Tag Archives: Virginia Postrel

Liberaltarianism: The Turducken Of Politics

Will Wilkinson and Brink Lindsay once proposed that libertarians have more in common with liberals than they do with conservatives.  But now that we collectively wait for the Keynesian surge to fry the system, Jonah Goldberg and John Hood wanted to raise the question to libertarians: siding with the left under Bush was one thing, they say, but now, with that side of the boat taking on water, is it time for the libertarians to come back whence they came?

Many have weighed in–Virginia Postrel, Ross Douthat, Matt Welch, and Reihan Salam.

For his part, Wilkinson seems to be framing the debate for the others, and I’m unhappy with Wilkinson’s framing since it’s based on his style of moral philosophy. Let me explain. The most telling comment I can think of relating to this problem occurs during a BloggingheadsTV interview Wilkinson conducted with Jonathan Haidt. Outlining the differences between conservatives and liberal moral sensitivities, Haidt said something to the effect of, “The difference between liberals and libertarians is that the libertarians are liberals who’ve read some economics.” It was clear Wilkinson agreed.  But, even though this may be true for many of us, the observation is false to the spirit of liberty. It’s based on a gross confusion Wilkinson has been sensitive to in other contexts. The confusion is this: the Haidt comment overlooks the fact that we can believe some act to be morally wrong, and yet, at the same time, believe it to be legally permissible.  That is the heart of liberty. One obvious example of a despicable act that fits this mold is infidelity. Cheating on your loved one is wrong–one of the worst ways to hurt a person–and yet no one few in the West believe it should be a crime. What is morally wrong is not always legally wrong. Wilkinson had that right in a post about emotional coercion. 

But I believe this is one of the greatest political problems of our time: how to cleave apart our moral intuitions from our political philosophy.  There is no grand unifying theory here. And so modern freedom, the freedom of Constant, was born out of war along just this divide. It took a century or more of blood shed during the Reformation to cleave apart people’s religious judgments from their political ideals. One of the more troubling tasks for modern politics is to separate the moral–how we interact with others–from the political–how we interact with hundreds of millions on a scale that boggles the mind.

Wilkinson abhors conservative moral sentiments. But in this he is not a lover of liberty. A libertarian is not defined by what moral intuitions he has regarding sacred spaces, the integrity of the body, or even in group/out group biases. Rather, libertarians are defined by their views on the limits of state power, always harboring the doubt that their particular moral judgments may not translate readily into state action. In Haidt’s terminology, we should expect both conservative and liberal moral settings among libertarians. Conservative moral intuitions need not craft policy.

Of course, in recent history, liberals and Republicans have forsaken many checks and balances on state power.  They are one and all eager to base national policy on moral inclination.  Libertarians, insofar as they stand athwart anything, stand in front of that unified, soul-crafting theory of the state. For liberals and national greatness Republicans, this is a problem. I suggest we keep it that way. Let the Spitzers of the world try to fucking steamroll us.

And another thing. Rawsekianism is a nice rhetorical move, but on deeper reflection, it’s misguided.  I’ll hazard a guess that this formulation of Rawls relies on a Harsanyi interpretation of the difference principle.  Rawls spent the second half of his career trying to move away from that.  User beware.

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Postrel’s Corollary

One upshot of the experiments Virginia Postrel has described could be the following: the more investors believe behavioral economics to be true, the more likely bubbles will develop in markets trading in assets.  As long as I’m overly confident in my own rationality and knowledge (a bias behavioral economics confirms) and as long as I think everyone else is a moron (my overconfident belief in behavioral economic theory in general) then it will make sense for me to buy assets now in the hopes of selling dearly to others later, when the rising momentum of irrationality has swept them away.

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Not Irrational Exuberance But Irrepressible Effervescence

Meanwhile, Virginia Postrel has a fascinating article in the newest Atlantic on how bubbles develop in finance. She elucidates their nature by describing some recent findings in experimental economics. The nut: it turns out that even fully informed investors will inflate the value of an asset by trying to fleece dummies in the market before it crashes. 

Based on future dividends, you know for sure that the security’s current value is, say, $3.12. But—here’s the wrinkle—you don’t know that I’m as savvy as you are. Maybe I’m confused. Even if I’m not, you don’t know whether I know that you know it’s worth $3.12. Besides, as long as a clueless greater fool who might pay $3.50 is out there, we smart people may decide to pay $3.25 in the hope of making a profit. It doesn’t matter that we know the security is worth $3.12. For the price to track the fundamental value, says Noussair, “everybody has to know that everybody knows that everybody is rational.” That’s rarely the case. Rather, “if you put people in asset markets, the first thing they do is not try to figure out the fundamental value. They try to buy low and sell high.” That speculation creates a bubble.

Interesting throughout.

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