God, the State, and Sin

One of the frequent objections I get runs like this: “Murphy, how can you be so blind? You are great at seeing how the State rules people through fear and dependence, preying on their insecurities and vanities. Don’t you see that’s exactly what organized religion has done throughout the ages? No gods no rulers!”

Of course I understand the apparent patterns, but the correct reaction is not atheism. (Look, should I disbelieve in the existence of tanks and poverty, simply because politicians use the fear of these things to further their own power?)

I get annoyed when critics refer contemptuously to “Libertopia” (although in fairness, there is an actual event with that name, so it’s hardly a strawman). The giants in libertarian thought never said that abolition of the coercive State would lead to paradise on earth.

However, in practice I have seen many self-described voluntaryists or anarcho-capitalists argue that every social ill really is a direct result of the State, and that they would all disappear if only people respected property rights.

That is not correct. Yes, humans have the capacity for greatness, they yearn for an impossibly high ideal, but their nature is also capable of the utmost cruelty. Now it’s true, I recognize in my study of free-market economics how State institutions amplify these evil impulses, yet the causality runs both ways. Humans (under the influence of malevolent forces, in the view of Christians) created State institutions, after all. So it hardly makes sense to take the blame for humanity’s monstrous acts off of humans, and lay it on “the State”–which isn’t an actor with preferences, if we’re being good methodological individualists.

Let me cap this discussion by showing just how wrong it is to equate the God of the Bible with the secular State. Far from being two sides of the same coin, in reality the perversity of the modern State is that it seeks to replace God in our lives:

1 Samuel 8 New International Version (NIV)

Israel Asks for a King

8 When Samuel grew old, he appointed his sons as Israel’s leaders.^{[a] 2} The name of his firstborn was Joel and the name of his second was Abijah, and they served at Beersheba.³ But his sons did not follow his ways. They turned aside after dishonest gain and accepted bribes and perverted justice.

⁴ So all the elders of Israel gathered together and came to Samuel at Ramah. ⁵ They said to him, “You are old, and your sons do not follow your ways; now appoint a king to lead^[b]us, such as all the other nations have.”

⁶ But when they said, “Give us a king to lead us,” this displeased Samuel; so he prayed to the Lord. ⁷ And the Lord told him: “Listen to all that the people are saying to you; it is not you they have rejected, but they have rejected me as their king. ⁸ As they have done from the day I brought them up out of Egypt until this day, forsaking me and serving other gods, so they are doing to you. ⁹ Now listen to them; but warn them solemnly and let them know what the king who will reign over them will claim as his rights.”

¹⁰ Samuel told all the words of the Lord to the people who were asking him for a king.¹¹ He said, “This is what the king who will reign over you will claim as his rights: He will take your sons and make them serve with his chariots and horses, and they will run in front of his chariots. ¹² Some he will assign to be commanders of thousands and commanders of fifties, and others to plow his ground and reap his harvest, and still others to make weapons of war and equipment for his chariots. ¹³ He will take your daughters to be perfumers and cooks and bakers. ¹⁴ He will take the best of your fields and vineyardsand olive groves and give them to his attendants. ¹⁵ He will take a tenth of your grain and of your vintage and give it to his officials and attendants. ¹⁶ Your male and female servants and the best of your cattle^[c] and donkeys he will take for his own use. ¹⁷ He will take a tenth of your flocks, and you yourselves will become his slaves. ¹⁸ When that day comes, you will cry out for relief from the king you have chosen, but the Lord will not answer you in that day.”

¹⁹ But the people refused to listen to Samuel. “No!” they said. “We want a king over us.²⁰ Then we will be like all the other nations, with a king to lead us and to go out before us and fight our battles.”

²¹ When Samuel heard all that the people said, he repeated it before the Lord. ²² The Lordanswered, “Listen to them and give them a king.”

Then Samuel said to the Israelites, “Everyone go back to your own town.”

Tom Woods and I Discuss Krugman’s Flawless Model

Everything you need is here.

“Paid Family Leave” a Great Way to Hurt Women in the Workforce

My latest at FEE. An excerpt:

For example, if a 23-year-old woman with a fresh MBA is applying to several firms for a career in the financial sector, but she has a serious boyfriend and thinks they might one day start a family, then — other things equal — she is going to highly value a clause in the employment contract that guarantees she won’t lose her job if she takes off time to have a baby. Since female employment in the traditional workforce is now so prevalent, we can expect many employers to have such provisions in in their employment contracts in order to attract qualified applicants. Women don’t have a right to such clauses, just as male hedge-fund VPs don’t have a right to year-end bonuses, but it’s standard for employment contracts to have such features.

Update on Commenting Issues

OK I am going to try to go into the Spam folder periodically and approve comments that the plug-in erroneously marked as Spam. Apparently, this will help it learn over time which ones to allow and which to divert.

So that means some of you will see duplicate comments, because you resubmitted under a different email address etc. I think the best way to handle this going forward is either of the two following approaches:

(A) You use a single preferred email address. If your comment disappears, then email me and I’ll go approve it. Hopefully the plug-in will soon learn your email address is OK. But this means you have to have patience, while you wait for me to dig up your comment.

(B) When a comment disappears, you use a different email address or some other trick, in order to get instant gratification. But then don’t email me about it, because if I dig up your original you will then have the same comment multiple times.

Potpourri

==> Martin Weitzman is one of the leading economic theorists in the case FOR aggressive government action against greenhouse gas emissions. Here he is on EconTalk.

==> An interesting graphic from John Christy’s testimony showing 102 climate models’ predictions vs. observations on global temperatures.

==> Daniel Kuehn bringing power to the people.

==> Ryan Murphy (basically) agrees with David R. Henderson and me on the ordinal/cardinal utility stuff. However, on Facebook I backed down somewhat in an argument with David Friedman, because when I was reading the climate change economics stuff (without thinking of this debate) I realized that the “pure discount rate” is clearly talking about the percentage comparison of a util today versus a util next year. Yes, there are ways you can relate this to ordinal rankings of flows of consumption over time, but economists in the trenches are clearly thinking of this as cardinal utility. (Indeed, that’s why in my dissertation I criticized Mises’ writings on the pure time preference theory–I said in certain passages Mises only makes sense if we think utility is cardinal, and surely he doesn’t want to go down that road.)

==> Tom Woods vs. Austin Petersen. It’s just what you hoped it would be. In the future I think we should build a road around Austin and then not feed him.

==> On a more serious note, Tatiana Moroz interviews Lynn Ulbricht, whose son Ross was just sentenced to life in prison for his role in the Silk Road.

An Unexpected Twist in the “Debt Burdening Our Grandkids?” Debate

You guys think you’ve got me all figured out. Well you’re wrong. In my current EconLib essay, instead of focusing on Krugman, I design two thought experiments of war financing to show that even Ludwig von Mises missed something crucial in the “debt and future generations” argument. The intro:

Critics of government debt often argue that deficits are irresponsible and cowardly because the present generation is foisting the bill onto future generations, many of whom have no say in the political decision. This perspective resonates with the man on the street, but many professional economists—such as Paul Krugman and Dean Baker—believe that such thinking is completely fallacious because it confuses an individual household with the economy as a whole.1 According to these economists, today’s government spending is “paid for” by the present generation, period, and any talk of burdening our grandchildren is nonsense.

However, some economists—notably James Buchanan and those following his lead—have challenged this dismissal.2 They argue that when we account for the fact that generations overlap, there really is a legitimate sense in which government debt allows people today to enjoy higher government spending that is partially paid for by reducing the standard of living of taxpayers who have not even been born. In this article, I lay out the respective positions with a numerical example involving a hypothetical war. I use the example of war because that has a been a traditional cause of government debt. But the same analysis applies whether the government debt is to finance war or to finance anything else that government spends money on. I also show that this dispute is not simply an ideological one: I contrast Buchanan’s view with that of Ludwig von Mises, a champion of the free market and no apologist for government budget deficits. Even Mises, in his writings about financing war, overlooked the subtleties that Buchanan (decades later) would emphasize.

Incidentally, this is a very subtle matter. Krugman, Dean Baker, and (I believe) Abba Lerner all relied on the “we owe it to ourselves” notion in order to show that the public shouldn’t worry about big government deficits, and certainly shouldn’t view them as analogous to household or corporate debt.

Now, when I say that I used to subscribe to a version of this view, and so did Mises, of course I am just talking about the very narrow issue of whether the existence of a higher government debt, with the required taxation to pay interest, can directly burden future generations. I used to think this was impossible, that such payments were merely a transfer within the future generations. But after the great debate a few years ago, I now see that there is something else we have to keep in mind.

By bringing Mises into this debate, I am trying to defuse the ideological reactions. I want to show that there is a technical confusion here, beyond the fallout for policy.

In conclusion, and to avoid any confusion: Mises explicitly rejected the “we owe it to ourselves” argument for the BENIGNITY of deficits, and so did I back in 2006. But my point with this EconLib article is to show that even Mises missed the “overlapping generations” point that Buchanan (and then Nick Rowe and Don Boudreaux) nailed.

Tomorrowland vs. the Bible

Because there is such a dearth of family-friendly movies, I took my son to see the George Clooney movie, “Tomorrowland.” On the one hand, the film was very uplifting. I’m sure the people behind thought they were doing a great thing. They were telling people (especially young kids) that so long as enough poets, artists, scientists, doctors, and other creative people kept their dreams alive, then humanity would make it. The only true threat to the world was if the forces of cynicism and doubt became self-fulfilling prophecies and crippled humans from solving–through technology and compassion–the genuine problems facing us. John Lennon and Walt Disney would have loved this movie.

This message of optimistic, secular humanism is diametrically opposed to the message of the Bible. In this book, we see a picture of humanity bound for utter destruction if left to its own devices. It’s only through the intervention of God Himself (ultimately through His Son) that any can be saved.

For whatever reason, it was only until fairly recently that I realized why so many people reject Christianity: It’s not simply that they “don’t believe in fairy tales,” but for many people they are offended to hear that they need a savior. “How dare you suggest I’m not basically a good person. If there were a heaven, I’m sure I would qualify. I don’t go around raping and murdering! Look at how well I stack up against some of the real scumbags out there!”

In this post I don’t hope to challenge such a view with a head-on assault. Instead, let me make a simple observation. Some of the wisest, most observant students of the human condition–I’m thinking of wits like Mark Twain and H.L. Mencken, but also currently living people whom I won’t mention by name–were extremely cynical and downright misanthropes. Indeed, when I encounter young libertarians who have just discovered the theoretical works on a free society, or who are gushing on Facebook about the latest “liberty candidate,” I sigh with regret because I know they are going to have that enthusiasm knocked out of them by 20 years of learning how stubborn and cruel humans really are. I’m not even that old, but from my vantage point I think it would take a miracle to save the human race.

But that’s why I can still have the hope of victory, and go to the trenches to spread the truth as I see it, regardless of the short-term prospects. Because I believe in miracles.

My Response to David R. Henderson’s Proposed Bet on the Stock Market

Over at EconLog, in response to my recent post here, David writes (with my minor formatting changes):

I propose to Bob the following bet:

==> “I bet that by May 27, 2020, the S&P 500, adjusted for inflation measured by the CPI, will not be more than 10% lower than it was on May 27, 2015. Even odds with a bet of $500.” <==

Of course, you could argue that Bob and I have already made much bigger bets than that. I haven’t checked exactly, but about 45% or more of my net worth is in stock funds, both U.S. and international. I’m guessing that, given his views, well under 25% of his net worth is in stock funds.

So why bet with each other? The main reason is that it’s fun. The other reason is that we save all the transactions costs that would be involved with buying, and renewing, puts and calls.

So, Bob, do we have a deal?

Here was the answer I gave David on Facebook:

In terms of the actual bet, it’s not appealing to me at all. For example, suppose in May 2008 I said, “I think the stock market is in a bubble and could crash at any time.” David says, “Oh yeah? Bob I bet you in May 2013, the S&P is up 20% compared to now.” He would be right. (I’m not adjusting for CPI.) And yet, in our scenario, surely I could claim, “I told you so!” when the market fell in half (from that point) by March 2009.

To put it in other words: The stock market could crash in the next two years (say), and then the Fed might come in and blow up another bubble, poising it for still a fourth big crash even further down the road. That outcome is consistent with David’s proposed bet. (Also, it’s hardly a vote of confidence for “buy and hold” to know that over the next five years, you probably won’t lose more than 10 percent in real terms. Stocks are more volatile than bonds and “cash,” so I’m surprised that David put such a low bar for equities into his proposed bet.)

However, I don’t mean to suggest that if David and I went back and forth a few times, we might come up with a suitable wager. The fundamental problem here–as we learned last time–is that this is foolish in terms of the broader blogospheric discussion of economic policy. Last time, David (who has written a policy study for Mercatus pushing for “fiscal austerity” through spending cuts and using the Canadian example as a model) bet me that CPI inflation would be modest, while Krugman predicted accelerating deflation, and then when David won Krugman & Co. ran around saying it proved the success of the Keynesian model. (Furthermore, I often see people referring to my failed predictions on “hyperinflation.”)

The famous Julian Simon / Paul Ehrlich wager made sense, because they were on opposite sides of the ideological spectrum. But in this environment, I have learned it’s not wise to make public wagers with your friends. No matter which of us won, our opponents could claim, “Ha ha, the free market guy just botched another prediction, this story is getting old at this point.”