Smith, Hayek live on!

If I succeed with this post I will convince the reader that there are a narrow set of clear rules that should guide the debate over the appropriateness of any government activity. I claim that those rules are simple and uncontroversial for most Americans. They are rooted in the core of what it means to be human and are rules whose observance let our distant ancestors rise up from the level of common animals to improve their lot in life. Without the observance of these rules we would still be living in a world government by the rules of the jungle. Government activities that cannot be justified through these rules threaten to do more harm than good.

In defining these rules I borrowed heavily from a talk Roger Pilon presented at a Cato Institute event May 9, 2011. I quoted at length from Pilon’s talk in a posting on June 25, 2011. As I have freely extrapolated from Pilon’s points please do not blame him for any faults in my logic.

Three rules above all others govern the interactions among people:

Rule 1. We have a right to property. We have the right to keep the things we (legitimately) possess. This right also covers our own bodies – we have a right not to be assaulted, confined, or physically abused. I take it as an assumption that the reader will agree this is a right. I am sure there are those who would disagree with this (say those who believe that society’s right to possess things trumps the individual’s) but for my purposes today I am assuming that the vast majority of Americans agree with this right.

This right enables a key ingredient of the advance of society: the right to maintain possession of those things one has worked hard to obtain. The right to eat the tasty morsel you dug up rather than having it take from you by someone who had not put out that effort. The right to occupy the shelter you built against the weather. The right to feed your family with the wildebeest you just brought back to camp rather than seeing it taken from you by force and going hungry. Given the social structures we see in even the most basic societies (and their differences from animal behavior) it is hard to imagine how humans would have evolved beyond instinct-driven animals without constructing and agreeing upon this right.

Pilon says the rules I am describing here are “so simple you can understand them even on the playground” and describes Rule 1 as “Don’t take what belongs to somebody else.”

Rule 2. We have a right to enter into enforceable contracts with one another. In order to join in common society with one another and work together to advance our lot in life, we need contracts to document agreements and consequences for failure to abide by agreements. Contracts help us regulate interactions between people and thus provide the structure that allows us to specialize. Pilon describes the playground-simple version of Rule 2 as “keep your promises.”

As with Rule 1, contracts allow our civilization to advance and the key behavior they enable is specialization. Thus contracts and specialization go hand in hand. Specialization is perhaps one of the key features that has enabled humans to advance. You and I agree (create a contract) that I will hunt for game and you will gather fruits and vegetables and we will exchange some tonight so that our dinner may be more complete, nourishing, and appetizing. Or we agree (create a contract) that I will spend the week making arrowheads while you spend the week hunting. I share my arrowheads with you to make your hunting more efficient (for you are a great shot but a lousy arrowhead maker) and you share your meat with me to ensure you have better arrows (for I am a lousy shot but make great arrowheads). Together we eat better than if we both depended on our abilities alone where I would miss most of my shots even though I had great arrowheads for my distance vision is not so great and you would miss most of your shots for your inept arrowheads would send your arrows careening wildly across the landscape.

It may be that the this more than any other thing differentiates us from other animals – we establish contracts and trade with non-relatives and thus enable us all to live a better life than if we had not done so. (See, for example, my post on trade here.)

Rule 3. Government is the only institution that should be authorized to use force to enforce Rule 1 or Rule 2. Here I use a fairly broad definition of government – a group of individuals freely authorized by the population at hand and given specific authority to act in the name of the population.

Rule 1 leads to the conclusion that force should not be allowed as an option for anyone for any use of force is by its very nature an assault on some individual’s right to property. However, what do we do if someone breaks Rule 1 or Rule 2? Do we allow force to enforce those rules? Society functions best when we do not have to enforce most contracts by resorting to physical force but instead call upon social mores, peer pressure, churches, and other such aspects of the institutions we create to band together. These institutions create the feeling that we will be visited by significant negative consequences if we break contracts but those negative consequences typically fall short of physical violence. However, even with a well functioning society there will still be individuals who break the rules. We need to choose someone or some institution to enforce Rule 1 and Rule 2. If we have no institutions to enforce the rules, then we may face an unhealthy level of chaos and a sub-optimal level of individual effort as the costs to individuals of enforcing their own rights may make them more hesitant than would be optimal to invest in obtaining those things that need protection by Rule 1 or Rule 2. Thus it seems that we have strong support for Rule 3.

Enforcing contracts and providing a police power to protect the right to property seems to be supportable role for government, based on first principals.

Pilon describes Rule 3 slightly differently but I believe philosophically consistent with my approach and says Rule 3 means “if you fail in [Rule] one or two, give back what you have wrongly taken or wrongly withheld. That is the whole world of remedies and that is what we create government to do.”

Now if we agree that those are the three basic rules that ought to govern our affairs then whenever we discuss the rationale for government action we should ask how the proposed action is supported by these rules. If we cannot articulate a defense of a particular government activity by referring to these three rules then we have no recourse other than to conclude that the government activity under consideration is illegitimate. Even if we believe the end in mind is valuable, we must look elsewhere for some legitimate means for achieving that end than government action.

If we cannot defend a particular government action with these rules then it marks as illegitimate the use of government force to perform or enforce that action with money taken from the general population or when that action infringes on the rights of those who do not voluntarily surrender them.

Can we apply these rules?

These rules will only prove valuable if we can successfully apply them in considering a specific government program or activity. If they are too theoretical to provide useful guidance then they are of little use for my purpose here.

Presumably government action is only called for when there is some problem that needs fixing. If my thesis is correct we should be able to express that problem in terms of the three rules. If we cannot express the problem in those three rules then, I argue, there is no justification for government action to fix the problem. Please notice, however, that I am not arguing that the problem does not exist, rather I am arguing that government action is not the right solution to the problem.

I will attempt to apply these rules to a few government policies or actions. In order to try to avoid creating a straw man conveniently formulated to be easy to torch, I’ll look for someone else’s justification for the government policy then dissect the justification in light of the three rules.

As my first example, I will consider Federal funding for K-12 education and the rules that come attached to that funding. That will be the subject of my next post.

Links to related content

1. A talk by Roger Pilon presented at a Cato Institute event May 9, 2011. I quoted at length from Pilon’s talk in a posting on June 25, 2011.
2. See the quote by John Stuart Mill from 1859 in On Liberty on my favorite quotes page.

Roger Pilon of the Cato Institute presented at talk at a Cato event entitled “The Moral Implications of the Deficit, Debt and the Budget Battles” on June 9, 2011. His talk was part of a debate with Amatai Etzione that was inspired by Pilon’s article in the Wall Street Journal. Starting around 30 minutes in he outlines the core roles for government starting from first principals. This was the clearest exposition of the core beliefs of the libertarian cause that I have ever heard. He grounded the position in core fundamental rights and the basic rules that we can derive from those rights as we move from a state of nature into a civilized society. I searched for a copy of Pilon’s speech but did not find it, and so instead I will quote the key bits (from my point of view) below.
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The theory of rights says you have two fundamental rights: property and contracts. Property as Locke put it is lives, liberties and estates. Property in your life. The property in the liberty you have. The property you have acquired in the world. Such that a right violation is the taking of something that belongs free and clear to another. … The second great right is through contract, whereby we associate with each other in various ways that will lead to the creation of civil society or civilization as we can think of it.

Now there are three basic rules which apply in this state of affairs before you turn to government. … They are so simple you can understand them even on the playground. Rule Number 1: Don’t take what belongs to somebody else. That is the whole world of property. Rule 2, keep your promises. That is the whole world of contract. And Rule 3, if you fail in one or two, give back what you have wrongly taken or wrongly withheld. That is the whole world of remedies and that is what we create government to do.

Now there is a 4th rule, but it is optional, it is voluntary, it is: Do some good as you work your way through life. Be a good Samaritan. But notice the good Samaritan is good only because he acts voluntarily, not through force of law. In other words, you are at perfect liberty to be a good Samaritan or not, … that is why it is an optional rule.

Those are the four basic rules you can derive from the theory of rights to sort out the vast array of human relationships no matter how complex they may subsequently be. When we come out of the state of nature into the state of society there are certain reasons we do that. As Locke put it there are inconveniences in the state of nature. We may disagree about what our rights are and our obligations are. We may disagree about what rights we have if they are violated. Indeed, Hobbes put it very poignantly, life in the state of nature is solitary, poor, nasty, brutish, and short.

When we come out of the state of nature for these prudential reasons it turns out that there are three basic powers of government that you can think of when you think of government analytically.

The first power is the police power. … that is the main power we yield up in the original position to government to exercise on our behalf. And we use it to secure our rights both with respect to our neighbors and with respect to foreigners who may threaten us from abroad. And it is also used to create public goods. But you have to understand the nature of public goods in a strict sense, those are goods that as the economist define them are entailed by non-rivalous consumption and non-excludability. Goods such as national defense or clean air. The idea is that a non-rivalous consumption of a good by one individual does not reduce the availability of that good for any another individual. Non-excludability – no one can effectively exclude another from using it.

The second great power is the eminent domain power, which is the power to take someone’s property provided you pay him just compensation and it is for a public use. This is much more difficult to justify. It is justified in our constitutional order, first of all because we agreed to it in the original position – the Fifth Amendment recognizes by implication the power of eminent domain. Secondly, it is a power that when exercised properly is pareto superior as economists would put it, at least one person is made better off, namely the public as is evidenced by its willingness to pay and nobody is made worse off. The individual from whom the property is taken provided he receives compensation that makes him indifferent to whether he keeps the property or takes the compensation. … Second great power, it is used to prevent the hold out in the state of nature, the person who simply will not relinquish his property and therefore can extract monopoly rents accordingly.

The third great power is the redistributive power, literally the power to take from A and give to B or the regulatory use of that power. … Regulatory power which is used to prohibit A from doing what he would otherwise have a right to do or require him to do what he would otherwise have a right not to do for the benefit of B. Unfortunately this third redistributative power is the one that defines most of what government does today. That means that most of what the federal, state, and local governments do today is illegitimate because there is no justification for this ultimate redistributative power.