigh! That line of reasoning was demolished by Bastiat over 150 years ago. Lower costs are good, and no special interest group of disaffected people should be allowed to prevent lower costs.

Barcode readers in particular have a basically minimum-skill, minimum-wage job and they could train for another job (which economics tells us must exist, given economic freedom) in very little time.

Tiny Island