Andrew Koppelman's book Burning Down the House deserved a little more scrutiny than I gave it previously. I wrote an earlier post reacting to the book, and I stand by it. But I took some time to re-read and annotate so I could deliver a more thoughtful review.
When I wrote the earlier post, I was under the misapprehension that Koppelman thought of himself as a libertarian. The whole book (title included) has this air of "You're doing it wrong, here's the true path." Which would presumably be coming from the position of someone who was following the true path. He actually never identifies as a libertarian. He is some kind of pro-market progressive (my description, not his). The book occasionally provides a flourish of rhetoric in favor of markets. But when it comes to particular regulations or government programs, Koppelman is almost always pro-state.
Too many on the left fail to grasp that the original
libertarian strategy has been massively vindicated. The capacity of markets to
alleviate poverty has been so overwhelmingly demonstrated in recent decades
that it is silly to keep denying it. Too many on the right fail to grasp that
unregulated markets cannot deliver a livable world. Moderate libertarianism can
bridge some of the bitterest divisions of contemporary American politics.
Amen to the first two sentences. This book could be a useful corrective to the excesses of the left if Koppelman expounded on this a little. Here is a passage that seems right out of Steven Landsburg's Price Theory text:
Should a farmer grow beans or zucchini? It depends on what
consumers want. How can he know what they want? And how can he know if consumer
preferences change—if, for example, there is a surge of interest in fried
zucchini flowers? Only prices in a market can convey the necessary information
quickly and accurately. If the price of zucchini rises, farmers will plant more
of it without needing to know anything about culinary fashions, or any of the
incalculably many other factors that affect the demand for vegetables. The
irreplaceable virtue of free markets, Hayek thought, is their capacity to
manage that flood of information. Mises had argued, against socialism, that
without a market, one can’t rationally calculate how to allocate capital. Hayek
argued, more radically, that the necessary knowledge could not even be
collected. Innovation often emerges from individuals’ tacit knowledge,
inexplicit even to themselves. Its value is not reflected in existing prices,
because the innovation does not yet exist. The problem is not the complexity of
calculation, but the lack of information. No central authority can know all the
competing demands for resources.
He seems to have a mature understanding of how markets allocate resources (an understanding that most leftists lack). But, again, he could have provided a few more examples of bad government interference in markets. On my second time through the book, I was specifically listening for any such instances. At one point (apropos of nothing) he says, "There is no excuse for farm subsidies." It wasn't connected to a discussion or cost-benefit analysis of farm subsidies, it was just given as an individual instance of a bad government program. Articulating the reason why farm subsidies are bad might have highlighted a higher principle or helped the reader to identify other bad government programs. But I suspect Koppelman is trying hard to avoid discovering any such principle. I suspect he thinks there are wise technocrats who can very thinly "slice the salami", identifying and rejecting the bad policy proposals and implementing the good ones. The libertarian perspective cautions that this is a fraught path. Once empowered, governments do a poor job of discerning good from bad. Politicians even self-consciously implement bad policies because they are popular. Even "wise technocrats" have a tendency to get the calculus wrong, or to be captured by populism or by trendy "science", or to optimize the wrong thing, or to minimize/maximize along a single dimension with a total disregard for other considerations. (Think of the public health establishment trying to maximize life-years, with no consideration whatsoever given to the enjoyment people get from their vices. Or think of the response to Covid, which seemed to be shooting for minimization of Covid deaths disregarding all other costs, even deaths from other causes.)
Political Philosophy
Koppelman presents a cursory review of some of the major thinkers of libertarianism. He covers the philosophy and writings of Ayn Rand, Murray Rothbard, and Robert Nozick, using them as foils to be contrasted with wise libertarians like Hayek. He also includes a long discussion of John Rawls, whose philosophy he sees as delivering a devastating rebuke to libertarianism.
I understand what Koppeleman is trying to do here. Most libertarians would probably consider themselves somewhat grounded in philosophy. Many would cite one of the above authors as being a major influence on their political philosophy. (See "It usually begins with Ayn Rand", for instance.) So it makes sense from this perspective to poke holes in their arguments or point out their weaknesses. At the same time, I think he's overestimating the reliance of libertarians on the arguments left behind by dead men and women. No doubt Rothbard and Rand have some fanatical devotees, but they are a small (though perhaps loud) minority of the movement. I have read a few books by Rothbard (his book on the Great Depression, For a New Liberty, and parts of his Man, Economy, and State). Also Nozick's Anarchy, State, and Utopia. (I haven't read anything by Rand, and I don't feel like any part of my own libertarianism hinges on her philosophy.) I feel like I derived some value from these books, but I also found myself dismissing or disregarding the pieces that were poorly argued. It's not like Koppelman can dismantle Rothbard's moral premises and the entire structure of libertarian thought falls apart without that scaffolding. I see these books as early works of libertarianism, which have been built upon (or, as is often appropriate, disregarded) by subsequent scholars. Call them first drafts of a movement. Individual libertarians can take them or leave them. One can arrive at the libertarian view on a whole slate of policy issues without knowing any of these authors' names. A smart person armed with a little training in economics and some understanding of cost-benefit analysis may end up supporting privatization of schools, repealing minimum wage laws and other labor market regulations, liberalizing insurance markets, ending tariffs, etc., without ever needing to become steeped in moral or political philosophy. This theme of the book simply did not land for me, and I suspect most libertarian readers will likewise disregard Koppelman's arguments.
I'm imagining a libertarian author attempting the same exercise, writing a book about progressivism that takes aim at three "influential" progressive thinkers. Most self-identified progressives will not have heard of any of these authors (some may be familiar with the names but unfamiliar with said authors' arguments) and will simply shrug at this hypothetical libertarian author's devastating rebuke. Perhaps they'd say, "I wasn't really relying on any of those premises or arguments, so...who cares?" Koppelman alleges that libertarian arguments have infiltrated the conservative movement as well. Imagine this libertarian author waving his book, his devastating takedown of progressivism, in the faces of adjacent movements (socialists and left-leaning classical liberals, maybe?). Imagine him insisting that he's undercut the basis of their support for the welfare state, or labor market regulation, or public education. The reaction would be confusion, and a rightful dismissal.
Koppelman says near the end of the book,
This book engages with the philosophical arguments for libertarianism: consequentialist claims like those of Hayek, Epstein, and Mises, and rights-based arguments like those of Rothbard, Nozick, and Rand. But political philosophers sometimes need to get over themselves. Most people hold their political views for reasons that have nothing to do with philosophy.
Emphasis mine. I was thinking this throughout his entire discussion of Rothbard, Nozick, Rand, and Rawls. Libertarians mostly are not staking themselves to a rigid moral philosophy and following it off a cliff. (Contra the quote, the book barely engages with consequentialist arguments. That would require dueling cost-benefit analyses of various policies, and the book barely even touches on that.)
The book's discussion of Rawls would probably be interesting to someone who has never heard of the Rawlsian veil of ignorance. The basic idea is that if we're designing the politics of our world, we shouldn't be able to stack the deck in our own favor. We should craft a world that would work out well if we didn't know who we're going to be. So I might personally favor some policy that makes actuary and physician salaries artificially high because that would directly benefit me, but I should really favor or disfavor that policy with regard to its effect on society as a whole. If I was going to be born into a random body (not one that I already know the conditions of), I'd choose a different slate of policies that are less slanted in my favor. I might opt for a generous social welfare system, not knowing if I'm going to be rich or poor.
Koppelman gives some details of Rawls's life that I didn't know. He had younger siblings who died of disease, which they probably contracted from him. You could imagine (and Koppelman does imagine) that this experience affected his philosophy. It was mere bad luck that determined which siblings in Rawls's family would survive to adulthood. Plausibly, this experience of being the "lucky" sibling had a profound impact on Rawls' philosophy. This is all fine, but I think Rawls' fans overestimate the political implications of his musings on luck and misfortune. For instance, they vastly overstate the role of luck in determining personal income. (BTW, this whole discussion of luck struck me as odd. There is no way to "redistribute" luck or health such that his siblings would have survived, so the implications of these events for the welfare state are far from obvious.) His philosophy is basically building up to that punchline: incomes are unequal, so we need to redistribute. This is a non sequitur, though, because people's incomes are largely determined by the choices they make. People choose a profession (or no profession), which has a profound impact on their lifetime earnings. Anyone with at least moderate intelligence and a willingness to hunker down and study can join the professional class: doctors, lawyers, actuaries, business executives, etc. Rich and poor people aren't stamped with an "R" or a "P" on their forehead at birth. There are exceptions, of course. Being born in a third world country dramatically limits your options. So does being born with a serious disability, or suffering a debilitating injury. These conditions can be called "bad luck." Most libertarians don't categorically oppose government aid to people with serious disabilities. And libertarians tend to favor more liberalized immigration (not all libertarians do), such that the person born into a poor country can move to better opportunities. But it's bizarre to frame the differences in income as this mysterious, fortuitous phenomenon known as "income inequality." If you are comparing the annual incomes of two people of modest intelligence who went to the same high school, the difference will be utterly explicable in a large majority of cases. Some of those differences will be quite large, though stemming from similar beginnings. The future auto-mechanic may be sitting next to a future doctor in the same class at the same school. These are people with nearly equivalent opportunities. The difference is often in dedication to study, the decision of which career to pursue, the avoidance of vices, etc., all of which are volitional. (I often observe the same differences in annual incomes between siblings, people who are literally from the same nuclear family. These differences aren't all based on choice, nor are they all based on luck. My point here is that Rawlsians, and people who implicitly rely on Rawls's arguments, vastly overstate the role of luck. They generally argue based on raw income statistics, which affords no correction of any kind for justifiable, explicable differences that one should not wish to correct for with a redistribution scheme.) Koppelman's attempt to make Rawls the hero of political philosophy just didn't land for me.
Obamacare
Amazingly, Koppelman tries to blame opposition to Obamacare on libertarians. He points to a few libertarian thinkers (e.g. Randy Barnett) who opined on Obamacare in order to make his point. But this had almost nothing to do with Republican opposition, which was almost entirely an expression of crass partisan politics. Republican congressmen and their base of Republican voters had a negative emotional valence toward Obama. They weren't deriving their deeply reasoned opposition from the writings of libertarian legal theorists (much less from Rothbard or Rand). By the way, the inverse is also true. The support for Obamacare was largely based on a positive emotional valence from Obama's base, not some deeply held philosophy on the nature and responsibility of the state.
He also dismisses too cavalierly the constitutional arguments against Obamacare. There is a very simple one, which I think he would probably dismiss with contempt, but which I insist is still in play. Congress does not have an enumerated power to force individuals to purchase health insurance. Article I, Section 8 of the constitution explicitly states which powers the US government has, and there is no provision for anything resembling Obamacare. The federal government has been enacting laws that is has no constitutional authority to enact for at least the past hundred years. Government lawyers have been inventing legal fictions to justify this state of affairs, like playing "Six degrees of interstate commerce." Since the federal government has the explicit authority to regulate interstate commerce (this power was initially granted to prevent states from slapping tariffs on each other, not to give the federal government overarching control of all commerce), they simply need to present an argument, no matter how vacuous, that the activity being regulated is "interstate commerce". (Is growing wheat on your own land for your own consumption interstate commerce? How about growing cannabis that you will personally use for a medical condition? How about declining to purchase healthcare? Plainly not, but the federal government argued that all of these things are "interstate commerce" because it wanted to seize the power to regulate these things.)
The formal process for doing something like Obamacare involves amending the constitution to grant the federal government the authority it seeks. Critics of this "enumerated powers" argument note that this makes it very hard for the federal government to do a lot of things. Requiring a constitutional amendment means it's easy to create blocking coalitions. What these critics don't appreciate is that this is a feature, not a bug. It's a good thing that big, sweeping, expensive government programs require a high degree of unanimity to pass. Legislation such as Obamacare that fails to pass at the federal level can instead be tested at the state level. But I am just an ignorant pleb, not of the legal tribe. I'm sure legal scholars like Koppelman can provide all kinds of clever arguments as to why a straightforward reading of the Constitution doesn't apply. Actually, these clever arguments are usually wrong. The plain meaning, legible generally to all citizens, is the law of the land, even if the government has been getting away with some other arrangement. For "the law" to be meaningful as a concept, it has to be comprehensible and predictable. It can't be something that shifts with trendy new legal theories. We can't empower government lawyers to rewrite the constitution by pulling and poking at the clear boundaries it sets, inventing clever edge cases and asserting that everything is some kind of exigency.
(Another example of ignoring/obliterating constitutional process is Congress's abdication of it's duty to formally declare war. It hasn't done so since World War II. Instead, it passes "authorizations of use of military force", which unconstitutionally transfers the power to make war to the executive branch. Modern politicians and legal scholars can sniff and sneer at us "purists" who insist on following process. But it's not an obsession with process for the sake of process. The process is an important check on government power.)
We don't really need to get into the constitutional arguments, though, because Obamacare has almost nothing going for it from a cost-benefit perspective. This was always my challenge to Obamacare proponents: demonstrate some measure of aggregate public health that has improved substantially (and improved beyond what the pre-existing trendline would have predicted) since passage and enactment of the legislation. I'm not talking about the intermediate metric of how many people have "coverage." If that coverage is actually leading to better care, if the legislation is serving its stated purpose of providing needed medical care to those who would otherwise lack it, we should see an improvement in aggregate health outcomes. Infant mortality. All-cause mortality. Morbidity, particularly for treatable diseases. We should expect to see the benefits concentrated in low-income populations (assuming the data is collected in a way that allows us to analyze such a result). Maybe the impact of Obamacare is too subtle to see in aggregate statistics? (In which case, how could anyone have any confidence that it's "working"?) The narrative about recent trends in public health (past 20 years or so, but certainly incorporating the post-Obamacare era) is that so-called "deaths of despair" have reduced life expectancy for the first time since we've been keeping records, at least in some age demographics. The financial security supposedly provided by Obamacare has not alleviated this despair, apparently. Someone could try to argue that the opioid epidemic is some kind of external shock. But for that shock to the system, Obamacare would have brought life expectancy up. But absent entertaining fantastic counterfactuals, it's hard to find evidence of Obamacare's efficacy.
We shouldn't be surprised by Obamacare's null effect on health outcomes. The Rand health insurance experiment, in which thousands of families were randomly assigned to groups that got more or less free coverage, saw no effect of additional medical spending on health outcomes. Oh, more coverage correlated with greater use of medicine. The additional medicine was often deemed "essential" by the doctors who prescribed it (despite the fact that the control group, who would forego such additional medicine, faired no worse). Two other randomized controlled trials have arisen since Obamacare's passage, both finding the same null effect. The Oregon Medicaid health experiment used a lottery to assign some applicants to be eligible for Medicaid. A control group was non-eligible (there was a waitlist due to a limited resources, which allowed for a randomization of treatment). From Wikipedia (thought this is consistent with commentary I've seen elsewhere, and this is frankly a plain interpretation of the study's results): Approximately two years after the lottery, researchers found
that Medicaid had no statistically significant impact on physical health
measures, but "it did increase use of health care services, raise rates of
diabetes detection and management, lower rates of depression, and reduce
financial strain." A third, and much larger, RCT in the same vein comes from the Karnataka Hospital Insurance Experiment. Here's Robin Hanson on that study: So a new randomized experiment on ordinary health residents
of India had 6.8x as many subjects as the RAND experiment, and also found no
net effect on health. It only looked at the effects of hospital treatment, but
to many that is the crown jewel of medicine. This appears to hold up pretty well. We've run the experiment of giving people tons of free medicine. If "lack of resources" or "lack of access to medicine" were a lethal threat to a large number of people, you should see some effect on aggregate health outcomes when you give a lot of people free medicine.* This result is seriously embarrassing to the left's worldview. If we take the result seriously, it dramatically undercuts any agenda for nationalizing healthcare and regulating medicine to provide "more coverage." This notion of Dickensian deprivation leading to illness and death from lack of medicine is mostly a myth (or, at any rate, adding the supposedly missing medicine does not improve outcomes in any observable way).
Koppelman appeals to an absurd estimate of lives that might have been saved by Obamacare if states had implemented it, citing this study:
Had every state adopted the Medicaid expansion, about
fifteen thousand deaths would have been prevented during the program’s first
four years.
I can't speak to the quality of this particular study. There are a lot of garbage studies in this space that basically compare the all-cause mortality of people who have insurance to those who don't, then attribute the entire difference to coverage. (Even though people who have health insurance are different in other relevant ways, like having higher incomes and higher levels of education and more likely to be married.) There are various attempts to control for known differences, but all of this is trying to use statistics to simulate the answer you would have gotten from a randomized controlled trial. (Meaning randomization and statistical models are both trying to make the treated and untreated groups equal and tease out just the effect of the treatment.) We have three randomized controlled trials, and they all give us a null result. (A lot of regression studies come to the same conclusion, btw.) Koppelman can cherry-pick studies that make Obamacare opponents look like mass murderers, but he's not on solid ground.
I think Koppelman doesn't appreciate how messed up healthcare markets are due to government interference and third-party payments. He repeats the trope that healthcare is too expensive, but he states it as thought this is merely a feature of the universe. It's not, it's the result of bad policy. We over-insure ourselves because the government creates bad incentives to do so. "Health insurance" behaves like no other form of insurance, in that it steps in to pay for routine medicine (regular checkups, medications such as antibiotics for mild illnesses, the occasional office visit for illness, etc.). That causes us to consume way more medicine than we otherwise would without regard to the price tag. We're not the payer, so we're not the customer. So providers get away with insanely high bills that get charged to insurance or the government. They suggest more tests and treatments than are truly necessary. And we don't have any particular reason to say "No" to excessive treatment, since we wouldn't personally pocket the savings from foregoing it. Obamacare more or less doubled down on all these bad features of the existing system. In the few enclaves of medicine where there are truly private markets and first party payments, prices have been reasonable, even falling, in contrast to the system that is mostly funded by third party payments. See the Surgery Center of Oklahoma, for instance. Or see Lasik surgery, which has also seen falling costs. This is a working model of what the rest of the healthcare system could be. If we had a 90% private market for health care, I wouldn't object on libertarian grounds to having some subsidies for the truly indigent. If Obamacare were merely a safety net to catch those who couldn't otherwise afford care, it would probably be fine. But that's not what's being proposed. Obamacare proponents accept none of the blame for the bad features of our system that have caused costs to explode. They should, though.
"Tough Luck"
Koppelman apparently thinks libertarians are unique in having to say "tough luck" to people in dire straights. He uses the phrase repeatedly throughout the book, and it was even in the title of his earlier book on Obamacare, The Tough Luck Constitution and the Assault on Health Care Reform. A couple of examples:
If you get sick and you can’t afford to pay for a doctor,
that’s your tough luck.
And:
The only arguments of principle available (and that is what
you need in court) rested on a categorical rejection of redistribution—what I
have elsewhere called Tough Luck Libertarianism. If you are too poor to buy
medical treatment or health insurance, tough luck: you can’t get something in a
market unless you pay for it.
This framing is nonsense, because every system imaginable has to say "tough luck" some times. What if you ignored the mandate to acquire coverage, and you get sick or injured? Tough luck. What if, as was the case in Oregon (and the premise for running a randomized experiment), there aren't enough slots when you sign up for Medicaid? Tough luck. What if bad policy has made healthcare needlessly expensive, and you get stuck with a gigantic bill? Tough luck. What if you're struck with a terminal illness and there's no cure at any price? Tough luck. With the "tough luck" taunt directed at us, we're being invited to imagine there's an imminent problem with a solution that will work with absolute certainty. The problem is lack of access to affordable medicine, the solution is some government transfer program. But the government "solution" can fail for any number of reasons. The voting public underfunds the social safety net. (Tough luck!) Or the government declines to pay for certain treatments that would benefit the patient, because it fails some cost-benefit test (rightly or wrongly, tough luck!). Or the government nationalizes the hospitals, but the system gets captured by public sector unions that are more interested in feathering their nests than providing quality healthcare. (Tough luck!) We have to resist the notion of government as a lever of control over social problems, where the only obstacle to solving them is the lack of political will to pull that lever. There is simply no mechanism for wresting control of social problems.
(Bryan Caplan made this point more eloquently about ten years ago in a post titled "Tough Luck." The late Tibor Machan made a similar point in this video, after some intellectual springs a lame "gotcha" question on him.)
None of this is to concede Koppelman's hypothetical. He's trying to get us to imagine that if you can't afford medicine in a free market system, you simply go without and you die (or otherwise suffer some horrible fate). That generally isn't true. If you require emergency care, hospitals have to provide it for you whether you can pay or not. They may take you to collection to recover some of their costs. But if you collapse from a blockage in your heart, you will get an angioplasty without anyone checking your assets or creditworthiness. That is, you'll get better medical care today if you're penniless than the President of the United States got when a heart attack struck him down (Eisenhower) in 1955. Hospitals are required by law to help, but that's not the only reason the indigent would get free or affordable care. The book Ensuring America's Health by Christy Ford Chapin describes how medicine was practiced in the early and middle parts of the 20th century, prior to the era of widespread health insurance. Doctors had sliding fees that took into account the patient's ability to pay. They would often give out free care, possibly out of a sense of professional duty and possibly as a tax write-off. (There can be both selfish and unselfish motives at play.) They would make up for their losses by charging higher rates to their high income patients (who were probably easily identifiable as such, possibly they were country club buddies with the doctors in the community). This was an era of free market social welfare and redistribution in medicine. I should also bring up the various ways people raise funds when they come upon a sudden illness. Often their friends in the community will organize some kind of collection. I've seen numerous fliers saying, "Let's help out Ben!" or something like it. Sometimes the sick person appeals directly to GoFundMe. That's not to claim this is a totally reliable solution, but of course neither is depending on the government. If a society is full of selfish, uncharitable people, then that society's welfare state will tend to be underfunded.
I feel like I should say something about the source of libertarian objections to the welfare state. It's almost never about the money. Very few libertarians are fretting about the tiny portion of their tax bill that is extracted to pay for government services for the poor. (Where I have heard resentment about this expense, it's usually from lower middle-class laborers. They resent having to work for a living while other people live as well as they do without putting in the labor. Even here, it's more about the unfairness than the expense.) Almost none of the policy analysis I have seen comes from a place of "I don't want to pay for poor people's medicine." The more common libertarian objection to the welfare state is summed up nicely by a recent post by John Cochrane: generous welfare payments that steeply drop off as you earn more creates very high marginal tax rates on the poor. Sometimes the implicit marginal tax rate is 100% or higher, meaning your final take home income (post-tax and post-transfer) is unchanged or even decreases if you earn an extra dollar. This can disrupt a person's natural career trajectory. "Why work more if I don't earn more?" But this is short-termism. If this person worked diligently at some profession, even starting at an entry level job, they could eventually climb into the upper income quantiles. I don't oppose these programs because they're a bad deal for me. I think they're a bad deal for the recipients.
Likewise, most libertarians who have strong opinions about socialized medicine aren't simply saying, "Give me my money back" or "I don't want to pay for poor people's medicine." Usually they'll argue that the current system makes things worse even for poor people. We've regulated and subsidized medicine to the point where it's unaffordable, but that's a self-inflicted wound. It's not an immutable feature of the world. A libertarian purist might insist that it's always wrong to take money by force to provide for someone else's welfare. But if we're listing the things the government does in rank order of how bad they are, this outlay set aside for the indigent would be pretty far down on the list. (The welfare state is vastly more expensive than it needs to be because it doesn't merely redistribute to the poor. We mostly redistribute from the young to the old, without account of need. If we stuck to providing for the needy, the welfare state would be a rounding error in the budget, and we'd barely need to have this argument.)
Libertarians could be wrong in any of the particulars. Maybe we're wrong about how a free market in medicine would play out, and maybe we're overestimating the disincentive to work produced by the welfare state. My point is that Koppelman's book is not really engaging with libertarianism! He's swatting away silly arguments by a few high-profile libertarian authors who subscribe to extreme deontology. To be fair, those authors have some dedicated fans. There are some bullet-biting followers who swallow these libertarian gurus' dogma. They can engage with Koppelman's argument if they like. But that conversation would be a minor and unimportant side-show. Most libertarians aren't lashing themselves to the mast of unquestionable moral premises then following them off a cliff. Most are happy to talk about why government programs are dysfunctional from a practical standpoint, fail to pass cost-benefit tests, and have unintended (though predictable!) consequences. Contra Koppelman, "tough luck" isn't even in most libertarians' vocabulary. This was another theme that utterly failed to land.
Freedoms and Rights
Koppelman uses a kind of argument that I find extremely distasteful. It sneaks in government paternalism and regulation using the language of "rights". That is, if I can artfully, surgically constrain your option set, I can actually make you freer rather than less free. After a discussion of auto safety regulations requiring back-up cameras, he writes the following:
Freedom isn’t the absence of regulation. It is the capacity
to construct one’s life as one likes. That means the capacity to focus on what
matters to us, in reasonable security that we will not be blindsided by all the
matters we inevitably neglect. Some paternalistic intervention is merely a
collective delegation of certain decisions to the state, in the way that one
delegates responsibilities to any professional. I’m not competent to decide
what toxins are unsafe to inhale at the workplace, but I’m sure that I don’t
want to leave that decision to my boss. Interference with my liberty of contract
makes me freer.
Emphasis mine. This kind of thinking proves too much. It always has some nasty implications that the speaker does not intend. It recasts "freedom" as some kind of optimization problem where wise technocrats make you better off by fiddling with your option set (by banning and taxing things), rather than the more obvious definition whereby "freedom" simply means leaving people unmolested. If I were a religious fanatic, I could argue that government regulation of religion expands your freedom. If you are "free" to follow the wrong religion, you will damn your soul for all of eternity. A trivial amount of force for a finite amount of time in the physical world would preserve an eternity of freedom for all those would-be lost souls. Likewise, couldn't the government make you freer by restricting the kinds of ideas you are exposed to? Shouldn't a government that's concerned with optimizing your freedom take a keen interest in the books you're allowed to read or the arguments you're able to hear? You won't be very free if you're exposed to Covid misinformation and end up dead because of it. Of course, these are contemptible arguments. But we only recognize them as such because we've internalized ideas like freedom of religion and freedom of the press. For some reason there is a double standard when it comes to anything involving market transactions. You are free to damn your soul for all of eternity and speak contemptible speech. Our devotion to rights is strong enough that we're willing to let each other make those mistakes. But god forbid you make a mistake on your employment contract or consumer purchase. Our freedom to interact with our fellow creatures is basically untrammeled with respect to speech, religion, and consensual romantic relationships, even though we can and do make terrible decisions in these domains. There is no reason to nullify this basic understanding of freedom when money changes hands, as if such human interactions were less worthy of our respect.
Implicit in this double-standard is the notion that "bigness" necessarily implies power. Employers and the sellers of consumer products are large and well-financed and can run roughshod over their employees and customers, the thinking goes. Koppelman makes this explicit (emphasis mine):
Consider arbitration provisions in contracts, which
typically require the economically weak contracting party—the consumer or
employee—to waive access to the courts for disputes that arise out of the
contract. Instead, such disputes are remitted to a forum designed to the
specifications of the stronger party, which drafted the provision. Should such
waivers of legal rights be permitted?
This notion of "bigness implies power" basically has no merit, not if you give even a moment's thought to how consumers and employees make decisions. I think the best dispelling of this idea was given in Private Governance by Edward Peter Stringham. He entertains the idea of Amazon (or a similar vendor) slanting the rules, say by declining to fulfill some random orders and then adjudicating all disputes in its own favor. (Koppelman is strongly implying that "bigness" grants large entities this power. He basically comes out and says as much in the quote above.) Here's an excerpt from Private Governance:
Even if one party is larger and offers the terms of
adjudication on a take-it-or-leave-it basis, the requirement for a compromissum
creates incentives to maximize joint benefit and minimize potential problems
such as bias or waste. Suppose, for example, that buyers on eBay accurately
predict a 10 percent chance of the seller not delivering and that eBay
adjudication always found in favor of these delinquent sellers (and suppose for
the moment this 90 to 10 percent ratio is stable). Here a $ 100 tie would be
sold only for $ 90 (or less if we add risk aversion), meaning the cost of any
proseller bias would be borne by the seller. Whether the sellers are big
corporations and the buyers are little guys is irrelevant. Rules that harm
buyers negatively affect their willingness to pay for a transaction.
…
Whether we are talking about potential disputes between
stockbrokers and clients, banks and customers, cell phone carriers and users,
or landlords and tenants, attempting to stack the deck against one side does
not pay when that party can adjust his willingness to enter an agreement. The
cost of biased rules or procedures is borne by the party that the rules were
intended to bias.
When you consider that the smaller (likely poorer and less diversified) party is likely risk-averse, the large party is probably paying more than $10 when it tries to statistically skim an expected $10 off each order. I think the worldview Koppelman subscribes to obliterates the agency of typical consumers and employers, who are actually quite savvy. Resource-poor consumers shop around for the best price and spurn companies with bad customer service or products that break unexpectedly. Workers are generally well aware of their employment options. They know about poor working conditions related to safety or discomfort, usually well before they join a firm. If anything (again because of risk aversion) they will tend to overweight rare but costly mishaps that are stacked in the employer's favor. Suppose one out of every 1,000 employees suffers a $100,000 injury. It seems like Koppelman is insisting that employers can make the unfortunate employee simply eat the cost (thus effectively skimming $100 off each employee, in expected value terms). In reality, such a scofflaw employer is likely to attract bad press, and its reputation of mistreating workers will certainly get out to potential employees. Being less attractive as an employer, it will need to pay its employees at least a $100 premium to join (relative to similar firms that don't cheat their workers), erasing any "gains" from cheating random workers out of a proper settlement. (Again, the cheating employer likely needs to pay more than a $100 premium because the individual workers are undiversified and thus risk averse.)
Again, we don't really need to get into the talk of "rights" or "freedom". The regulations requiring backup cameras have some fairly obvious unintended consequences, which could completely erase any value added. Such regulations mandating safety features (or fuel efficiency) make automobiles more expensive, which means car owners are likely to hold on to their older, less-safe (or less efficient) models for longer. The regulation he's championing doesn't mandate retro-fitting older models in the existing fleet to add back-up cameras. This is the folly of optimizing in one dimension. Even without any government regulation, newer model vehicles tend to get safer and more fuel efficient. The mandate could well lead to more car-years of service of less safe automobiles (even if the newer models are slightly safer than they otherwise would be...and models with backup cameras would be available for people who want them at any rate). Koppelman keeps inviting us to think of libertarians as following simple moral principles off a cliff. No, a cold, rational technocrat with a basic understanding of economic reasoning will tend to reach libertarian conclusions, at least in the examples presented in Burning Down the House.**
CO2 and Climate Change
Koppelman is obviously interested in discussing pollution in this book, because it is the kind of problem that markets don't always handle well. For obvious kinds of pollution, such as dumping buckets of toxic chemicals onto your neighbor's property, there actually isn't much of a problem. Even in an anarchocapitalist society (or a society in which the legislature fails to take up the issue of environmental pollution), you have redress against your neighbor for such dumping. You can sue him in whatever judicial system exists in your society. More interesting is the topic if extremely diffuse pollution that doesn't have an obvious victim. Instead of dumping highly concentrated chemicals on someone's lawn, thus directly poisoning my neighbor's well water and killing him, say I instead evaporate the pollution and send it into the atmosphere. My pollution is now mildly affecting a much larger number of people (rather than obviously poisoning a single person). Maybe I'm still killing one person per unit of pollution under this diffuse method, it's just very hard to identify who that is because it shows up in, say, higher cancer rates. This is admittedly a hard case for free markets. Various free market solutions have been floated, but the obvious solution is to have some kind of society-governing body (the legislature, or maybe a judicial ruling) regulate the pollution.
Granting all of that, I think he says some absurd things about CO2. Essentially nobody doubts that higher levels of CO2 have caused some warming over the past century and a half. But there are valid differences in opinion over how much of that warming is due to CO2, how harmful that warming is likely to be, how sensitive the climate is to CO2 levels, and how effective any proposed mitigation measure is likely to be. The accusation that someone is a "denier" is almost always an empty smear, directed at someone who takes issue with alarmism on any of the topics in the prior sentence. The boogeyman climate denier, who disputes the basic science of CO2 as a greenhouse gas, is basically not a thing. The book veers toward the extreme alarmist side of the spectrum when it comes to CO2 and climate change.
Koppelman says the following:
There are about $6 trillion in fossil fuel reserves. If all
of those are used, the earth’s temperature will rise by 16 degrees Fahrenheit.
The tolerable upper bound is 3.6 degrees. The largest increase that has
happened since life appeared on earth was a 6-degree rise during the
end-Permian extinction, 251 million years ago, which wiped out 95 percent of
the species on the planet. The 16-degree rise won’t happen, because everyone
would die first and the burning of fossil fuels would then cease.
This is absurd. Fossil fuels are the remains of plants that died hundreds of millions of years ago. They took carbon out of the atmosphere and turned it into their bodies. Then they died and were buried deep underground. Pressure and time turned these dead plants into coal, oil, and natural gas. All of that carbon was once part of the atmosphere. Koppelman is claiming that returning to this state is inconsistent with life, even though obviously that's the state of the atmosphere when life on Earth was thriving. (Is he talking about temperature deltas rather than actual temperature levels?) No doubt, an extremely rapid temperature rise would be very disruptive, and a large enough rise could end civilization. Certainly the species alive today aren't optimized for a very high CO2 atmosphere, as it was hundreds of millions of years ago. But almost nobody is actually projecting such a catastrophic change.
CO2 levels rose from about 280 parts per million pre-industrial revolution to around 420 ppm today. The temperature response to carbon is logarithmic! That is, if doubling the amount of carbon dioxide gets you X degrees of warming, we must double that again to get 2X degrees of warming. CO2 levels would have to be growing at an exponential rate over time to get a steady (linear) increase in global temperatures. (That relationship is basic physics and is not in dispute, as far as I can tell.)
Anyway, I'll chalk this up to Koppelman being not very knowledgeable about climate science. That's no sin, it's not his specialty. He's likely taking his cues from the alarmist climate press rather than reading directly from the literature. But given that, he probably shouldn't be holding this up as an awesome example of market failure. He certainly shouldn't have any confidence that he's identified the solutions to such a market failure.
Books That Supplement With Useful Context
I was fortunate to have read Alex Epstein's new book Fossil Future immediately after reading Burning Down the House. It's a useful inoculation against lazy climate doom saying, the authors of which expect their audience to uncritically accept their alarmist projections. In this vein, I will also recommend The Myth of American Inequality by John Early, Phil Gramm, and Robert Ekelund. Burning Down the House repeats a lot of stale bromides about how American income inequality is increasing, and how this implies our market system is inherently unfair. This is basically not true at all if you count all of the resources at a household's disposal rather than just counting their market income. That is, the lower quantiles have been getting more "generous" transfer payments, and the higher quantiles pay very high taxes. This results in a sever flattening of household incomes. To the people who gripe about income inequality, why would you not give the American system credit for what it's actually doing about the "problem"? Inequality-griping is always a lead-in to an argument for more income redistribution. Why would you not take account for the current levels of redistribution? The climate and inequality stuff in Koppelman's book is a lazy repetition of leftist talking-points. Again, maybe I'm wrong about some of the particulars. The point is that Koppelman's book is attempting to engage with libertarianism. It could have dealt with more sophisticated versions of the climate and inequality discussions. The basic leftist talking points have been answered (at least responded to). Rather than respond to the responses, Koppelman simply repeats the step-1 talking points.***
I should note that there's nothing particularly libertarian about one's opinion on the state of climate science or the proper way to measure inequality. These are technical topics, matters of fact, that stand on their own and should not be polluted by political philosophy. But libertarians end up focusing on these topics because statists use them as intellectual ammunition when building their case for various government programs. If the statists are routinely misstating facts about the world, if they are overstating various problems and generally catastrophizing, then they're going to attract a chorus of libertarians contradicting them, speaking as if in the same voice.
End
I was very curious to read a serious critique of libertarianism. But this book fell flat. It told me some things I already knew, that there have been some nutty libertarian theorists who make terrible arguments. I know Rand and Rothbard made some silly arguments, because other libertarians are constantly critiquing them! Koppelman vastly overstates the influence of these authors on modern politics by finding occasional similarities in rhetoric or noting that some politician claims Rand or Hayek as an intellectual influence. It was a surprise to me that libertarians have all this political power, considering the vast and unceasing expansion in government over the past hundred years.
If I'm trying to be constructive, I'd recommend a few changes for a second edition, or perhaps a sequel. Maybe even an entirely new book by a different author. For one thing, make it a little bit clearer what mistakes leftists are making. Koppelman is far too vague about the pro-market part of his ideology. He could identify a slate of bad government interventions that leftists love. He doesn't hesitate to wag his finger at bad libertarian arguments, but he seems shy about scolding the left for its mistakes. I suspect nothing he does here will satisfy me, because he is far too accepting of government regulation even when it's poorly justified. He basically swallows the left's "bigness is power" framing, even in cases where there is not an externality (e.g. the stuff about employers and companies slanting contracts in their favor). But he could at least disavow the most destructive or the most obviously bad market interventions: import quotas and tariffs, excessive zoning, rent control, occupational licensure, the Jones Act, etc. He could scold the left-aligned constituencies that favor these programs, like labor unions and local NIMBY homeowners. He could also give some examples of policies that the left likes, but which marginally fail a cost-benefit test (he gives some examples that go the other way).
On the inequality and climate change stuff, again I feel like we should be engaging at Step 3 of the following interchange:
Step 1: Leftist claim/argument about (policy topic)
Step 2: Libertarian counter-argument about same policy topic.
Step 3: Leftist counter-argument to the libertarian counter-argument.
His book is mostly stuck on step 1. He does spend a lot of time engaging with libertarian arguments, to be fair. But again I feel like he's not engaging with the most current state of the response-counterresponse discourse.
In my opinion, the intellectual center of the current libertarian movement isn't Rand, Rothbard, and Nozick. Richard Epstein and Randy Barnett are interesting figures, but they don't jump out at me as influencing the movement in a significant way. David Friedman, who gets a single mention in Koppelman's book (in a rebuke to Rothbard's environmentalism), should get center-stage in a proper treatment. See his debate with George Smith on rights-based vs. economic arguments for libertarianism. (Again, we libertarians don't need Koppelman to point out the silliness of extreme deontology. There is a lively debate about this within the movement.) Or see his debate with Bob Murphy on Austrian versus Chicago school economics.
The econ-libertarian blogosphere and the George Mason University economists barely get mentioned. A second book could correct this omission by grappling with some of these titans of libertarian thought. When I think of my libertarian influences, near the top of the list are these excellent scholars. Bryan Caplan on immigration, education, and voter rationality; Tyler Cowen on anything (and he often comes to non-libertarian conclusions); Alex Tabarrok on pharmaceutical regulation and policing; Garrett Jones on IQ, governance, and macroeconomics; Don Boudreaux on applying basic economics to policy analysis; Peter Leeson on pirates, anarchy, and private/cultural systems of governance; Robin Hanson on medicine, prediction markets, and VERY BIG QUESTIONS! There are also non-GMU economists who are adjacent. Steven Landsburg or David Henderson or Arnold Kling on foundational economics applied to policy. Scott Sumner on macroeconomics. Mike Munger on public choice theory. Jeff Miron on drug policy. Jonathan Meer on minimum wages. Russ Roberts (formerly of GMU) of Phil Magness on anything. Then there is the Cato crowd. Alex Nowrasteh on immigration policy. Jeffrey Singer on drug policy and medicine. Michael Cannon on healthcare.
Moving a step back, we could include the Chicago school in this pantheon. Koppelman does include several of them in his book. Milton Friedman (mentioned), Gary Becker (mentioned and quoted), and George Stigler (not mentioned). There is also the generation of scholars who were students of these giants, people like Deirdre McCloskey and Thomas Sowell, who have interesting and distinct arguments. Read the works of these scholars and get a feel for the texture of their arguments. They don't start off with "Since we all know government is bad..." or "Applying the non-aggression principle...". The pro-market punchlines of their arguments are conclusions, not premises. Nor is "undercut the case for government" an animating motive for these intellectuals. (Sowell and McCloskey both admit to starting their intellectual lives as extreme leftist, Sowell having once been a Marxist. And Milton Friedman was a Keynesian who became a free market advocate as he matured.)
This is where Koppelman's entire project fails. I get the sense that he was hoping he could knock out a few simple foundational arguments and the entire edifice of libertarianism would come crumbling down. But modern libertarianism is more eclectic. It would be almost impossible to write a single book "correcting" libertarianism by responding to arguments of all the thinkers mentioned above. There are individual policy critiques that stand on their own, with no obvious through-line or libertarian principle uniting them. Such analyses don't start off assuming some weird Rothbardian or Randian moral premise. They often still end up reaching the libertarian conclusion.
______________________________
*Here is Robin Hanson's classic Cato Unbound post titled Cut Medicine In Half. He gives a good rundown of the literature at the time (it was written in 2007). He has three hostile intellectuals responding to him with essays of their own in this Cato forum. In my opinion, Hanson gets the better of them, and none bother to seriously engage with his point.
**Here is Koppelman early in the book, expressing his discomfort with "rights":
The standard defense of gay rights was simple: people should
have a right to do whatever they want as long as they don’t violate anyone
else’s rights. I thought it was too simple. The principle had two embarrassing
implications. First, it meant that the law could impose no restrictions on
self-destructive conduct: corner stores would have to be allowed to sell heroin
and methamphetamine. Second, it undercut all of antidiscrimination law, which
forces people into transactions that they would prefer to avoid. The world was
just more complicated than that. So
I was led to defend gay rights on an entirely different basis. (I argued, and
still think, that discrimination against gay people is a form of sex
discrimination.)
Casting gay rights as a basic form of human freedoms, as in the freedom to transact and interact with your fellow creatures any way you like so long as it is mutually agreed upon, is a more obvious framing than putting it under the more modern umbrella of anti-discrimination law. Koppelman's objections to this way of thinking are notable. He appears to be objecting to legalizing drugs, which would put him on the side of one of America's worst, most destructive domestic policies. He makes it clear much later in the book (and in several podcasts) that he's no drug warrior. (He later states: "America’s war on drugs has been so destructive that there is a serious case to be made for complete legalization.") It was simply jarring to me that this is what snapped him out of embracing rights language? Libertarians have diverging opinions on antidiscrimination law. Some of us are maximalists when it comes to the right to associate, which necessarily implies the right to not associate. Even if it's for a dumb reason, like disliking someone's race or wanting to create an exclusive boys' club. At the same time, even those people will usually say antidiscrimination law is not the hill they're going to die on. It's way down on the list of "bad things the government does," and repealing such laws is not a priority. Other libertarians positively embrace antidiscrimination law. And some have argued there is pre-existing common law (so preceding and not dependent on anti-discrimination legislation) that compels businesses to serve all comers. As in, putting out your shingle and advertising your services to the public is a kind of implicit contract, which you can't simply rescind because you don't like someone's face. I find this common-law argument persuasive.
***I am confused about Koppelman's position on inequality. At one point he writes the following:
The fundamental error of the anticapitalist left is focusing
on inequality when its most pressing concern should be poverty. Effectively
addressing poverty will require acceptance of substantial, undeserved
inequality. Attacks on capitalism foolishly hurt the very people they are
intended to help.
Amen, brother! But he then repeats all the standard talking points about how the middle income quantiles haven't seen their incomes increase in fifty years, how the top quantiles have been taking all the gains, etc. There isn't necessarily a hard contradiction here, but there is a tension.
