Note on “The Color of Law”

The Color of Law by Richard Rothstein is about anti-black government policies imposed by federal and state governments in the United States that segregated housing in the United States by race. I will discuss a couple of examples of topics covered in the book.

In Chapter 2 the author explains that there was a shortage of housing in the US from the 1930s to the 1950s because of the Great Depression and WW2. A New Deal agency called Public Works Administration (PWA) built housing . The PWA adopted a rule that the racial composition of the residents of its new housing should match the previous racial composition of the neighbourhood. The PWA often broke this rule and reserved the housing it constructed for white people. In chapter 9 the author explains that when a black family tried to move into a neighbourhood mobs of their neighbours would sometimes attack their persons and property and the government would refuse to enforce the law against the mobs. 

In chapter 5 the author explains that many developers required people who purchased their houses to sign covenants saying that they wouldn’t sell the house to black people. Governments often enforced these covenants at the expense of black people who tried to purchase such properties. I don’t think such provisions should be enforced either now or in any future ancap society. The purpose and effect of these provisions is to hurt people for stupid reasons not to facilitate cooperation. Also the supposed reason for excluding black people was that black people would lower property values, but the response of neighbours to black people moving in was to throw bricks through their windows, burn crosses on their lawns and use physical violence. Did the people who acted this way think that having different colour skin would lower property values but not threats, violence and vandalism? We shouldn’t concede anything to this kind of stupidity and evil.

The book has some weaknesses. The author thinks minimum wage policies are good when in reality it leads to unemployment among people with low pay (see Capitalism by George Reisman, pp. 382-384). He claims that income and social mobility have stagnated in the US which will make fixing the lack of integration between black and white people more difficult. So he wants the government to try to fix this problem by incentivising black people moving into white neighbourhoods with tax policies. It might be a good idea to arrange compensation in cases where there is an identifiable wrong to some identifiable person or group. Also, the market works to correct mistakes in the way resources are being used. Anyone who isn’t productive has to sell goods to maintain his life which will be bought by those who can use them productively (see Capitalism, pp. 316-319). The government doesn’t know how to do this and allowing it to try will only benefit those with political pull, not people who have been mistreated.

Szasz Discussion

This is a post whose comments can be used to discuss Thomas Szasz. Sometimes people say or write something critical about Szasz on a platform that is unsuitable for discussion like Twitter. This post is a more suitable place to discuss Szasz.

I have written a brief account of Szasz’s ideas and some references on the Fallible Living site.

I am willing to discuss the contents of that article and Szasz’s ideas more generally here. I would prefer that people who come here to discuss should have an account of their criticisms of Szasz that they’re willing to discuss and defend for reasons explained in Elliot Temple’s Paths Forward essay.

The state is not your friend

I sometimes post stuff like “the state is not your friend” on twitter and somebody asked me about it. As an example, I wrote:

The government is not your friend. They’re not providing services. They’re not trying to help anybody. To them you’re just a peasant and if they think you’re too uppity they’ll try to destroy you. I wish Grimes good luck. He’ll need it.

This was in response to the government threatening a man called Darren Grimes with prosecution for doing an interview in which the historian David Starkey referred to black people in a way that has been interpreted as derogatory. The government previously tried to prosecute Grimes for an alleged violation of election law during the brexit referendum. The attempted prosecution didn’t result in a conviction because there was no evidence of any criminal intent from Grimes. The government’s actions toward Grimes are malicious. The British government prosecutes lots of people for speech it doesn’t like. The British government is dangerous.

The government raises money by taxation and inflation, which amount to taking money from people without their consent. They claim to provide services in return for doing this. They are not serving anybody by threatening Grimes. The government has cut the budget for the justice system despite the fact that it seems to be falling apart. This isn’t an isolated example. On every area of policy they have terrible and destructive ideas. For example, the government announced a policy to let first time buyers get property with a 5% deposit. Are banks going to be forced to provide such mortgages? What effect will that have on incentives to build? Will the government subsidise these mortgages? What happens to the people with those mortgages if and when the government withdraws the subsidy? What happens if property values go down or interest rates go up and people with these mortgages are left with a mountain of bad debt? Ten years ago the US had a crisis caused partly by the US government trying to get mortgage providers to “help” poor buyers. Why is this new policy not going to be a repeat of that disaster? The government takes money for services that it can’t provide competently.

I don’t think this can be ascribed solely to ignorance or stupidity. The conservative party is aware of the work of FA Hayek and has been aware of him since the 1940s. And if you’ve read Hayek you know of the existence of Mises and could look up criticisms of government intervention in the economy. So why has the conservative government done nothing about government intervention over the past ten years? It’s not like they have a reply to Mises pointing out flaws in his ideas. They just don’t make any effort to explain why government intervention is bad, or to reply to criticisms of government intervention and they make no effort at reform either. Politicians in other parties also know of Hayek by virtue of the fact that they have heard of his existence from the conservatives, so they have the same problem. And anybody working for the state also has that problem.

Many people in the UK worship the state and even when they disagree with the government in power. Their idea is that the state is the solution to every problem and that government employees are great people. If people keep thinking like that then the government will continue to function as a giant burden if it continues to function at all. We have a lot of very serious political problems in the UK and the government is contributing to making them worse without addressing known problems with their conduct. 

“The government is not your friend.” They’re being hostile to a lot of people for bad reasons. “They’re not providing services.” Does trying to do a lot of things incompetently count as providing services? “They’re not trying to help anybody.” Does acting incompetently or maliciously while creating many new problems count as trying to help? Overall I think people should avoid contact with the British government as much as possible and should not sanction it. Is there something wrong with what I’m saying?

The Secret Barrister

The Secret Barrister:  Stories of the Law and How It’s Broken by The Secret Barrister is a book written by a barrister about the state of the British legal system. The short version is that the British government isn’t providing adequate law enforcement services. The government has cut funding for the police, the courts, the Crown Prosecution Service (CPS) and legal aid (the government paying defence costs for defendants who can’t afford a lawyer). One result of the cuts is that the police and the CPS often don’t provide information that is needed to prosecute defendants so many of them are released. And since legal aid has been cut many middle class people representing themselves because they can’t afford lawyer fees. Since these non-lawyers aren’t familiar with the law or with court procedure, their misconceptions cause problems in court that make the case take longer. The incompetence of people who represent themselves also leads to more convictions. The book has lots of illustrative stories about the British justice system going wrong, as well as history and statistics illustrating the impact of the government cuts. For example, in Chapter 4, the author tells the story of a woman called Amy whose partner Rob beat her up (p. 120):

Amy had sustained a multiplicity of injuries in the course of the assault. She had suffered a fracture to the left wrist, a fractured eye-socket, a broken jaw and extensive bruising and grazing where she had been dragged through the flat and out to the front garden. And she had given her account of what had happened to the police. 

But I know this – and the details of the assault and Amy’s history as set out at the beginning of the chapter – only because it all appeared on my brief in the MG5. This is the document we encountered earlier, composed by the police and (theoretically) containing a precis of what the evidence shows. 

The problem was that the actual evidence itself – the statement presumably taken from Amy and the medical records from the hospital – was nowhere to be found on my brief. Now, evidence not appearing on a prosecution brief is far from unusual. Often it will exist on the CPS computer and will just have been missed off the brief. Other times it will still be in the possession of the police, who upon prompting will forward it to the CPS to pass to the barrister. But it became apparent upon reading the notes of the previous hearings by the in-house CPS advocates that, in this case, the evidence had simply . . . gone. It had never been served on the defence. It had never even reached the CPS.

The evidence never turned up, so Rob walked free without a trial.

The government raises money through taxation and inflation, both of which involve the use of force. If you don’t pay taxes or you don’t obey legal tender laws, then the government will prosecute you. The police and courts use force to arrest people, fine them and imprison them. The only legitimate reason to use physical force is to respond to somebody else who has initiated the use of force. Some of the existing laws are about preventing the initiation of force: laws against attacking or damaging persons or property and laws against theft and fraud. So by cutting the budget of institutions for enforcing laws so they non longer work the government is sacrificing its ability to engage in the only activities it performs that are legitimate.

My guess is that the situation would improve if the government increased the budget for the police, the courts the CPS and legal aid. With enough public pressure maybe this will happen. But it is instructive that the government is so bad at deciding priorities that it cut one of the very few activities it undertakes for which the use of force can be legitimate. This is an illustration of Mises’ argument in Bureaucracy that without the profit and loss system the government is bound to be very bad at prioritising. 

Li and Vitanyi’s bad scholarship

In An Introduction to Kolmogorov Complexity and Its Applications 4th edition Li and Vitanyi claim that Solomonoff Induction solves the problem of induction. In Section 5.1.4 they write:

The philosopher D. Hume (1711–1776) argued that true induction is impossible because we can reach conclusions only by using known data and methods. Therefore, the conclusion is logically already contained in the start configuration. Consequently, the only form of induction possible is deduction. Philosophers have tried to find a way out of this deterministic conundrum by appealing to probabilistic reasoning such as using Bayes’s rule. One problem with this is where the prior probability one uses has to come from. Unsatisfactory solutions have been proposed by philosophers such as R. Carnap (1891–1970) and K.R. Popper.

What Hume actually wrote about induction was (Section IV, Part II, pp. 16-17):

Should it be said that, from a number of uniform experiments, we infer a connexion between the sensible qualities and the secret powers; this, I must confess, seems the same difficulty, couched in different terms. The question still recurs, on what process of argument this inference is founded? Where is the medium, the interposing ideas, which join propositions so very wide of each other? It is confessed that the colour, consistence, and other sensible qualities of bread appear not, of themselves, to have any connexion with the secret powers of nourishment and support. For otherwise we could infer these secret powers from the first appearance of these sensible qualities, without the aid of experience; contrary to the sentiment of all philosophers, and contrary to plain matter of fact. Here, then, is our natural state of ignorance with regard to the powers and influence of all objects. How is this remedied by experience? It only shows us a number of uniform effects, resulting from certain objects, and teaches us that those particular objects, at that particular time, were endowed with such powers and forces. When a new object, endowed with similar sensible qualities, is produced, we expect similar powers and forces, and look for a like effect. From a body of like colour and consistence with bread we expect like nourishment and support. But this surely is a step or progress of the mind, which wants to be explained. When a man says, I have found, in all past instances, such sensible qualities conjoined with such secret powers: And when he says, Similar sensible qualities will always be conjoined with similar secret powers, he is not guilty of a tautology, nor are these propositions in any respect the same. You say that the one proposition is an inference from the other. But you must confess that the inference is not intuitive; neither is it demonstrative: Of what nature is it, then? To say it is experimental, is begging the question. For all inferences from experience suppose, as their foundation, that the future will resemble the past, and that similar powers will be conjoined with similar sensible qualities. If there be any suspicion that the course of nature may change, and that the past may be no rule for the future, all experience becomes useless, and can give rise to no inference or conclusion. It is impossible, therefore, that any arguments from experience can prove this resemblance of the past to the future; since all these arguments are founded on the supposition of that resemblance. Let the course of things be allowed hitherto ever so regular; that alone, without some new argument or inference, proves not that, for the future, it will continue so. In vain do you pretend to have learned the nature of bodies from your past experience. Their secret nature, and consequently all their effects and influence, may change, without any change in their sensible qualities. This happens sometimes, and with regard to some objects: Why may it not happen always, and with regard to all objects? What logic, what process or argument secures you against this supposition? My practice, you say, refutes my doubts. But you mistake the purport of my question. As an agent, I am quite satisfied in the point; but as a philosopher, who has some share of curiosity, I will not say scepticism, I want to learn the foundation of this inference. No reading, no enquiry has yet been able to remove my difficulty, or give me satisfaction in a matter of such importance. Can I do better than propose the difficulty to the public, even though, perhaps, I have small hopes of obtaining a solution? We shall at least, by this means, be sensible of our ignorance, if we do not augment our knowledge.

What Hume wrote isn’t that we can only use known data and methods. Rather, he said that no argument can prove that the future will resemble the past. So drawing conclusions about what will happen in the future from past data is illogical. He didn’t say that the only possible form of induction is deduction.

In addition, the future always resembles the past in some respects and not others, so saying the future resembles the past is irrelevant to creating and assessing ideas.

Popper wasn’t trying to solve the problem of how to make Bayesian induction work. He claimed that induction was impossible, not that he had a way of making it work by finding the right prior (Realism and the Aim of Science, Chapter I, Section 3, I):

It seems that almost everybody believes in induction; believes, that is, that we learn by the repetition of observations. Even Hume, in spite of his great discovery that a natural law can neither be established nor made ‘probable’ by induction, continued to believe firmly that animals and men do learn through repetition: through repeated observations as well as through the formation of habits, or the strengthening of habits, by repetition. And he upheld the theory that induction, though rationally indefensible and resulting in nothing better than unreasoned belief, was nevertheless reliable in the main—more reliable and useful at any rate than reason and the processes of reasoning; and that ‘experience’ was thus the unreasoned result of a (more or less passive) accumulation of observations. As against all this, I happen to believe that in fact we never draw inductive inferences, or make use of what are now called ‘inductive procedures’. Rather, we always discover regularities by the essentially different method of trial and error, of conjecture and refutation, or of learning from our mistakes; a method which makes the discovery of regularities much more interesting than Hume thought.

Li and Vitanyi want us to think they can solve the problem of induction, but they can’t even summarise the arguments against their position accurately.

The concept of tax avoidance is evil

Apple recently won a tax avoidance case against the EU antitrust regulator. The regulator said that Apple changed its structure so that it was owned by an Irish company so that it would be charged low Irish tax rates. The EU somehow decided that Apple should have paid €13 billion more in tax. Not only is the tax avoidance case against Apple illegitimate, all such cases are inherently illegitimate and the concept of tax avoidance itself is evil.

One problem with the concept of tax avoidance is the idea that paying tax is some sort of moral duty and that the government presumptively owns all of your property. And make no mistake, that’s what tax avoidance actually means. Nobody can spell out any objective standard by which it can be decided whether you have avoided tax. What Apple did was legal, so the law itself is not the standard. The standard is that if the government decides you should pay more tax that is what you should do. If the government decides to steal every single penny you own and all of your fillings, then that is what you should do according to the idea of tax avoidance. If Apple had been lumbered with a €13 billion tax bill it might have been forced to shut factories or stores, or delay or cancel development of some products. People might have been fired because the government suddenly decided to take more of Apple’s money.

Another problem is that the concept of tax avoidance is a breach of the rule of law. Laws are supposed to be laid out in advance and if you don’t break existing laws then you’re not liable. But since everything Apple did to ‘avoid’ tax was legal, the regulator would be punishing them without them breaking the law. Apple couldn’t possibly know in advance whether its actions would be considered tax avoidance.

Another problem in this particular case is that the EU is undermining the independence of member states. The implicit meaning of this case is that Ireland isn’t allowed to lower its taxes to attract investment. Any company that takes advantage of Ireland’s taxes might be punished. So every country in the EU should adjust its taxes to be as high as the highest tax member for that particular category of tax.

The next problem is how exactly Apple is supposed to decide what tax to pay. The law isn’t an adequate guide because Apple didn’t break the law. How is Apple, or any other company supposed to make any decisions about what tax to pay? What exactly is the objective standard by which they are supposed to make the decision? The actual standard is that the government will just take whatever it wants by force and appeal to the greed and stupidity of its subjects to legitimise its actions.

The concept of tax avoidance also creates a conflict between government demands and profitability. Tax avoidance requires that a company should not pay the minimum possible amount of tax. But making more profits requires paying the minimum possible amount of tax. So the concept of tax avoidance creates conflict between companies accused of it and the government. And there is no way of avoiding this conflict because there is no objective standard by which tax avoidance can be decided.

The final point I’m going to make is that tax is money taken by force and force shouldn’t be used except in response to the initiation of the use of force. So the only services for which there could be any case for tax funding is services for defending against the use of force: police, the courts and the military. Governments are demanding so much tax that companies can and should go out of their way to minimise taxes because governments are using taxes for illegitimate purposes. Taxes are used to fund government programs like the welfare state and bank bailouts, neither of which have anything to do with stopping the initiation of the use of force. Taxes are also used to punish peaceful behaviour the government doesn’t like. This includes sin taxes on smoking, drinking and plastic bags. It also includes punishing people for saving. The British government allows people to save a particular amount of money each year tax free. If you save above that amount you are charged tax on any funds you withdraw. This amounts to punishing people for saving ‘too much’ by the government’s standards. I would go so far as to say that tax avoiding companies are heroes for resisting this immoral behaviour by governments.

Milton Friedman’s Methodology Essay

The economist Milton Friedman wrote an essay called “The Methodology of Positive Economics” (reprinted as Chapter 7 of The Philosophy of Economics: An Anthology edited by Hausman). This essay is influential, but it is also bad.

Positive and normative economics

Friedman writes about a distinction between positive and normative economics:

Positive economics is in principle independent of any particular ethical position or normative judgments. As Keynes says, it deals with “what is,” not with “what ought to be.” Its task is to provide a system of generalizations that can be used to make correct predictions about the consequences of any change in circumstances. Its performance is to be judged by the precision, scope, and conformity with experience of the predictions it yields. In short positive economics is, or can be, an “objective” science, in precisely the same sense as any of the physical sciences.

In Section I, Friedman writes more about positive and normative economics:

Normative economics and the art of economics, on the other hand, cannot be independent of positive economics. Any policy conclusion necessarily rests on a prediction about the consequences of doing one thing rather than another, a prediction that must be based – implicitly or explicitly – on positive economics. There is not, of course, a one-to-one relation between policy conclusions and the conclusions of positive economics; if there were, there would be no separate normative science. Two individuals may agree on the consequences of a particular piece of legislation. One may regard them as desirable on balance and so favor the legislation; the other, as undesirable and so oppose the legislation.

I venture the judgment, however, that currently in the Western world, and especially in the United States, differences about economic policy among disinterested citizens derive predominantly from different predictions about the economic consequences of taking action – differences that in principle can be eliminated by the progress of positive economics – rather than from fundamental differences in basic values, differences about which men can ultimately only fight. An obvious and not unimportant example is minimum-wage legislation. Underneath the welter of arguments offered for and against such legislation there is an underlying consensus on the objective of achieving a “living wage” for all, to use the ambiguous phrase so common in such discussions. The difference of opinion is largely grounded on an implicit or explicit difference in predictions about the efficacy of this particular means in furthering the agreed-on end. Proponents believe (predict) that legal minimum wages diminish poverty by raising the wages of those receiving less than the minimum wage as well as of some receiving more than the minimum wage without any counterbalancing increase in the number of people entirely unemployed or employed less advantageously than they otherwise would be. Opponents believe (predict) that legal minimum wages increase poverty by increasing the number of people who are unemployed or employed less advantageously and that this more than offsets any favorable effect on the wages of those who remain employed. Agreement about the economic consequences of the legislation might not produce complete agreement about its desirability, for differences might still remain about its political or social consequences; but, given agreement on objectives, it would certainly go a long way toward producing consensus.

Friedman thinks that there are basic values and that there is no rational way of deciding between basic values. He thinks he can avoid talking about those issues by discussing issues of implementation of supposedly shared values. There are at least two problems with this.

The first problem is that people don’t all share similar values. Friedman’s description of the minimum wage controversy is false. There are people who think the minimum wage will help the poor. There are many other people who don’t think that, including many politicians. Politicians will vote for minimum wage legislation to get elected even if they think it’s harmful.

The second problem is that it is possible to have critical discussions about values because values are linked to other ideas, including other values. If a person is a socialist and claims to value science, then you could explain to him  that socialism is incompatible with science. Scientists create knowledge by guessing solutions to problems and then criticising and testing the guesses. They have to be free to guess even if the government dislikes a guess. They also have to be free to obtain the resources needed to test guesses. Since socialism destroys resources, the resources needed for experiments are difficult or impossible to obtain. So a socialist who values science and comes to understand these problems will stop being a socialist.

Friedman’s epistemology

In Section II, Friedman writes:

The ultimate goal of a positive science is the development of a “theory” or “hypothesis” that yields valid and meaningful (i.e., not truistic) predictions about phenomena not yet observed.

Friedman claims that the point of science is to make predictions – he is an instrumentalist. The point of science is to explain how the world works, it is not primarily to make predictions. One weakness of this way of looking at science is that it neglects the problem that predictions and observations are both explanations. For example, if you want to explain a decline in employment by the imposition of a minimum wage then you have to understand the means by which that reduction is supposed to happen. If employers are anticipating that the minimum wage will rise in the future they may stop hiring people at wages below the new proposed minimum before the legislation is passed. If employers don’t anticipate the minimum wage rise, then many people working below that wage may be fired quickly. Government unemployment figures may also need some interpretation and explanation. The government may choose only to count as unemployed people who have signed on for government benefits, so if lots of people who were fired go into black or grey markets instead it might be difficult to see the effect of the minimum wage on unemployment.

Friedman continues:

Such a theory is, in general, a complex intermixture of two elements. In part, it is a “language” designed to promote “systematic and organized methods of reasoning.” In part, it is a body of substantive hypotheses designed to abstract essential features of complex reality.

Languages include substantive claims about how the world works that have come to be regarded as uncontroversial, and those claims are sometimes wrong. For example, the term “price gouger” implies an adverse moral judgement of people who charge high prices for goods to those who are in less fortunate circumstances, e.g. – people charging a lot for food after a hurricane. In reality, “price gougers” often had the foresight to store goods in anticipation of a disaster and if they don’t charge high prices they may run out of rare goods quickly so there is nothing left for some people who would otherwise get those goods. So “price gougers” are sometimes in the right.

Later Friedman writes:

Viewed as a body of substantive hypotheses, theory is to be judged by its predictive power for the class of phenomena which it is intended to “explain.” Only factual evidence can show whether it is “right” or “wrong” or, better, tentatively “accepted” as valid or “rejected.” As I shall argue at greater length below, the only relevant test of the validity of a hypothesis is comparison of its predictions with experience.

This claim is wrong. Many ideas can be rejected without testing as pointed out by David Deutsch in The Fabric of Reality Chapter 1. For example, I can reject the theory that what I will have for lunch is determined by the atmospheric pressure in Baltis Vallis on Venus without bothering to test it. There is no explanation of why the atmospheric pressure in Baltis Vallis should have anything to do with what I eat and there are explanations of why they shouldn’t be related. I am not measuring that pressure and have no way of knowing about it, and my decisions are a result of my knowledge.

Friedman continues:

The hypothesis is rejected if its predictions are contradicted (“frequently” or more often than predictions from an alternative hypothesis); it is accepted if its predictions are not contradicted; great confidence is attached to it if it has survived many opportunities for contradiction. Factual evidence can never “prove” a hypothesis; it can only fail to disprove it, which is what we generally mean when we say, somewhat inexactly, that the hypothesis has been “confirmed” by experience.

If a hypothesis is contradicted by evidence that’s a problem for the hypothesis regardless of whether it happens frequently. “Frequently” is a vague description that Friedman doesn’t explain. You might expect that your experimental data won’t lie perfectly on the curve predicted by a theory as a result of imperfections in the experimental apparatus, small fluctuations in the environment surrounding the apparatus and that sort of thing. Does that count as frequent deviation? If these “deviations” are understood properly then they don’t count as deviations from the theory being tested. Friedman is correct when he claims that factual evidence can’t prove a theory. He doesn’t explain how failing to refute a theory can give you confidence in it. Nor does he explain why confidence, which is a subjective feeling about a theory, is relevant to methodology.

Friedman on unrealistic assumptions

Friedman also has bad ideas about unrealistic assumptions in theories. In Section II he writes:

In so far as a theory can be said to have “assumptions” at all, and in so
far as their “realism” can be judged independently of the validity of predictions, the relation between the significance of a theory and the “realism” of its “assumptions” is almost the opposite of that suggested by the view under criticism. Truly important and significant hypotheses will be found to have “assumptions” that are wildly inaccurate descriptive representations of reality, and, in general, the more significant the theory, the more unrealistic the assumptions (in this sense).The reason is simple. A hypothesis is important if it “explains” much by little, that is, if it abstracts the common and crucial elements from the mass of complex and detailed circumstances surrounding the phenomena to be explained and permits valid predictions on the basis of them alone. To be important, therefore, a hypothesis must be descriptively false in its assumptions; it takes account of, and accounts for, none of the many other attendant circumstances, since its very success shows them to be irrelevant for the phenomena to be explained.

Not all abstractions are unrealistic. For example, treating a particular region on a computer chip as a NAND gate is an abstraction, but it may be a very realistic abstraction that models what that section of the chip will do very accurately. And there are many other examples like this. So why is Friedman saying this?

In Section III he gives an example that explains why he’s saying it:

It is only a short step from these examples to the economic hypothesis that under a wide range of circumstances individual firms behave as if they were seeking rationally to maximize their expected returns (generally if misleadingly called “profits”) and had full knowledge of the data needed to succeed in this attempt; as if, that is, they knew the relevant cost and demand functions, calculated marginal cost and marginal revenue from all actions open to them, and pushed each line of action to the point at which the relevant marginal cost and marginal revenue were equal. Now, of course, businessmen do not actually and literally solve the system of simultaneous equations in terms of which the mathematical economist finds it convenient to express this hypothesis, any more than leaves or billiard players explicitly go through complicated mathematical calculations or falling bodies decide to create a vacuum. The billiard player, if asked how he decides where to hit the ball, may say that he “just figures it out” but then also rubs a rabbit’s foot just to make sure; and the businessman may well say that he prices at average cost, with of course some minor deviations when the market makes it necessary. The one statement is about as helpful as the other, and neither is a relevant test of the associated hypothesis.

Friedman’s assumption isn’t just unrealistic. It contradicts the explanation for why businessmen actually make a profit on a free market. An individual businessman has to make guesses about how to make money and then test those guesses. The businessman might do AB testing of different products or different ways of displaying products. So the businessman would do lots of stuff that doesn’t work. And a businessman who tries too many experiments that don’t work will fail and will stop being a businessman. The resources he would have used will go to businessmen who haven’t failed. The operation of the market depends on profit and loss. Leaving out loss eliminates part of the explanation of how markets work in reality. The reason Friedman made this assumption is that it provided him with a way to construct a tractable mathematical model of a business. This made Friedman look clever to people who are easily impressed by maths. This is also the reason for his instrumentalism. By ignoring the requirements for coming up with a correct explanation he could construct a model that bears scant resemblance to reality but appears to make predictions if you don’t pay enough attention.

Children don’t respond fully to reason?

Once in a while i have a discussion with somebody who offers up the following excuse for hitting children:

Kids don’t fully respond to reason, else they wouldn’t so frequently & deliberately disobey their parents’ reasonable requests.


If children don’t respond fully to reason, then there must be some limit beyond which they don’t respond to reason, such as particular topics or whatever. But this raises a problem. Let’s say that children don’t respond to reason about jam. There are various things that related to jam in some way like glass jars. So do children respond to reason about glass jars? What about phenomena associated with glass jars, like refraction? What about the physics of the constituents of glass like silicon and oxygen? What about the constituents of those atoms, like protons and neutrons? Unless you can answer questions like that this stuff about the child being unreasonable is just an excuse. And if you can explain in what respect the child is acting unreasonably, then why not use that explanation to convince the child to act differently?

There is another problem. If the child is supposed to enact the parents ideas he has to figure out how to do this. But the claim is that children are not capable of using reason on that topic. So how could the child obey the parent?

One more problem: the author states that children “deliberately” refuse to enact a parent’s reasonable requests. If a child is doing something deliberately then he has a purpose in doing it and he is using reason to figure out how to do what he wants. So that description of what the child is doing contradicts the claim that the child is not capable of using reason on the very topic where the parent and child have the disagreement.

What is actually happening is that the child disagrees with the parent. This happens because the child has to figure out what he wants to do next by himself. He can’t act on an idea in another person’s head. The parent may provide the child with assistance in figuring out what to do next by providing explanations of flaws in the child’s plans or alternatives the child might prefer. The parent might be wrong about what’s best for the child for many reasons. The parent might not understand the child’s preferences well enough to offer good suggestions for meeting them. The parent may dislike the child’s preferences and try to thwart them without knowing how to criticise those preferences. Since the parent doesn’t understand those preferences he can’t explain what’s wrong with them and so convince the child to change his preferences.

The West has a tradition of reason that involves figuring out better ideas through critical argument without violence. Using violence to get a child to do what you want contradicts that rational tradition. Parents should want to figure out ways of improving existing parenting traditions to make them more rational. For good explanations of these topics see Fallible Ideas materials on Taking Children Seriously and Parenting and Tradition.

Private property needs no justification

Matt Bruenig, a writer for a socialist website called Jacobin magazine claims that private property isn’t justified:

Perhaps the most interesting thing about libertarian thought is that it has no way of coherently justifying the initial acquisition of property. How does something that was once unowned become owned without nonconsensually destroying others’ liberty? It is impossible. This means that libertarian systems of thought literally cannot get off the ground. They are stuck at time zero of hypothetical history with no way forward.”

Bruenig later quotes libertarian Matt Zwolinski:

“If I put a fence around a piece of land that had previously been open to all to use, claim it as my own, and announce to all that I will use violence against any who walk upon it without my consent, it would certainly appear as though I am the one initiating force (or at least the threat of force) against others. I am restricting their liberty to move about as they were once free to do. I am doing so by threatening them with physical violence unless they comply with my demands. And I am doing so not in response to any provocation on their part but simply so that I might be better able to utilize the resource without their interference.”

No source is provided for the quotation, so Bruenig is against good scholarship as well as capitalism. Bruenig asks about justification of private property instead of looking at what problems capitalism solves. This is an example of justificationism being used to shield an anti-rational ideology, socialism, from criticism. Since justification is impossible, that is true but irrelevant. What is relevant is how capitalism solves the problem of disputes about how to use a piece of property, which Bruenig doesn’t discuss.

Private property is an institution that helps people solve disputes about how to use property and to enable the correction of errors in how property is used. Suppose that Jim wants to use a particular unowned place to grow corn. Peter would like to use the same place to graze cattle. That place can’t be used to fulfil both of those priorities at the same time because the cows will eat corn and will knock it down and trample it. No matter who uses that place somebody won’t get to fulfil his initial preference for it. If nobody ever uses that place then nobody’s preferences for how to use it will be fulfilled. So there is a problem to be solved. Note that this problem exists whether or not we have an institution of private property. So Bruenig can’t blame that problem on capitalism or private property.

Private property provides a way to solve the disagreement between Jim and Peter. Under a system of private property, the initiation of the use of force is forbidden so a person will only engage in an exchange if he prefers what he will get to what he gives up. So an exchange will solve some problems for the people who engage in it. If Jim has fenced in some land and planted corn on it and nobody else owned the land before him, then he owns the land and Peter shouldn’t use it. If Peter accepts this rule then he can move on and look for somewhere else to graze cows. Or if there is no more suitable grazing land, Peter can come up with a new idea about what he should do since he hasn’t found any grazing land. Or if Peter can make a lot of money from cows he might be able to pay Jim to let Peter take over Jim’s corn field.

In the world as it exists now, a lot of property is already owned and some of it was taken by initiating of the use of force against previous owners. In many cases the original owner hasn’t been identified. Under capitalism, you can pay somebody to find stuff you used to own and you may be able to get it back. So identifiable problems in current ownership titles can be corrected.

Intervening by initiating the use of force in exchanges of property can only thwart the process of getting property back to its rightful owners. Socialism involves initiating the use of force, and so prevents some property exchanges that would solve problems. So socialism prevents people from solving the kinds of problems Bruenig pointed out.

Escape from Jan Lester Part 1

In Escape from Leviathan, Jan Lester claims to use critical rationalism and to defend anarchocapitalism (ancap). I think that many of the arguments are wrong and some of them contradict good Popperian ideas. This post is about one example.

On pp. 137-138, Lester writes:

Popper sees that the people ‘never rule themselves in any concrete, practical sense’ ([1945] 1977, 1: 125). His understanding of ‘democracy’ is not rule by the people but rather a way of limiting bad rule, ultimately in order to preserve maximum equal ‘freedom’ – or so he asserts. But from a libertarian viewpoint, liberal democracy is a practical contradiction (at least, to the extent that ‘liberal’ means having respect for interpersonal liberty): the more liberty individuals have the less they can be ruled by ‘the people’ (or anyone else). A liberal democracy is a sort of substitute for all-out civil war. The winning side imposes its rules on the others by force and the threat of force. The taxation and regulation of people who are not imposing on anyone are themselves forms of aggressive imposition rather than peaceful persuasion. Popper insists that ‘any kind of freedom is clearly impossible unless it is guaranteed by the state’ ([1945] 1977, 1: 111). The possibility of competing private police and courts protecting persons and their property and of anarchic defense are beyond rational consideration for Popper.

He writes that the question “‘Who should rule?” … begs for an authoritarian answer’ ([1963] 1978, 25). Libertarians disagree. ‘Each should rule himself: a sovereign individual’ is a coherent non-authoritarian answer. Popper prefers to ask, ‘How can we organise our political institutions so that bad or incompetent rulers … cannot do too much damage?’ ([1963] 1978, 25). But this clearly does presuppose the necessity for political authority over subjects. The very possibility of individual sovereignty, rather than the ‘institutional control of the rulers’, is also ‘thereby eliminated without ever having been raised’ ([1945] 1977, 1: 126). And with libertarianism, analogously with Popper’s defense of good democratic institutions, the institution of individual sovereignty would ipso facto be maximally spread for safety.

Popper is right when he writes that the question ‘Who should rule?” … begs for an authoritarian answer’ and Lester is wrong when he claims that in a free society the individual would rule. Suppose that I was walking down the street in a future ancap society and somebody tries to mug me. We have a violent struggle and he dies as a result. My guess is that this series of events would lead to an investigation by ancap protection agencies to check whether I was acting in self defence or if I just murdered the mugger. As a result of this investigation they might use force against me if they decided I had murdered the mugger. Whether the protection agencies would use force or not would be a result of them applying principles and rules of law. The legitimacy of their decision would be based on whether the people conducting the investigation had acted properly and competently. The mere fact that they work for a protection agency wouldn’t be sufficient to stop people from criticising or overturning their decision. Nor would the fact that I acted on my own judgement be sufficient to defend me against a charge of murder. Under some circumstances, such as when a person is accused of a crime, the actions of an individual or an ancap protection agency would be under the control of institutions in an ancap society. So Lester is wrong and Popper is right on that particular issue even in an ancap society.