Profitably (& Properly) Understooding Libertarian Economics
Economics / Economic Theory Mar 16, 2013 - 11:35 AM GMTBy: DeepCaster_LLC
Libertarians commendably focus on maximizing Economic Freedom and Individual Liberty. Who, after all, wants not to be economically and politically free?
But there is considerable dispute even among libertarians about what freedom does, or should entail regarding a variety of crucial issues such as “free trade,” immigration, and the proper role of government.
A profitable (and proper) understanding of Freedom is essential to maximizing Individual and Political Freedom, and to Protecting Economic Freedom and thus enhancing Wealth and Prosperity.
So what are the necessary conditions for having Freedom? Having freedom, in any context whether economic or political, entails having choices. The beggar soliciting donations on a street corner may appear to be free because he is apparently without the constraints of employment and other responsibilities but he also has very few choices. Freedom entails having “freedom to” (i.e. positive freedom) as well as having “freedom from” (i.e. negative freedom).
Thus freedom entails having choices in a variety of contexts. What is the necessary condition for having choices? Having choices in any context requires a structure which makes choices possible, as the philosopher Immanuel Kant demonstrated. There are many kinds of structural contexts: physical, cultural, religious, educational, governmental, legal. Thus, the variety of choices which one has, is defined by each particular structural context. Thus a variety of structures provide opportunities, enrich our lives and even at times our pocketbooks.
There are maximally enabling structures, such as an excellent system of roads and rail, which provide destination choices and transportation. And there are intentionally oppressive structures like prisons. Thus in order to maximize freedom, one should seek to improve structures for their intended purpose, not abolish them.
Of course, some structures, like a burdensome scheme of regulations, can be oppressive. In that case maximizing freedom entails reducing the number of, and nature of, and simplifying, regulations. Often, enhancing freedom means merely simplifying structures.
Generally, governmental structures which are closer to the governed, enhance freedom. However, there are some structures that deserve to be abolished because they impair freedom.
The negative characteristics of certain structures inspire the view of some well-meaning but naïve libertarians who not having fully considered the necessary conditions for freedom, believe that freedom is “atomistic individualism,” that is, the absence of structure. The problem with that view is that it itself negates critical values and thus impairs important positive freedoms.
Indeed, some Naïve Libertarians would have us believe that public policy decisions should be made solely on economic grounds. But some very valuable aspects of our lives are, should be, beyond price (that is, beyond economics) such as, for example, religion and meaningful human relationships, and human rights. Many Americans would add freedom to access wilderness, viewing that as a means of re-discovering an aspect of essential national character.
Further, who among us in the Western World would be comfortable with the culture of a nation which relegates women, for example to third class status, denying them education and free speech. Yet there are such cultures, and some Open Border advocates among the naïve Libertarians would have us disregard such cultural and religious considerations in setting Immigration Policy.
And some of those among naïve Libertarians who advocate the unfettered movement of people, capital, and technology (without considering other important non-economic considerations) would seemingly be impelled to claim the consequent wage depression and job displacement of American citizens by such an Open Borders Policy is unimportant.
Continuing with the Immigration example, even on economic terms, while a highly selective policy of limited immigration can be a benefit, Mass Immigration is a detriment. 36% of the households headed by legal and illegal immigrants to the U.S. are on some sort of welfare program (www.cis.org) as well as receiving de facto free (i.e. taxpayer funded) medical care (in emergency rooms forbidden by the EMTALA law to turn them away) and “free” public education.
It is hard to see how these welfare-recipient immigrants provide a net gain to productivity. Consider that by 2004 there were already 17.7 Million low-skill Immigrant households in the USA. A Heritage Foundation study found that each immigrant household cost American Taxpayers $1.3 Million more for the public benefits and law enforcement service directed to them than the total Taxes paid by them. The NET COST of these Households from 2004 through 2013 was thus $3.9 Trillion! (Heritage Foundation—Robert Rector et al.) This result of the “free” movement of labor is hardly freedom-enhancing to the taxpayers who are required to support it, nor is the loss of manufacturing jobs thereby imposed on to the Unemployed.
Indeed,
“Had an [Immigration] Moratorium been in effect since 1996, the 20.5 Million native-born Americans unemployed or underemployed as of December, 2012 would be as much as 9.85 Million lower today – a reduction of nearly 50%.”
Ed. Rubenstein, vdare.com, ESR Research
An ostensibly freedom-enhancing policy of Open Borders and Mass Immigration thus actually imposes the burdens of additional taxation, unemployment, wage depression, and job loss on Millions of Americans (www.carryingcapacity.org).
And consider the issue of freedom in the context of constitutional law.
The framers of the U.S. Constitution, fed up with Taxation without representation and other Orders of a distant imperious central British government, incorporated many Negative liberties (freedom from) in that Constitution.
First among these is the tenth amendment which reserves those Powers not explicitly delegated to the United States, to “the States or the people.”
That Constitution and Bill of Rights also contain Important Positive Liberties and Powers such as Freedom of Speech, Freedom to keep and bear Arms, and Right to Trial by Jury.
But, as Libertarians rightly point out, Positive Liberties are subject to abuse when they are interpreted so broadly as to impair or impose upon the liberties of others. Shouting Fire in a Crowded Theater surely exceeds the proper bounds of Free Speech.
More threatening to the liberties of all are policies which unjustifiably expand what are meant to be limited Positive Powers into Oppressive Liberty Destroyers.
A Regime’s Imposing Excessive Taxation is one. But perhaps the Classic Example of Oppressive Regulations Power is that imposed by the U.S. Supreme Court in the 1937 Wickard v. Filburn case.
In that decision the Court claimed the U.S. Government did not exceed its power to regulate commerce “among the several states” when it fined a wheat-grower for exceeding a U.S. Government-imposed Maximum Acreage requirement even though he was growing the wheat solely for use on his own farm.
Many legal scholars accept that the Commerce clause of the Constitution was intended to be freedom-enhancing because "regulating" meant facilitating trade between States. However, Wickard v. Filburn clearly did not enhance freedom.
This case and similar ones have provided precedent for a whole variety of excessive freedom-destructive impositions of central Government Power.
So there is always a legitimate concern that the positive powers or rights claimed by some individuals, or governments, not infringe on the Rights of others.
And thank Goodness for the Libertarians for being Active Opponents of such ongoing Infringements.
More broadly, people live in communities which are cultural, social and biophysical as well as political. People are not merely atomistic individuals. Sophisticated Libertarians who understand the importance of simplified freedom-enhancing structures understand. “Free Trade” is not free unless it is also “fair” which in many instances means a structure of tariffs and intellectual property protections is necessary to protect home grown manufacturing and innovation.
Hundreds of thousands of American manufacturing jobs were shipped overseas under the auspices of NAFTA and other “free” trade regimes on the theory that they would provide cheaper imported goods and they have, for some. But the twenty-five million plus Americans who are consequently unemployed or underemployed are in that unfortunate condition partly as the result of having their manufacturing jobs shipped overseas, and thus are not in a position to buy many, if any, of those cheap goods. How has their freedom been enhanced by “Free Trade?”
Similarly, had the constructively structured Glass-Steagall Act (which separated Traditional Banking with Taxpayer insured deposits from Investment/Speculative Banking) not been repealed, the Taxpayer Bailout of Banks in 2008 could have been avoided.
Thus, those Sophisticated Libertarians who want to restore power to communities, localities, and even States, rather than allowing power to be concentrated at national, or worse, regional or global levels have the correct and truly freedom-enhancing idea.
Indeed today it is hard to see how the regionalizing (or globalizing) powers that created the EU have enhanced anyone’s Freedom but rather only the Economic benefit of a small elite group, as the suffering citizens of the Eurozone are increasingly realizing. Unfortunately, the Trans Pacific Partnership as it is now being pushed by leaders in a variety of Nations would similarly reduce liberty by:
--impairing National Sovereignty much as the proposed North American Union would have done, and
--remove control farther away from the citizens of the participant Nations it is ostensibly supposed to help.
In the week after the defeat of Bersani in Italy, and the rise to Power of the Populist Grillo, The U.S. Based private for-profit Federal Reserve injected $100 billion cash into Foreign (Mainly European) Banks operating in the U.S. and The Fed did this without approval of taxpayers or governmental Officials. That brought the amount of Cash provided by the “U.S.” Fed to Foreign Banks to a staggering $936 Billion (www.zerohedge.com) thus diluting the Purchasing Power of U.S. Dollar Holders. All this was done by The Fed (certain of whose shareholders/owners are reportedly European banks) without the approval of the U.S. Congress or the Taxpayers who suffer from it.
The Globalization (i.e. weakening or destruction of local, State, and national structures) advocated by some Naïve Libertarians, creates precisely this sort of negative outcome.
Similarly, the unfettered Money Printing by The Fed, European Cental Banks and Bank of Japan via QE et al effects a confiscation of the Wealth of Savers and Retirees, by diminishing the Purchasing Power of their Fiat Currencies. Thus a Primary Aim of Deepcaster’s Recommendations in its three Portfolios is to Profit and Protect Wealth despite the ongoing Real Inflation (9.24% in the U.S. per shadowstats.com) and Currency Purchasing Power Degradation.
Central among Libertarians and Deepcaster’s Recommendations is the importance of holding the Precious Monetary Metals Gold and Silver, albeit in a form not subject to impairment by hypothecation, price manipulation or otherwise.
Individual Economic Liberty is surely enhanced by holding Real Money, i.e., these Precious Metals, rather than Fiat Currencies which are being devalued by remote Unaccountable Elite Entities.
Gold and Silver are thus Essential to Economic Freedom, as Libertarians correctly claim.
The Libertarian impulse is a positive and profitable and freedom-enhancing one, properly structured.
Best regards,
www.deepcaster.com
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