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Wednesday, December 21, 2011

Rackets, protection and otherwise

A while ago, Todd Zywicki at the volokh conspiracy linked to a paper he had written concerning what is commonly called "overdraft protection." In particular, he focuses on the recent regulations to control "overdraft protection," and proposals to regulate it further. (Click here to see his volokh conspiracy post, and here to get the link to the pdf version of the paper). Zywicki argues the regulations that have been enacted on "overdraft protection" and especially those that are currently under consideration actually harm those who make use of "overdraft protection." His argument, by and large, convinces me. But I have several reservations about it.

Anyone familiar with Zywicki's writings--or at least those writings that he advertises on the volokh conspiracy--knows that he rarely (to my ken, never) has met a regulation of the financial industry that he likes. The argument seems to be that all new regulations impose a cost, and that those costs are passed on to consumers. As a result, consumers, especially the less affluent and more marginal, have to pay more,and are priced out of credit markets either because they are now credit risks where they might not have been before or because they simply can't afford to pay for the new credit "products." In my less discerning moments, I'm inclined to believe that he starts from the assumption of what's best for the credit card company or bank and then looks long and hard for an argument that might show how a regulation affects some unfortunate class of people on the margin, and voila, he's now the champion of the poor.

In my more discerning moments, I avoid that ad hominem (note, however, that I included it in this blog post anyway). I realize that my argument against his conclusions must be more substantive than "Mr. Zywicki wrote that paper ON PURPOSE!!!" And reading his paper, I'm convinced that he's largely right insofar as he critiques regulation of what is called "overdraft protection."

A definition is in order before I explain his argument. "Overdraft protection" is the term now used for the way banks decide to honor or dishonor checks that are presented against an "overdraft," or against a checking account that lacks the funds to cover the amount of the check, almost always with a fee, per item paid or returned unpaid, in the range of $30, sometimes less, and usually more. I believe this use term is unfortunate and misleading: "overdraft protection" used to refer to lines of credit, usually unsecured, or to secondary accounts, usually savings accounts, linked to the checking account that would kick in to cover overdrafts, on the assumption that the customer would repay (in the case of lines of credit) the amount, in addition to a small amount of interest, or pay (in the case of a linked secondary account), a small fee, in the range of $3 or so.

I say the new use of the term is misleading because it feeds the fiction that the bank's practices in honoring or dishonoring checks presented against an overdraft is "product" the consumer purchases instead of an actuarial, risk management practice that the bank engages in. However, being a "fiction" doesn't make it false. "Overdraft protection" is a "product" in the sense that it is part of the set of practices that affect how a customer uses his or her checking account and that may conceivably influence which bank a customer chooses. It is also a "product" in the sense that customers end up paying for the practices, directly when it comes to being charged overdraft fees, and indirectly inasmuch as the aggregate risk assessments influence a bank's overall account-fee structure (minimum balance requirements, monthly or annual fees, fees for atm and other bank card transactions). I should say that while I wish Mr. Zywicki were more precise in how he uses the term (later in his paper he does discuss lines of credit and linked secondary accounts), I can't truly fault him for using it the way he does. Even federal regulators--the federal reserve and the FDIC--appear to have adopted that terminology.

What Zywicki is taking aim against is recent regulations that limit the way banks decide whether or not to pay against overdrafts. These regulations, if I understand them correctly, limit the number of overdraft fees a bank can charge per business day and requires customers to "opt in" to allowing a bank to honor checks against an overdraft (and thereby charge the fee). If a customer doesn't opt in, then any check or electronic item that is presented against an overdraft. Not opting in would also mean debit card authorizations would not--at least not in theory--be approved against an account with insufficient funds. For those who don't opt in, there is still a possibility of an overdraft: a debit card authorization might be approved while an account has funds, but will post a few days later, when an account might lack the funds, and my understanding is that in such situations, the usual overdraft fee would apply. Zywicki raises concerns about other proposed regulations that would, in effect, lessen the number of overdraft fees or somehow control the amount of those fees.

The ostensible reason for these regulations is to prevent what the pro-regulation side calls "abuses." Banks have to, or at least in practice they choose to, standardize the order in which items are paid against an account. Usually, banks will pay any debit authorization (once it's posted) first (because that can't be refused), then any electronic check (ACH/EFT), then paper checks or checks submitted via the normal clearing processes. (Electronic checks and paper checks are starting to meld into a new category, as some institutions are now processing paper checks as electronic items). When paper checks (or their electronic proxies) are submitted, banks follow one of three ways to clear them: by check number (usually from lowest number to highest, although conceivably the order might be reversed), by amount from lowest to highest, and by amount from highest to lowest.

The order of clearing correlates with the number of fees charged the customer. Clearing by check number has a relatively "neutral" (or perhaps "random" is a better word) effect. Clearing from lowest amount to highest amount tends to result in fewer overdraft fees because the lower amounts are more likely to be paid against posted funds before the first overdraft in a series of check presentments occurs. Clearing from the highest amount to the lowest amount tends to result in more overdraft fees because the higher amounts are more likely to induce an overdraft, and the remaining, and usually more numerous, lower amounts are likely to repeat the overdraft, incurring a new fee each time.

One of the "abuses" comes in when a bank chooses clearing by highest amount first, apparently in an attempt to gain a higher fee income. Banks tend to justify this change because 1) it gives them more money that allows them to offset the risks of defaults and charge-offs; 2) the price is born by those who overdraw; and 3) checks written for a higher amount are usually the most important checks, to pay for such necessities as rent, insurance, and utilities, and dishonoring those checks could lead to evictions, loss of coverage, and loss of access.

Zywicki argues that much of the new regulations works to impose costs on banks that will lead them to charge higher prices or to deny "overdraft protection" services to those customers that would need them most. He suggests that such regulations would be justified only if the practices they regulate represent a way for which banks to, in effect, gouge customers in a manner that's not disciplined by market competition or if customers simply don't know, and are in a position not to know fully, how the fees are charged and how much they are.

He finds such justifications lacking. He finds that the "overdraft protection" services prior to and after the regulations do not allow banks to collect "monopoly rents," the sort of unconscionable profit-seeking that harms the consumer. Although I don't fully understand what is meant by "monopoly rent," nor do I fully understand the economics behind his analysis, I'll take him at his word when he says that while banks might indeed make a profit off of overdraft protection, they do so in a largely competitive environment and from limiting their charges to those people who, by and large, use the service. That is, the people who overdraw or write checks against overdrafts are those who generally end up paying. (This is not to say that he thinks the financial industry, especially the consumer banking industry, is perfectly competitive--in fact, I seriously doubt that he believes this to be the case--only that he does not see the types of abuses that he would consider a justification for these regulations.)

Neither does he find that consumers are hapless and ignorant victims of "overdraft protection." He cites studies that suggest tentatively (and he admits the findings are only tentative and more research needs be done) that consumers to whom "overdraft protection" applies by and large are well aware of the fee structures and the procedure by which their bank pays the items that present to accounts, and that they are also grateful that the larger checks are paid against the overdraft.

Having excluded these two potential justifications for the regulations and even more severe proposed regulations, Zywicki finds what he calls paternalism as the primary reason for these laws. Like most libertarians, he share skepticism and not a little disdain for "paternalist" regulations, and offers that as an almost sufficient reason (absent the other justifications which he claims are not in evidence) to oppose these regulations. He cites the critique against "paternalist" regulations--that they essentially deny choices to people who acts affect primarily only themselves and in that sense make them worse off without benefiting anybody else. And he notes that as these regulations tend to increase the costs of managing overdrafts--by cutting off money that might be used to offset the risks of defaults and charged off accounts--certain people, particularly more marginal people, are priced out of these types of checking accounts and are compelled, sometimes, to use even more costly credit products, such as payday loan lenders.

Now, as I said above, I find Zywicki's overall argument convincing. I buy his claim that banks do not necessarily exact "monopoly rents," and I share his distrust of "paternalist" regulations, even if I do not distrust such regulations to the extent he does. Still, I have some reservations about some of what he says in his paper.

First, Zywicki hedges a bit about the "opt in" requirement. He is honest about this, and says that while his default preference would be for an "opt out" requirement--wherein the bank would decide to pay against overdrafts regardless of whether customers have given the bank prior permission to do so, but the customer could order the bank not to do so--the "opt in" requirement probably would not do much harm. He offers as a possibility, however, that even the opt in requirement would impose some costs on the bank and on customers who otherwise might have wanted to use the "overdraft protection" services in the time between when they opt in and opt out.

I said Zywicki "hedges" on this issue, and perhaps hedge is an unfair word. He's not on a crusade to combat the opt-in provision: he's simply noting some of its potential costs. I would, however, like to offer a more robust defense of the opt-in provision. Here it is: its tendency is to confirm that the customer knows what they are getting into. It's not an inexorable tendency, I acknowledge: the "opt in" notice that banks send their customers--or at least the ones that my two banks have sent me--tends to emphasize "protection against overdrafts" and not the fees or the fact that all items paid against overdrafts are done so at the bank's discretion. Still, it is a disclosure that the customer has to take an active step in accepting.

Another defense lies in one of the examples Zywicki gives to demonstrate that there are not true "information asymmetries" of the sort that would justify the types of regulations he by and large criticizes. He refers to an "overdraft protection" disclosure and notes how easy it is to read, and he reproduces the content of this disclosure (although apparently without any of the different fonts and bold type that might help the reader know to what extent the disclosure emphasizes some points in exclusion to others). One thing that his paper does not really mention is that such disclosures were, to my knowledge, almost unheard of before the new opt-in regulations. (If they were indeed "heard of," then the paper ought at least explain that.) In the deposit account agreements I read when I was an employee and customer of my banks, the "overdraft protection" policy was tucked into the larger account agreement (and if I recall correctly, it wasn't called "overdraft protection"), and one had to hunt it down just to read it and know the bank's policy. Also, the bank consistently reserved the right to change its overdraft policy at any time, although usually with notice. In other words the very clarity Zywicki praises was brought about, at least in part, by the requirement he has certain reservations about.

Finally, opting out of things is not as easy or simple as it sounds. Maybe it's my inner-paternalist here, but I wouldn't be surprised if, under an opt-out regime, telephone customer service reps be required to ask two or three times the equivalent of "are you sure?"--perhaps with a recitation of the long list of the "benefits" of opting in--when taking opt-out requests. In the cold light of day, that sounds harmless enough, but not all customers have an easy time saying no. I have a hard time saying no, and I should know better. (I even avoid calling my credit card company unless it's absolutely necessary because I know--or have good reason for believing--that the CSR is required to offer me some "credit protection" service I know I don't need and that the CSR is required to ask me at least twice and ask for my reason for not wanting the service. The main response that tends to keep them quiet is "I'm still trying to weigh my options.") Already, I'll note that the opt-in form the banks send out tend to be somewhat alarmist on the severity of the consequences of not opting-in. Even someone like me, who knows pretty firmly that I don't want to opt in, has second and third thoughts after reading those notices.

In sum, the opt in provision makes "overdraft protection" more obviously a product in the way that Zywicki wants it to be. I admit that it adds (probably) somewhat to the cost of managing overdrafts, but if it makes for a somewhat more transparent process, then I think it is a positive good.

Second, one thing Zywicki does not address fully is that when items are returned unpaid against an account with non-sufficient funds, they incur a fee almost as hefty as the fee incurred by paying items against an overdraft. At one of the banks I worked at, the difference was about $3 to $5. Although I don't remember the exact amounts, and they changed while I worked there, an item returned unpaid incurred a fee of $24 and an item returned paid against an overdraft incurred a fee of $27. Part of customers' preference for having items paid against an overdraft is probably attributable to the fact that the customers would get charged comparable fees by their bank. There are, of course and as mentioned earlier, other reasons customers might wish to have their checks paid against overdrafts: the potential consequences of, say, a bounced rent check, not to mention the fees for returned checks charged by most companies, which would obviously compound the bank's returned check fee.

Third, one thing that not opting into "overdraft protection" helps alleviate (but cannot, I imagine, eradicate completely) is overdrafts by use of a debit card. Under the older regime, banks could--and did--authorize debit card transactions, the dollar amount of which exceeded not only the ledger balance of funds in a person's account, but all funds in that person's account. (There's a distinction between the ledger balance--funds that were posted--collected balance, and available balance.) The rationale was that "it's embarrassing to try to purchase something with a debit card and have it declined and maybe the customer made a deposit at the branch today and it might show up on the system when the ledger balances are updated, or the customer will make another deposit before the authorized purchase actually posts." I admit that it can be embarrassing, especially if one tries to purchase a meal at a dine-in restaurant, after the meal is over, and has no other mechanism of payment....such a situation is not only embarrassing, it's also dicey. But the end result is that people could overdraw their account by making a debit card purchase. (To be sure, even under the prior regime, certain transactions--such as cash-back transactions or atm withdrawals--would generally be denied in cases where purchases might be approved.)

This result might not be so bad, especially if customers are by and large knowledgeable about the bank's policies, as Zywicki suggests they might be. All I can really say is that it would be a good idea for a customer to know what they are getting into when they use a debit card, and that these new regulations help ensure that. (Thus, here's another defense of the opt-in provision.)

Fourth, Zywicki under-appreciates the effects of "overdraft protection" on less affluent customers. Zywicki cites a New York Times article--which I didn't read so I take him at his word--that, he says, discusses the predicament of a college student who mismanaged his (or her?) account and got zapped with hundreds of dollars of fees by the bank. He suggests that these kinds of examples might demonstrate only that an impecunious young man overspent and did not pay attention to the consequences. Good enough, so far as it goes; and I'll add that my prejudices lead me to have less sympathy for the stereotypical college student whose parents might bail him or her out of periodic financial pecadillos. (All the while, I must admit that the "stereotypical" college student--white, privileged, affluent, child of college graduates--often does not exist, and can be a first generation college student, a parent, a full-time or part-time worker, child of working-class parents.) I'll finally admit that the "innocent college student oppressed by big banks" trope fits too neatly as a pro-regulatory prop, similar to the way that occasional (and as far as I can tell, rare) reports of police officers ticketing 8 year olds for operating a lemonade stand without a license fits too neatly into some libertarians' otherwise valid objections to the ill effects and perverse incentives of some licensing regimes.

It's not only the irresponsible college student who has lost a few weekends worth of beer money who suffers from the fees concurrent with mismanaged accounts. Sometimes it is, indeed, the single parent trying to make ends meet, or the person who is caring for an elder, or someone who is on social security disability and is barely scraping by. When I was a call-center customer service rep, I encountered several customers who claimed to fall into these categories and who often got hundreds of dollars worth of fees because of either overspending on certain things or because of a mistake in addition when balancing their checkbooks.

Now, I admit that my sample was especially skewed in favor of the conclusion I wish to draw from it. People who overdraw were probably very much over-represented among the people who called the call center (because people tend not to speak with a CSR unless they already have a problem with their account). Also, as a CSR, it was in my power to refund or waive fees up to a certain amount (although my bank had a "shaming strategy" for CSR's who did this too much, each month circulating a list of the three highest fee refunders, a list I was on almost every's hard to say no when the person on the other end of the line is crying): therefore, customers are more likely to shade the truth or outright lie or claim ignorance of a bank's overdraft policies: in short, they are more likely to play the type of victim that the tentative study Zywicki cites suggests does not exist.

One doesn't have to insist that all or even most of these folks were hapless victims, ground beneath the wheel of a numbers-driven modernity. Maybe the single mother who cried because she just couldn't get ahead when I told her she had over $200 in overdraft charges really brought it on herself. Maybe she spent so much money on booze or or drugs or junk food. Maybe she wasn't even a mother. And maybe I'm a sucker. There have been times in my life where I've been taken in by people's hard luck stories, even when deep down I knew better. So anything is possible.

Still, one doesn't have to go so far and assign victimhood status to these people to acknowledge that someone who earns $2,000 a month and makes an error in addition will more likely overdraw and get more overdraft fees than someone who earns $5,000 a month. And some banks, as a general rule (at least this was true of the less than mega-sized bank I worked at as a CSR) were quite willing to refund more overdraft fees for "good customers" (that is, rich customers who overdraw only occasionally). (It's an interesting dynamic, and as Zywicki points out--if I recall correctly--a lot of repeat overdrafters are actually more affluent than; I have less sympathy for these people.)

If anything, what I want to get across is that it's these overdraft policies affect real people with real problems, not just the (largely stereotypical) slack-jawed trust fund baby who gets a write up in the New York Times. To deny that is to misread and, to some degree, belittle the urgency that some people attach to these regulatory reforms, even if the reforms themselves are misguided.

It is probably the case that the proposed regulations harms these people more than help them, and to the extent that these regulations are paternalist, they deny a little bit of dignity inherent in the ability to make choices on the market. Zywicki's under-appreciation thus does not disprove his argument, but it does, to my mind, signify a reason to be suspicious of the truth claims he makes about customer knowledge and to demand a more rigorous demonstration that "overdraft protection" does not operate in the shadows of information asymmetries.

Fifth and finally, it is these information asymmetries, which I think need further exploration, that constitute the basis for my last reservation about Zywicki's argument, an argument that I find, overall, compelling. The study that Zywicki cites suggests that customers are well-aware of their own bank's fee structures and are "grateful" that their bank pays against overdrafts. Assuming the results of this study are reproducible and generalizable, I would also like to know to what degree, if any, this ignorance results from some systematic obfuscations--the specific disclosure practices banks engage in, or even the disclosure practices mandated by law.

I would also like to point out something that, to my mind, constitutes an information asymmetry, although one that I can imagine a Zywickian analysis would account for easily. I refer to the "at the bank's discretion" proviso in most "overdraft protection" policies. To my understanding, banks used to have almost complete discretion on whether to pay a check that is presented against an account when there aren't enough funds to cover it. This makes sense. Whenever a bank pays against an overdraft, it runs the risk that consumers might not make good on the funds. Under the new regulations, my understanding is that the bank has less discretion, or at least a stronger incentive to return checks unpaid. But the principle remains valid: it's the bank's risk and it determines what risk it is comfortable with.

Therefore, the bank devises overdraft standards that are more or less rationalized based on a customer's average account balances, past history with the bank, income, and general creditworthiness. The bank at which I was a CSR observed the following procedure, which, adjusting for size, if probably in principle similar to what larger and smaller banks observe:
  • It placed customers in three default categories. The first allowed overdrafts up to a given dollar amount, say $500. The second tentatively allowed overdrafts up to a given dollar amount (again, let's just say it was $500). The third allowed no overdrafts.
  • A check that would overdraw the account of customers in the first category by less than the assigned dollar amount would automatically be paid by the bank. A similar check against the account of a customer in the second category would be flagged for attention by a bank officer who, the next business day, would review overdrafts and decide whether to pay it (the bank was small enough to make such a process feasible).
  • A check presented that would overdraw the account of a customer in the third category would be slated to be returned automatically, subject to final review by a bank officer.
  • Any check that exceeded the guidelines listed for customers in the first or second categories would also be slated for return, again subject to final review by a bank officer.
Other banks, I assume follow similar policies. Probably the larger banks that served more "national" markets had less personal officer review and more automatic decisions about payment and return of checks. And probably smaller banks had more personalized reviews of each overdraft. But the principle was the same: the bank determined ahead of time the excess dollar amounts of checks it would pay in order to speed up the process. That is how the system works.

The determination, as I said, is made along a variety of factors, but they boil down to the risk the bank believes it runs of a default or charge off of the overdrawn funds. Sometimes, that assessment of risk changes, and the bank finds it expedient to be less or more indulgent of overdrafts, and the bank changes the excess amounts accordingly.

All of this is opaque to the customer, and for understandable--and probably good--reason: if a customer knew ahead of time that the bank would automatically pay, say, a $500 overdraft, they might purposely overdraw their account by that much (and presumably pay the consequences), but if a bank did make available its assessment of an overdrawable amount, then it might have to notify the customer when it changed that assessment. Letting the customer know this information is too much of a risk for the bank.

What I'm getting at is that customers who would overdraw are writing checks in the hope that the bank might honor those checks. Sometimes--maybe even the majority of the time--such checks are written spuriously or irresponsibly to make purchases that aren't justified. Sometimes bad account management means an overdraft. But my point is customers cannot be sure in advance what the bank will pay.

I'm not sure this qualifies as an information asymmetry, or at least not one that represents a market failure. After all, the bank, in a sense, has a right to refuse payment against insufficient funds, and in practice, the per-customer assessment probably changes rarely, so an overdraft that was paid last month will probably be paid this month.

But it is something over which the customer has little control or knowledge, and if it is possible to devise a more transparent way for how this process works, while imposing only minimal costs onto the banks and to the customers they serve, then it would be worthwhile to pursue that. However, I have no idea what such a "transparent way" would look like or if it's even doable.

I have a partial solution to some of these problems, what I in another post called a "money order plus account," which is basically a savings account with money orders that operate more like checks. But it's only a solution in that it gives people another option, and this option is less convenient. Finally, I'm not certain that a critical number of persons would opt for such an account, although I might do so under certain circumstances.

I titled this post "Rackets, protection and otherwise" with the initial purpose of doing a pun on "overdraft protection" and "racket." See, "overdraft protection" + "racket" = "protection racket." Of course, if Zywicki is right--and I think he is if one accepts, as I do, most of his starting assumptions, and if one stipulates, as I do tentatively, to some of his empirical claims about customer knowledge--then "overdraft protection" is not a racket by any commonly accepted definition of the term. If I plead that consumers--even the knowledgeable ones that Zywicki claims constitutes the large majority of them--see "overdraft protection" as a racket, and if I can prove that claim, then that plea, once established as fact, only discovers that people can sincerely believe two things the logical implications of which are contradictory.

But I do think there is an opportunity for better understanding, for realizing that touting certain practices as per se good might blind us to other ways to enable people to have more choices and in effect to be more free. Maybe the answer is indeed to have minimal regulation to let loose the entrepreneurial energy that Willard Hurst discussed in his legal history scholarship. Maybe, on the other hand, we need to reconsider our values: what is the value of "having choices"? are there other ways to construct "choice" and "freedom"? is paternalism, while always suspect, therefore always necessarily bad? I won't offer the answers to these questions in this post. In fact, I'm not even sure I have the answers. But it's all worth considering.

Friday, December 16, 2011

Look on my work, ye Mighty, and despair

Yesterday, I finished the essential parts of a two and a half-year project. I'm not talking about my dissertation. I'm talking about an archiving project I've been working on as a graduate assistant. I helped organize a large collection from an organization that had donated its records to a library. (I'm being purposefully vague so as to protect my privacy and the privacy of the organization; needful to say, however, anything I write on this blog post or other blog posts reflects my personal views only and not the views of anyone at that organization or the entity that hired me or the library I worked for.)

In a real sense, it was not "my" project. There were several other people who worked on it, both before me--it was a three-year project and I was hired on four months into it--and with me. By my count, there were at least 5 (probably more) undergraduates, 8 graduate students, and at least 3 administrators who served the project. At least a few other undergraduates helped me do some important--and mostly thankless, although I thanked them--aspects of the project, mostly involving moving large and heavy boxes from one location to another.

On the other hand, it feels like "my" project, because I stayed on it the longest and probably am the one most familiar with the collection. For what it's worth, that does not mean I am the person the most familiar with the organization or with the types of matters the organization handled, but as far as the collection--what exactly it contains--I am probably the person who knows most, at least for now; a serious scholar who wanted to devote a few months to researching it would probably gain a more intimate and credible knowledge of the collection than I have now or will ever have.

An archival collection is something that is meant to preserve a piece of history. Preserving records supposedly has inherent value. Even if no one ever looks at the collection, the fact that it is "preserved" represents a good in itself. I should say, however, that a few people have already consulted the collection, and a couple more have expressed interest.

I realize that "piece of history" is quite a contestable term, and I am under no illusions that this collection reveals the "true" history of its donor organization.

I am also aware that in the process of organizing the collection, I have changed it and the history it represents, almost in a Heisenbergprinzip sort of way: I've changed the history by organizing it. I've made mistakes, only some of which I know about. Even if it's not a question of "mistakes," my very decisions in the organization process have set this particular documentary history of the organization on a somewhat inexorable path. The original collection was in a largely indeterminate order, and I and my colleagues made more "executive decisions" than is usual for processing similar-sized collections. But even records that come fully organized by the donor, there is a re-ordering that takes place, if only in that the holder of the records change.

I do feel that I and my colleagues have accomplished something. However, this accomplished thing will not endure forever, even if we can assume that the collection is a static "thing" that has been created. As sure as the United States will some day fall, the archives might someday fall in disrepair. With the possible exception of China, all the great empires have died, and even China had a rough 300 years or so during the warring states period (ca. 200 ad to ca. 590 ad) a rough 50 years or so in the transition from the Tang to the Song dynasty, periodic invasions and about 100 years of European and Japanese domination.

But it is a contribution, and I'm excited about it.

Wednesday, November 30, 2011

The death penalty: a clarification

In my previous post [click here to read it], I stated the grounds / argument / reason I oppose the death penalty, namely,
The state should not kill a person once that person no longer poses an immediate threat to society.
I also stated why this "argument" wasn't much of an argument, and I identified what I thought were some obvious problems. The chief problem was that I believed (and still believe) it to be a "question-begging" argument: if one already agrees with it, then one probably does not need to be convinced that the death penalty is wrong.

What I didn't do is explain further why I don't try to convince people of it. What are the reasons behind my saying that the state ought not kill those whom it has neutralized? I could cite some of the reasons that Pascal-Emmanuel Gobry tries to "demolish" or at least offer rejoinders for--the near certainty that some mistakes will be made (he did, after all, write this in response to the outcry over Troy Davis's execution) and that the death penalty might not operate as a deterrent (although I personally find this argument unprovable and based on assumptions about the purpose of punishment that I do not necessarily share). I also would add the alleged--and to my knowledge well-backed up by statistics--race, class, and (I suspect) sex discrimination* when it comes to who gets executed. There may very well be other reasons, some of which boil down to "I don't want to trust the state not to mess it up." As reasons, they have a certain force, and if true, might lead anyone to oppose the death penalty as a practical matter even if they support it in theory.

The truth is, however, that none of these reasons constitute my true rejection. All of them could be shown to be based on false premises--or could be stipulated to be false--and I would still oppose the penalty. In short, to adopt those as the reasons I oppose the death penalty--even though at least some of them might be sufficient reasons in themselves--would be dishonest on my part.

In short, my "argument" is not an "argument." I cannot use it to convince someone who doesn't already agree with me. I do not expect someone who is pro-death penalty to hear my "argument" and change their minds because of it. I might try to convince them that they already believe, deep down, that the state shouldn't kill people that do not pose an immediate threat. But such convincing would be a different feat, an act of showing that my opponent is actually someone who agrees with me already, not someone whom I could convince.

*When it comes to this point, I know nothing for certain. I suspect--and it's only a suspicion, founded on nothing--that if a similarly situated man and woman commit the same type of capital crime, then the man would most likely receive the death penalty. Again, I have no evidence, and I acknowledge two points. First, women often are and have been executed. Second, I understand that men tend to commit more violent crimes than women do, so establishing a way to test my suspicion systematically is quite hard.

Tuesday, November 29, 2011

A rejoinder to Pascal-Emmanuel Gobry

About two months ago, Pascal-Emmanual Gobry wrote of his admittedly reluctant support for the death penalty. (Click here to read his blog post in full.) His chief purpose is to "demolish" the anti-death penalty arguments and to explain why he supports the death penalty. I believe his argument for the death penalty is ultimately unworkable and unconscionable (which is not to say that it is not well-thought-out) and his attempt to demolish anti-death penalty arguments partially neglects an important argument against the death penalty, albeit one I do not believe I have heard others use and that I confess is almost a question-begging argument.

I share Mr. Gobry's reluctance to endorse some of the anti-death penalty arguments, although sometimes for different reasons from what he offers:
  • Like him, I'm suspicious of the claim that "the death penalty is not a deterrent," not necessarily because I believe, as he does, that the sole purpose of "justice" is not to deter crime, but because I admit that even if it is a deterrent, its deterrent effect would not salve my opposition to it.
  • I actually disagree with his argument that the death penalty is not vengeance--I think one function of the state undertaking to punish someone is to exact something I cannot call by any other name than "vengeance"--but at the end of the day, I submit that even if we stipulate the death penalty to be '"vengeance," then its essence as "vengeance" does not disqualify it any more than it would disqualify any other punishment exacted by the state.
  • His argument against the claim that "the state should not kill people" works to the extent that his characterization of that claim is valid. His argument, quite simply, is that all societies allow some sort of state-sanctioned and state-implemented killing. I'll return to this argument later because my opposition is closely related to the claim that Mr. Gobry "demolishes" here. But again, if one accepts his characterization of the claim, then his counterargument at least lends food for thought to those who advance the claim.
  • He addresses, but by his own admission does not "demolish," the argument that there is a real possibility of a miscarriage of justice. He his very honest that he has no perfectly good answer, other than to make the following points in mitigation against that argument: it is hard to truly compensate someone who, say, loses 10 years of their life in prison after having been found innocent of what they were convicted of (one might also add that compensation in such cases is in some states non-existent and in others very small); the assertion that "[p]unishment of the innocent is terrible to contemplate whatever the punishment, and yet society must punish and will always be imperfect"; the hopeful claim that [w]ith increasing prosperity and improving evidentiary science miscarriages should only become less likely, not more." I personally find these points woefully inadequate by themselves. First, it may be hard to "truly" compensate someone for 10 lost years--or even 10 lost days--but at the end of the day the person comes out of it alive. Second, the claim that society must punish and will always be imperfect strikes me as a bit of a dodge, almost the same as saying "it has ever been thus, so why change it."Third , I question the extent to which "evidentiary science," and the jurisprudence to accommodate it, will actually advance to cover most claims of wrongful imprisonment (I'm unclear how DNA evidence can even exonerate persons in most cases, and it seems to me that the appeals process does not always acknowledge such evidence as conclusive when it comes to ordering new trials). Despite my objections to this point, I'll concede him this argument if only because the underlying claim is not my true rejection of the death penalty. (I do think this "anti" argument, along with the argument that the death penalty is disproportionately assigned to persons of color, to poorer people, and (I suspect) to men, can be a true rejection for someone who otherwise might approve the death penalty.)
Mr. Gobry's "pro" argument seems sincere, and I hope to present it fairly. Namely, he seems to argue that extended prison sentences are cruel and amount to "torture," and that the death penalty, at least in cases of long prison terms, is the less cruel option. He cites the reports of prison rape and violence as examples of this cruelty. He also finds it a skewed set of values to say that life is more important than liberty, whereas he would prefer liberty to be more important than life, at least when it comes to punishment. To be clear, he is emphatically not saying that life is to have no value, but that rescinding all liberty is an ultimately more severe and cruel punishment than taking life (bold in the original):
Prison is immoral, cruel and unjust, and particularly life imprisonment. If we want to talk about what punishments are too cruel and beyond the pale, and we should, extended prison terms strike me as much more cruel than the death penalty.
A free society should reflect in its laws the judgement that liberty is a higher value than life, though life is very important.
He goes on to say that his is not an argument for prison reform per se. In fact, his despair of the likelihood of effective prison reform--"everywhere, the way politics work ensures that they will remain this way, because there will never be strong coalitions in favor of making prison 'livable', if that were possible"--supports his assertion that the cruelty of prison is well nigh inexorable. He does concede the possibility of "short and 'medium' prison terms as punishment and rehabilitation." Still, the taking of liberty for life or for very long terms shocks, or should shock, the conscience of a putatively free "democratic" society.

Unlike Mr. Gobry in relation to his efforts against the anti-death penalty arugments, I cannot claim to "demolish" his own argument. But I have several reservations after which I find his argument wanting:
  • As I note above, he concedes the possibility of "short and 'medium' terms" of prison, presumably in in minimum- and medium-security facilities, which (or so I've heard) have fewer of the features that lead Mr. Gobry to characterize prison as "torture." However, given this concession, I don't understand how finely he would draw the line between "short and 'medium' terms" (or likewise minimum- or medium-security facilities) and the longer terms (and harsher facilities) that are allegedly more cruel than death. At what point--10 years? 20 years? 30 years?--is death the less cruel option? My understanding is that recidivism is sometimes ipso facto justification for putting someone in a higher-security facility and for longer terms, even if the crime itself would not otherwise justify it. It shocks my conscience for a third-time petty drug dealer who has been convicted of no other crime to be put to death rather than be sentenced to 20 years in a maximum security prison (I'll confess that I do not know the drug laws well enough to know punishments). Of course, my shocked conscience is no answer to Mr. Gobry's argument, relying as it does on the premise that extreme deprivation of liberty for long periods of crime is more cruel than death. (And perhaps he might suggest that the penalties for violations of drug laws ought to be revised downward. He does not claim the US justice system is perfect or ideal.)
  • To elaborate my shocked conscience reservation, I'll point out that Mr. Gobry's argument relies to some degree on the question of "how do we punish those horrible murderers" who do horrible things to people--at one point he says as much when he writes "there are evil, inexcusable murderers in the world. The question is what to do with them and, again, how far we are willing to go in terms of cruelty toward them?" What about the long prison sentences administered to white collar criminals or (sometimes) to non-violent drug offenders or to admittedly violent recidivists who nonetheless do not rise to the level of "evil, inexcusable murders"? It seems like Mr. Gobry would like to have it both ways: prison cannot be made better and we cannot justify the "torture" that is prison even when it comes to murderers, but when it comes to other criminals, well, we just won't talk about what happens to them. Of course, I must concede that a lot of criminals, especially white collar criminals, probably have minimum security sentences. But my point is, that if Mr. Gobry is going to call prison torture, and be consistent with his advocacy for, or at least acquiescence in the existence of, the death penalty, he needs to address this wider problem.
  • Mr. Gobry despairs of a political coalition that would reform the prison system to such a degree as to make American prisons more "livable." Yet the same quasi-privatized prison industrial complex (to use a loaded term) and the incentives among police officers and prosecutors to arrest and convict (and sentence to long terms) large numbers of people are (arguably at least) largely responsible for the continuance of long prison terms in conditions that Mr. Gobry probably accurately describes as torture. Why would that same complex be any more amenable to re-establishing the process that is due to alleged criminals that would prevent the false positives and miscarriages of justice that Mr. Gobry, in another section of his blog post, is so hopeful for? Again, my point here is not a full answer to Mr. Gobry's argument, relying as it does on a quasi-conspiratorial vision of a "prison industrial complex" (obviously, I'm sympathetic to the charge that it does exist and is pernicious, but I confess that if someone were to call me on it, I don't have at my disposal the evidence to prove it) and counteracting only a portion of Mr. Gobry's larger argument about extreme deprivations of liberty.
  • Whose to say that extreme deprivation of liberty is indeed worse than death? For what it's worth, I believe the horror stories about prison are at least sometime true, and I fear that they are chronically true, and I think it's an outrage and would prefer that something be done. It is also facile of me to claim that a life in prison is a life worth living. But maybe there is something valuable to maintaining life, even in a place as hellish as the worst stories of prison. Again, maybe not. But unless I'm the product of reincarnation--and if so, then my memory has been duly erased--I have never died and don't know what it's like to die and on some level I confess to being afraid of dying even though I know that it is inevitable.
Again, none of the preceding reservations actually "demolish" Mr. Gobry's argument. But they are strong enough to convince me, at least, to reject it.

Finally, I'll say that Mr. Gobry's efforts to "demolish" the anti-death penalty arguments rejects another argument, the one akin to the claim that "the state should not kill people" and the one I promised to return to. As I said above, he has quite a powerful point when he says that the state already approves of and takes part in killing in at least some circumstances that most opponents of the death penalty would probably accept (a police officer shooting a suspect in self defense, a soldier shooting a soldier in the army of a country with which the US is at war). Therefore, it is hard to advance this argument. Moreover, Mr. Gobry is not setting up a straw man. There are, apparently, people who make this argument, and if you read his post, he links to one of them.

But there is a related argument, albeit more qualified and perhaps also a bit question-begging (in a similar way that the argument he "demolishes" is also question-begging: if one accepts that "the state should not kill" it's a 360 degree leap to get to the conclusion that of course, the death penalty is not right). Here is the--and my--argument:
The state should not kill a person once that person no longer poses an immediate threat to society.
In other words, it is, at least in theory, okay for the state (e.g., a police officer) to kill in immediate self-defense (one hears certain anecdotes and wonders how many such killings are, in fact, self defense), but not after the state has detained or otherwise neutralized the alleged criminal.

I acknowledge that my "argument" is almost no argument at all; it almost completely begs--i.e., assumes as evidence--that which I intend to "prove" with it. Someone, having accepted my formulation, must in most cases probably also deny the death penalty. The burden on me is to prove the validity of my formulation--the question that I beg--and not the almost perfectly valid conclusion I draw from it.

I say it "almost completely" begs the question because there are still some gray areas. There is (probably) no such thing as pure immediacy when it comes to threats or anything else outside the "approaches to zero" we find in differential calculus: how mediated does the immediate have to be before it's no longer "immediate"? I don't know exactly. I draw the line at the time the suspect is handcuffed. But what about the possibility of escape? Ted Bundy apparently escaped, and to kill again. What about the possibility of an "extremist martyr"? At least some argument is to be made that had the architect of the Oklahoma City bomber not been killed, he as a "political" prisoner might prove a rallying point for like minded extremists in a more violent way than he would not otherwise have been. (Maybe not; his co-conspirator was not sentenced to death, if I recall, and however such extremists might revere him, he doesn't seem to have been the focal point of more violence.)

And here I see the insufficiency of my "rejoinder" to Mr. Gobry. It boils down to this: he did not address my argument, and there are certain points he left unexplored (how to account for the way the prison system is) or assumed a priori (liberty trumps life when it comes to extreme punishment). But there I do see our differences.

Monday, November 28, 2011

In search of the libertarian / liberal divide, part V

A few observations after considering a series of proposed policy changes that are representative of one person's vision of "marginal libertarianism."

First, in the future, I will think real hard before promising "a series of posts" about anything. It's a hard promise to honor with my attention span and with my other obligations. (Compared to people with full time jobs or with children to raise, my appeal "other obligations" may sound suspect, since my principal obligations are working a relatively stress free, but well-paying part time job and "writing" a dissertation. But it's my blog and I'll whine about what I want to whine about.)

Second, it is much, much easier to criticize someone else's ideas than it is to come up with one's own. My objections to most Mr. Hanley's ideas, could be boiled down to: "Here are the nits I pick, but the current state of affairs is bad, and I can't think of anything better to improve them."

Third, almost all of my objections to Mr. Hanley's ideas are what I call "libertarian-friendly." Focusing on what will work is not a necessary or sufficient attribute of libertarianism, but most of the libertarians who I've read online seem very concerned about how policies will be implemented and whether they will bring about any "perverse incentives" or create a class of "rent seekers" (rent seeking is a concept I understand only imperfectly, but I understand it as the attempt to attain or maintain special privileges or unearned income from the state). Therefore, I cannot claim my decision not to be a libertarian to be distinguishable on the grounds of my differences with most of these policies.

Fourth, on the issues in which at least some of my objections rest on non-libertarian concerns, I think I see a kernal of my differences with libertarianism. I would support or at least acquiesce to government coercion for a conception of the "public interest" that seems to be defined along lines somewhat different from those that libertarians seem to define it.

Libertarians seem to define the "public interest" as "that which affects non-participant parties" where participant is defined as "someone who knowingly and willingly takes part" in a action. If, for instance, two people decide to do something that affects someone else negatively, then there is reason to restrain those people from acting, or at least require them to redress the "negative externalities" they create, all in the name of a "public interest." Conversely, if a policy would enable someone to do something that either does not affect non-participants negatively, or that benefits non-participants (or creates "positive externalities"), then that policy is probably good and serves a "public interest."

I think I differ in that I would enlargen (a real word? my spell check doesn't think so; maybe I should say "embiggen"?) the notion of "public interest" to include some an "obligation by those who have done well by the way things are to support others who have not done so well and the state ought to enforce this obligation." I see two problems with this view, neither of which I am yet able to resolve:
  • It is mere assertion. I think that deep down, I agree with it, but I have no proof other than "that's what I believe."
  • It allows for a potentially expansive state, with little check on state powers, for measures that check individual liberty, or at least by most definitions of "liberty." (Too often, I see people use the word "liberty" as self-evident, as if there might not be competing definitions of liberty.)
Regardless of the problems, I think this is where I differ from libertarianism. The difference doesn't necessarily have much to do with disagreement on policy, but rather on my higher tolerance of and acquiescence to state intervention by way of a more expansive justification for that intervention.

In Search of the libertarian / liberal divide, part IV

To continue with my series of posts on libertarian proposals: I am now going to cover those two items I said I "mostly opposed" of Mr. Hanley's policy proposals: for summary's sake, and for the sake of adding yet another colon to this sentence, here they are:
  • Pass a constitutional amendment that bans subsidies to any for-profit corporation.
  • Repeal the corporate income tax. It gets passed on to consumers anyway, so it’s just a way of pretending we’re making corporations pay their fair share, rather than substantively doing so. And it would reduce accounting costs and diminish the incentive to engage in rent-seeking in looking for special exemptions to it.
First, I'd like to change my vote from "mostly opposed" to "I'm so confused about the matter and what it would entail and how it would be implemented that I don't quite know where I stand but I think I'm opposed at least for that reason along with some others."

Here are my reservations about a constitutional amendment to ban subsidies to for-profit corporations:
  • I'm unsure about the effect of an actual amendment. What would the amendment look like? How would it define "for profit" corporation, as opposed to some other entity?
  • What would count as a subsidy? Would it be a simple transfer of money to a corporation? Would it be a tariff designed to protect a certain industry?
  • Such an amendment would seem to run counter to the original mechanism used to create corporations. Now, it is probably open for debate whether corporations themselves are creatures of the state--it is possible that there is an organizing tendency among people to participate in joint enterprises and that such enterprises tend to act as a "body" in a way we might vaguely call "corporate"--but in practice, what we call corporations are indeed entities created by the state, either as a tool for people in business to use or, in their older form, as a special organization granted certain special rights to achieve a desired public end (I'm thinking of corporations created in the early 1800s to promote internal improvements). These types of corporations, and the privileges they enjoy, have had a long and evolving history. (Limited liability for shareholders was not necessarily an attribute of the corporation as it was originally conceived, for example.) Either way, it seems unclear to me how the creation of a corporation is not in some way a "subsidy" of those who choose to incorporate. How would an amendment take this into account?
  • Would such an amendment apply only to state governments, or only to the federal government? If the restriction would be only on the federal government, would that prevent the federal government from issuing incentives to encourage overseas corporations to open up shop in the U.S.? (If so, maybe preventing such incentives is not a bad thing in itself, and therefore it might be a good thing altogether to have such a restriction.) If the restriction apply to the states, I imagine it would make illegal the disgusting spectacle we see in Illinois, wherein the governor and the legislature are falling over themselves to give various tax breaks to companies that threaten to leave the state. But I imagine that such a restriction would reduce the flexibility of state governments to act in such matters. Again, maybe that's not a bad thing, or at least not necessarily, but I wonder what the practical effects would be.
As to repealing corporate income tax, again, I'm unclear on what to make of it. I should plead ignorance and say that I don't know how a corporate income tax operates. My main concern is whether the correlation with prices is necessarily 1:1. If a tax of 1% is added to a corporation's income, then do prices increase by 1%, or by a lesser (or larger) percentage? I guess my main reservation is that I'd want to know more about what these taxes pay for, how much they are passed on to the consumer, and how capable they are of enforcement. I do imagine that in Illinois, the spectacle I described above would be lessened by such a repeal, but at the same time I find it hard to believe the legislators would have had the courage to impose a higher personal income tax to make up for the corporate income tax (of course, that issue is complicated, for at the time the legislature raised the corporate tax, it also raised individual income taxes "temporarily"; there is also the question of whether raising taxes at this time of recession is the right thing to do.)

Wednesday, November 16, 2011

In search of the libertarian / liberal divide, part III

Continuing with my series of posts on "marginal libertarian" policies and my hope to define further the distinguishing features of libertarianism and liberalism [click here to see the first post, and click here to see the second], here is a discussion of those policies which I support, but with reservations. Of these, some reservations are libertarian-friendly and others are probably more "liberalish," or at least non-libertarian (notice that I haven't defined liberalism, or liberalishism; suffice it to say that I'm "working on it").

The only one policy about which I have reservations solely on grounds that I might call "libertarian" is the radical reduction of the armed forces. Of course, my reservations probably depend at least in part on what counts as "radical" reductions. In the abstract, I'm all for ending the warfare state and the militarization of the US society and economy. In practice, the US does have a lot of commitments abroad that would be difficult to disentangle even in ten or twenty years time. Such issues are well beyond my pay grade, and I'm too ignorant. I just fear that a precipitous and "radical" draw down might be dangerous.

I call this a "libertarian" reservation not because there aren't libertarian reasons to support demilitarization: indeed, one might argue that the original antipathy to government violations of civil liberties in the Anglo world--an antipathy from which I think it's possible to trace modern libertarianism--arose in reaction to England's warfare state (I'm thinking of the "country Whig" constituency that arose in England during the 18th century and whose thinking, at least according to historian Bernard Bailyn, provided some of the ideological basis for the American Revolution). I call this reservation "libertarian" because I believe it is located closely to a notion of national defense, so that a strong military can, or at least might, deflect or at least channel the rise of local hegemons that might divide the world into separate "power spheres." In short, I fear a return to the 1930s, which depending on the circumstances might be an even greater threat to liberties than our current standing army and military industrial complex.

Now, I'm open to the notion that I'm entirely wrong on this fear. I should stress that my reservation--resting as it does on a hypothetical and on an imperfect historical analogy--is a weak one, and I would welcome a demilitarization of our economy and society the moment and to the degree that it is shown to be feasible in our current world system.

My reservations against vouchers and against a constitutional amendment to overturn the Kelo decision (the 2005 court decision that upheld a state's taking of private property and transfer to a private developer on the ground that the resulting development would increase the local tax base and provide jobs, etc.) are both liberalish and libertarian.

As for vouchers, I'm not in principle against programs that broaden people's horizons and give them options to go to schools different from the public school to which they would otherwise be assigned. The rent seeker, however, is in the details, and I'm concerned about how vouchers would work and do work in practice.

First, I would need to know if the vouchers are merely rebates of property taxes. If so, I imagine they would effectively price out those who do not own real property because there cannot be a rebate to such taxes when the taxes are not paid directly in the first place (they are paid indirectly, of course, through rent). Second, I am concerned that regardless of the basis for the rebate--or grant of money, as I imagine some voucher systems might simply be a grant of money that people may use for non-public schools--the poor will still be priced out of using vouchers and would be warehoused in public schools that now would have fewer funds available. (Perhaps this concern is less valid than I stated it: maybe money for vouchers does not imply necessarily a loss of funds for public schools, and perhaps money is only one of many problems that some public school districts face so that merely giving more money does not necessarily mean improvements.)

Now, these concerns are liberalish in the sense that they rest on the implication that it is better to compel people to pay for public education, which is in a sense a state-supported, partial monopoly. Libertarians tend not to like state-supported monopolies unless there is no other way to provide the service. I understand the libertarian support for vouchers has to do somewhat with the competition that they would allegedly introduce. Therefore, inasmuch as I would strengthen the public schools' monopoly on primary and secondary education, my reservations against vouchers is non-libertarian.

My concerns are also libertarian-friendly, however, in that I believe a voucher scheme, again, depending on how it operates, could be just a way of funneling money from one group of people to another, particularly if the voucher program is based solely on giving a rebate for property taxes. This funneling might create a class of interested, relatively more affluent people who are strongly subsidized at the expense of poorer people. Again, I must stress that this objection, like my others, comes from my ignorance of how these programs operate in practice or would operate if implemented on a wide scale.

My reservations about an amendment to overturn the Kelo decision are based more on the means of a constitutional amendment than on the prospect of overturning Kelo itself. I belief that the decision of New Haven, Connecticut, to take Ms. Kelo's property was based on a wrongheaded policy. (I have heard that the private developer ultimately did nothing with the land acquired. I don't know if that claim is true, but even if it is false, I think the policy was a bad one.) I also believe that any takings that involves a transfer of property to a private entity should be subject to the strictest scrutiny, so that the type of policy pursued by New Haven could not have survived a constitutional challenge. I disagree with a constitutional amendment for two reasons, one liberalish and one libertarian, and I admit that in some ways the betray an internal contradiction in my own thinking on the matter:
  1. Liberalish: as my invocation of a "strict scrutiny" test above might suggest, I can imagine, but only in the abstract, situations in which a taking for a purpose to transfer to a private entity might be justified. I say "in the abstract," because I cannot think of anything off hand. Also, and perhaps this is only a minor reservation, would such an amendment bar any transfer of land to a private entity if that land had been acquired by eminent domain? Perhaps this question represents a misunderstanding of Kelo (I have not actually read the decision, and I do not know if the private developer in question paid for the land that was condemned). But say the state acquires land for a public purpose through eminent domain: could it transfer the land 10 years later? a 100 years later? (I will say that the libertarian skepticism of eminent domain is well founded, especially because "just compensation" is not necessarily, in practice, fair compensation.)
  2. Libertarian: a constitutional amendment, depending on how it is worded, might do what it's supposed to do, but it might also either be redundant or, worse, might enable more Kelo-style takings in the future. It might seem strange to say that an amendment to overturn a Supreme Court precedent be redundant when the precedent has been set, but I would not be surprised if the Court in the next 20 years or so will start distinguishing Kelo almost out of existence. (I'm not a Court watcher or otherwise an expert on the law, so take my prediction with several large grains of salt. I have no evidence, just my "hunch.") My main fear--that it would enable future takings--rests on my belief that introducing a ban into the constitution might be interpreted as "now you can do, provided you don't violate this rule." The fifth amendment allows the federal government (and the state, through incorporation via the 14th amendment) to take property "for public use." The new amendment would, I imagine, put a further qualification on "for public use," that would likely follow a format similar to the following "shall not be construed as to permit a transfer to a non-public entity." I wouldn't be surprised if such an amendment only makes it incumbent upon the state to claim and to prove to the satisfaction of the Court that the private entity is actually, really, and in all truth, in a matter of speaking, for purposes of this taking, a "public entity." And then we'd be back at square one. (Of course, I might be wrong on all this. And maybe an amendment would introduce in practice the type of strict scrutiny I favor.)
For the remaining policies that I support, but with reservations, my reservations are probably more liberalish than libertarian. These concern Mr. Hanley's prescription for reforming health care provision, his desire to end agricultural cartels, and the negative income tax idea.

Re: his prescriptions for health insurance reform: I like the idea of decoupling health insurance from employment and introducing a competitive market for insurance. I also favor government intervention to help the poor and for "catastrophic" coverage (I confess, I'm ignorant enough about insurance to have a firm grasp on what is meant by "catastrophic" coverage and whether it includes, for example, pre-existing conditions). My reservations, such as they are, rest on a skepticism, or at least an ignorance, of how well the government intervention would help: how intrusive and cumbersome the means testing requirement would be and wide the gap between what coverage one can get on the market and one can get from government provision.

Re: ending agricultural cartels: Any consideration of whether farmers should be allowed to form cartels must take into account the effect such cartels have on the prices of foodstuffs. In short, I, as a non-farmer, find it hard to sympathize with practices that at least in the short term raise prices of necessary food to the consumer, and I also find it hard to sympathize with the massive subsidies provided farmers, especially when those subsidies seem to work more to encourage small- (or medium-, or sometimes large-) scale farms on land that would otherwise be farmed any way than to encourage farming on land that wouldn't be farmed at all without them. Therefore, I would support ending government support for agricultural cartels, but my reservation rests on my ignorance: does the government merely tolerate such cartels, or does it enforce them? If it's only the former, then I might be inclined to support them or at least their legality.

Re: the negative income tax. I confess to not knowing much about the negative income tax, and most of what I do know I learned just a few days ago when I read this post by someone who has studied the idea. There are, as the author of this post notes, some problems with implementing such a plan, but I think it sounds like in general a good idea. I would not like to end all other forms of support, however: I think I would support a robust food stamp program (with all its problems), for example, in addition to a negative income tax, largely because I fear that any version of the negative income tax likely to be implemented would not be sufficient to ensure what I would like to consider a minimum standard of living (note that my "minimum standard of living" is probably higher than what might be considered subsistence level).

In my next post, I'll discuss briefly the policies that I more or less oppose, although I'm not entirely opposed to the motivations behind enacting them.

Monday, November 14, 2011

In search of the libertarian / liberal divide, part II

In my previous post [click here to read it], I listed a series of policies advanced by a self-identified "marginal libertarian" and promised to examine why I support, support with reservations, or oppose these policies. In this post, I'll start with those policies that I almost unequivocally support: ending the war on drugs and legalizing same sex marriage.

First, ending the war on drugs:

I'll say that whatever other reason I might have for opposing the war on drugs, I'm convinced by the libertarian argument for ending the "war." Here is that argument as I understand it: the "war" is an excuse, and provides a mechanism, for the state to exercise a broad authority over its citizens in a particularly arbitrary way. The "war" subjects people to constant governmental oversight, crowds our prisons, and ruins the job prospects for millions of people who are caught for "possession." It also acts as a sort of "prosecutors' insurance": if the prosecutor "knows" someone is guilty of something serious, but can only prove possession, then the he or she can leverage that possession into a plea deal that increases his or her conviction rate. The "war" also creates a broad constituency for its own perpetuation: the prison guards union in California, owners of privatized prisons, prosecutors, the vast networks of funding streams for federal, state, and local efforts to eradicate the drug trade, to name a few.

My only quibble with "end the war on drugs" is not a particularly anti-libertarian one, it's one of definition. At its base, the "war on drugs" is a metaphor for a wider array of policies that function as a large power shift of the state over everyday citizens. In other words, there is not one single "war" policy that needs be overturned, but several other steps that probably include decriminalization, ending funding streams, ending the Drug Enforcement Agency. (Note, ending the "war" does not, to my mind, necessarily imply legalization, although it probably implies a radical decriminalization. Also, some ways that might be proposed to end the war, a "focus on treatment," for example, might have some very bad collateral consequences: in my more dystopian moments, I can imagine a judge saying to someone "well, you haven't committed a crime--and therefore this is not an adversarial process and you don't have the right to a lawyer--but you appear to be an addict, and I therefore "invite" you to spend 5 years in a treatment facility, and because this is for your own good, you must accept the invitation or be guilty of violating law wxyz-1234.")

The policy goal of allowing same sex marriage is also one I support largely on libertarian as well as personal grounds. The personal: I know several gay couples, and I would like them to have the option to marry if that's what they want to do. The libertarian: I find it unfair to deny some couples the right to marry simply because they are of the same sex. With the exception of, perhaps, a (probably very slight) increase in government spending or decrease in tax revenues because more people would, with gay marriage, be in different tax and social security benefits categories, and with the exception of knocking straight marriage from its position as "the only marriage contract allowed," I don't see how legalizing gay marriage affects others' rights at all. Even if the affect on taxes and government spending be enormous, I hope I would still support ssm because it's the right thing to do.

In my next, probably most boring post of the series of posts, I'll discuss the policies I support, but with reservations.

In search of the libertarian / liberal divide, part I

I often have a hard time explaining to myself why I am not a libertarian. Well, in some ways, I suppose I am, but I do not choose to identify myself as one, and the policies I tend to prefer are generally not endorsed by people who call themselves libertarians.

In part, my refusal to identify as a libertarian comes from a reluctance to be identified with the popular caricatures of libertarians: according to one of these caricatures, libertarians are minarchist extremists who support policies that would take us to a new feudalism where the owners of property rule over all in a sort of survival of the fittest world. This caricature--as well as others I could mention--is unfair to what I understand most self-proclaimed libertarians to believe. Still, that doesn't answer really why I don't identify as a libertarian. (For what it's worth, I don't identify as a Democrat, either, even though my preferred policies seem to be more congenial with what Democrats advance.)

However, when I read what consistent libertarians believe (there are always libertarians of opportunity, just as there are fellow travelers of opportunity to any ism when what what that ism advocates is congenial to them), I am sometimes at a loss to explain my differences with them. In one post, I listed things I have learned from libertarianism (click here to see it; and to that list I'll add that libertarians place a value on "choice," such that policies that tend to enlarge the number choices available to people tend to be better than policies that limit the number of choices). But although I appreciate these lessons and indeed must take them into account when I think about any of my policy preferences, they leave me at a loss to explain why I don't identify as a libertarian. This "loss to explain" is further highlighted by other (perhaps over-broad) statements about what libertarians believe, as in the explanation provided by libertarianism dot org [click here to read it in full]:*
Libertarianism is the belief that each person has the right to live his life as he chooses so long as he respects the equal rights of others. Libertarians defend each person’s right to life, liberty, and property. In the libertarian view, voluntary agreement is the gold standard of human relationships. If there is no good reason to forbid something (a good reason being that it violates the rights of others), it should be allowed. Force should be reserved for prohibiting or punishing those who themselves use force, such as murderers, robbers, rapists, kidnappers, and defrauders (who practice a kind of theft). Most people live their own lives by that code of ethics....[the definition elaborates a bit further, and I invite you to click onto the above link to see what I leave out, but I think what I've quoted here represents it fairly.]
This definition, as far as it goes, is something I could probably sign on with. I would, and do, quibble with the claim in the last sentence inasmuch as I believe we all have an inner authoritarian that out of spite or pride would forbid others from doing something which harms us not (at the same time, I believe a lot of libertarians suppose anyone to be corruptible, which is one reason why they are suspicious of concentrations of power into the government). I also believe that in the right circumstances we all are or would be tempted to resort to it. But quibbles are a fact of life, and in broad outlines much of this definition seems congenial. I do think it is over-broad because I imagine a very large number of people who are not libertarians would claim to be willing to embrace it. (Note, for example, how opponents of same sex marriage often frame their opposition in terms of how ssm would damage traditional marriage, not in terms of denying someone the right to do something that otherwise respects the rights of others.)

Too often, when I think about such things as "libertarianism" or "liberalism," I tend to focus too much on first principles and starting premises. And that focus leads me into vague, unsupported assertionism (see my claim that we all have an inner authoritarian).

Something I read recently at League of Ordinary Gentlemen, however, gives me the chance to explore further why I am not a libertarian. James Hanley, in the comment thread of a guest post at League of Ordinary Gentlemen (click here to read the post) gives a list of some policies that he, as a libertarian, would support. He calls these "marginal improvements" in order to underscore that they are doable and that libertarianism does not necessarily represent some pie-in-the-sky attempt to remake society completely de novo. Here is a concrete instance where I can say I support, oppose, or support with reservations a specifically libertarian policy and whether I support, oppose, or support with reservations out of respect for principles that might be considered libertarian or out of some other principles, or a combination. In short, examining this list will give me the opportunity to explore why I don't consider myself a libertarian and to explore what I see as some of the distinguishing features of liberalism and libertarianism. Here is the list Mr. Hanley provides, in brackets is a notation of whether I mostly support, support with reservations, or mostly oppose the given policy (click here to read the original comment):
1. End the war on drugs. [mostly support]

2. Radically reduce the armed forces (ok, that might be beyond marginal, but I think changes at the margin there are unlikely to stick). [support with reservtions]

3. Eliminate our current welfare programs and shift to a negative income tax. [support with reservations]

4. Pass a constitutional amendment that bans subsidies to any for-profit corporation. (I’m not a fan of subsidies for not-for-profit ones, either, but I don’t want to get rid of the tax deduction for contributions to non-profits, which is a de facto subsidy.) [mostly oppose]

5. Repeal the corporate income tax. It gets passed on to consumers anyway, so it’s just a way of pretending we’re making corporations pay their fair share, rather than substantively doing so. And it would reduce accounting costs and diminish the incentive to engage in rent-seeking in looking for special exemptions to it. [mostly oppose]

6. Promote the expansive use of school vouchers. [support with reservations]

7. Eliminate the federal law that allows for the creation of agricultural cartels. [support with reservations]

8. Change our health care system so that it’s actually more of a market system, reserving government’s role primarily for catastrophic care and the very poor. At a minimum this requires severing the link between employment and health insurance (which is what is actually blocking most unemployed/self-employed people from getting health insurance), and making it easier to set up inter-state buying networks. [support with reservations]

9. Allow same-sex marriage. [mostly support, with no reservations]

10. Constitutional amendment to overturn the Kelo decision. [support with reservations]
In the next few posts, I will examine each of these policies to explain why I take the position on them that I do and what role properly "libertarian" justifications play in my assessment of these policies. I will then follow up with a more general post on what this all means for defining the distinguishing features of libertarianism and liberalism.

*I do not read that site regularly and only stumbled on it a few days ago. I also cannot claim that it speaks for all or most libertarians. My very brief perusal of the site suggests to me that it relies on a question-begging, one-size-fits-all notion of liberty that amounts to preaching to the choir.

Sunday, October 16, 2011

We are the 99%, we are the 1%

The "Occupy Wall Street" movement has figured prominently in the BCM (Blogosphere as Consulted by Me) and, I assume, in the mainstream media, although I haven't looked much at the MSM in the last weeks. This movement appears to be largely a protest against what its participants believe to be the corporate greed and the unfair advantages enjoyed by the wealthiest of the population at the expense of most hardworking Americans.

One of its rallying cries is "We are the 99 percent," as opposed to the rent-seeking, greedy 1 percent who oppress us all and get government bailouts. One website that claims to speak for the movement explains what it stands for:
We are the 99 percent. We are getting kicked out of our homes. We are forced to choose between groceries and rent. We are denied quality medical care. We are suffering from environmental pollution. We are working long hours for little pay and no rights, if we're working at all. We are getting nothing while the other 1 percent is getting everything. We are the 99 percent.
Who, then, are the 1 percent?
They are the 1 percent. They are the banks, the mortgage industry, the insurance industry. They are the important ones. They need help and get bailed out and are praised as job creators. We need help and get nothing and are called entitled. We live in a society made for them, not for us. It’s their world, not ours. If we’re lucky, they’ll let us work in it so long as we don’t question the extent of their charity.
I do not wish to dismiss this movement or the concerns expressed by its adherents out of hand. There are real problems out there and reading that website--which, from the first of its (so far, as of a week and a half ago when I wrote the first draft of this post) 67 pages, seems to be a series of posts by people who explain their personal plight, such as high debts, poor health, and joblessness--is quite sobering. It's one thing for someone like me to contemplate, in the abstract, others' statements about what is important to them. It is quite another to put a human voice to the person making that statement. Many of the problems voiced there remind me of some of my own challenges. Others of the problems are (thankfully, knock on wood, etc.) are, so far, beyond my ken.

I also do not wish to claim that this movement is saying something it is not. It is easy to chide the proponents of the "we are the 99%, and they are the 1%" formulation as both naive and potentially dangerous, indicative of a mentality that sees conspiracies in everything perceived to be unfair or simply unsatisfactory or unfortunate. It is also easy to point out that the 99% formulation is over-inclusive. The top 10%, for instance, probably benefit more than the remaining 90% by orders of magnitude comparable to that enjoyed by the top 1% over the 99%. I in fact made a comment to that effect in a post at the Lawyers, Guns and Money blog. One commenter there thoughtfully rebuked me, saying in part (the rest, along with my original comment you can get by clicking on the link),
Personally, I think it’s somewhat misleading to think of “the 99%” as a demographic group; it is, rather, a political designation, more akin to a declaration of faith and principles than a reference to one’s factual income. To declare oneself as part of the 99% is not to say that I make less than X amount of money; it is to declare that I am in opposition to the existing order of things, which has effectively written out large percentages of the population as not really relevant to the political community. Thus, for instance, I think that Warren Buffet could declare himself too to be of the 99%, and I would welcome it. So while its true that the 99% don’t share a common interest, it is equally true that the one core purpose of the movement is to transform things, to bring into being a new political subjectivity, which in theory at least, could contain anyone and everyone.
Now, I think this commenter has a point, and it's a check on my own smugness (and against what another commenter at that site, in another post, called being "a pedantic a***ole). At any rate, I reject the facile characterizations of the movement by such people as Charles Krauthammer, who, in his appearance on a recent episode of "Inside Washington," criticized the protesters for their alleged hypocrisy in owning I-phones and wearing designers jeans while declaiming against corporate America. (That's not the only time I've seen the "they use I-phones" trope....I questions, by the way, how many of those people actually do use I-phones.) Another casual dismissal comes from Tom Van Dyke at the League of Ordinary Gentlemen. Noting one protester who says he or she has $70,000 in debt:
I feel you, brother. $70,000 in hock to the Educational-Industrial Complex and still no job to pay off your medical bills, the ones you ran up spending your cash on clubs and sushi and gadgets instead of insurance. Now you’re streetcamping, trying to figure out how to make a meal out of Cup O’Noodles and a can of Red Bull.
I don't see how Mr. Van Dyke knows that this person actually eats sushi or went to the clubs or didn't even have insurance, just as I don't know how accurate is Mr. Krauthammer's assessment of the protesters' fashion capabilities.

These detractors might have a point. Young college educated people--and the protesters are at least portrayed as mostly young and college educated, although I suppose those assumptions might be a bit overwrought--might have it rough in this economy, but it appears that the lesser educated have it even worse. At any rate, I'm not sure we really know the demographics enough to make such a general statement about the protests. But no number of studies in comparative oppressions and no accusations of hypocrisy necessarily answer the protesters' arguments.

Another point from the the detractors, a la Mr. Van Dyke, is that these protesters are in the situation they are in largely because of choices they made, some of which might have been improvident or at the very least ill-considered. There's probably some truth to that point, and that truth oughtn't be denied. But there is also a point, I believe, where it is important to have empathy for others, regardless of how much they owe their position to their own improvidence. Who among us hasn't made at least some poor choices? Of course, what the common solution should be, can be, and is, is a different question. I'm not sure, for example, that a onetime student loan bailout, is the way to go (although, to be fair, I don't see a lot of people seriously arguing for a student loan bailout as much as I see them arguing for expanding the categories by which people can earn forgiveness or otherwise have their debts discharged or reduced). But if someone is in distress, sometimes it is helpful to listen to them. We might see ourselves.

Still, I feel constrained to reject the "we are the 99%" formulation. My rejection comes, in part, from the criticisms I mentioned above: the conspiracy-theory mentality the formulation plays into and the formulation's (what I and and at least one other person sees as) over-inclusiveness.

My rejection also comes from the way I believe that formulation mischaracterizes the beneficiaries of the bank bailout. Those who benefited the most are probably the investment bankers and jet-setting insurance executives, at least I am going to assume that to be true. But in the very short term, at least, other beneficiaries were probably the people much lower on the food chain who worked for those firms--the clerks and the janitors and the tellers and the couriers. My point isn't that the bank bailout was wise or that it was primarily an effort to help those folks. Rather, my point is that when protesters criticize "Wall Street" or "Bank of America" (in Chicago, the protests are taking place on LaSalle Street and Jackson, where the main Chicago branch of Bank of America is located), they often elide the distinction between those they call the "1%" and those who are trying to get by on more modest incomes at more modest jobs at these places. (In this sense, my rejection is based less on the protest movement's alleged "over-inclusiveness" and more on its "under-inclusiveness.")

Finally, my rejection comes from that formulation's rejection of what I take to be basic truth. We are all essentially just as greedy, corruptible, and rent-seeking as the next person. The difference between the "99%" and the mythical 1% is that the 1% are better positioned or better able, or both, to make their greed work for them. This assertion--that humanity is inherently greedy and corrupt(ible)--is of course not very original. Even if you don't agree with it (maybe in a later post I'll explain my theory of greed, which I have stolen from C. S. Lewis and now claim as my own), you have to admit that the idea is out there and reasonable people advance it. You don't even have to agree with my broad generalization to acknowledge that to the 1%, but for the grace of God, go the 99%. (I hope that makes sense.) Who among us can honestly and with certainty say we would, if we could, abrogate all the privileges we enjoy that give us an advantage over others? I can't, and I don't think the 99% can either.

At the same time, to demand such and honest and certain avowal from another human being is unfair. And I hope it's clear that my rejection is to a particular slogan--"we are the 99%"--and not necessarily to the movement itself, what the movement represents, or any solutions the movement advocates.

Wednesday, October 5, 2011

Squirreled Away

From the Chicago Better Business Bureau's weekly Report of 2 April 1931 (p. 3):
The use of the trade name "Squrlpelt" to brand materials not made from the pelts of squirrels, is prohibited by the Federal Trade Commission in their order to H. Ernstberger and Carl Rosenkranz, co-partners, New York, trading as H. Ernstberger & Company.

The [FTC] order also forbids the use of labels picturing a squirrel, or the words "Squrlpelt" or other words of similar import.

The complaint charged that this company advertised "Squrlpelt" as "The genuine and original importation of the squirrel effect in fabrics." There was a picture of a squirrel and a picture of the label under which was quoted, "This label identifies the genuine."
With all due respect to the fashion tastes of the Great Depression era, my impression is that squirrels are pretty low on the chain of sought after pelt animals. If this company wasn't using squirrels, what were they using?

Sunday, September 4, 2011

On misosophy

I've never been much good at philosophy, and I tend not to like it, at least when it comes to the formal study of it. The best explanation for this is that I am probably too lazy to devote the time necessary to appreciate it. Reading philosophy can be hard, and I only do it anymore for its historic relevance. So, for example, I will read and have my students read (when I teach) parts of John Locke's treatise on civil government because of its historic importance, even though, I suppose, one cannot know its historicity without knowing its "philosophy."

But the other reason for my dislike have more to do with its seeming inscrutability. I get tired of puzzling through a treatise--actually, more like the 4 to 6 page excerpt from a treatise that is reproduced in an introduction to philosophy reader--only to find that the next treatise (do a quick "ibid" on the 4 to 6 page excerpt idea) that pokes holes in the first treatise, usually with the observation that "X philosopher's system of ethics is all well and good, unless your name is...........HITLER!"

In the introduction to philosophy course I took and the one or two other non-introduction to philosophy course(s) I took I ran into this phenomenon quite a bit. Does Kant's categorical imperative make sense? Well, not to Bentham? Does Bentham make sense? Well, not to William James.

I get that the point is to teach students to think, and to realize that there are not easy, uncomplicated answers, and to introduce them to answers that have been proffered in the past and, to identify fallacies and whatnot. But in the end, I'm just not good at it.

I freely confess that this is a failing in me. I realize that philosophy--i.e., the formal study and formal pronouncement of what is called philosophy--is important. I just don't understand it.

Sunday, June 12, 2011

What I've learned from libertarians/libertarianism

Well, for starters, it's not my sense of humor. I suspect that if a libertarian had to listen to my jokes all day, even he or she would support, "for the good of society," some restrictions on speech.

But I have learned a lot from them. First I should clarify what I mean by "libertarians" and "libertarianism." By libertarians, I mean those who call themselves libertarians and appear (to me) to be sincere. In other words, I have not read most of the intellectuals credited with being "libertarians," like Hayek or Friedman, although I have read Locke, who might be a proto-libertarian. I have also read Adam Smith's Wealth of Nations--the whole thing, although I can't claim to have understood it or to remember it. By libertarians, I mean, for the most part, those who I have met on the blogosphere, either at the belated Positive Liberty site and its successors or at the Volokh Conspiracy.

By libertarianism--well, I guess I should clarify what I mean, but I don't know what I mean, so I'll just assume I know what I mean.

Finally, when I say "I have learned" x, y, or z "from libertarians," I acknowledge that perhaps what I have learned has something to do with things that aren't essentially "libertarian" but are consistent with what I've observed libertarians support or believe in. In short, I am not a libertarian, but I have learned a lot from people who claim to be.

Here's my list:
  • Acti0ns have unpredictable consequences.
  • Government regulations usually (maybe always?) impose costs, and even the best regulations usually (maybe always?) get us something good at the cost of something else that is also, although not necessarily as, good.
  • Government regulations can and often do create "perverse incentives."
  • The state is coercive, and coercion of any sort is something we should be at least wary of. Even if it's necessary.
  • Fraud is a form of coercion.
  • The morality and efficacy behind antitrust laws is, to say the least, problematic. (I've actually probably would have come to this conclusion without the aid of libertarian bloggers of the libertarian scholars who I've read on this subject--my dissertation research has in some ways led me to this conclusion--but they have helped me in affirming this conclusion.)
  • Torture is not only wrong (which I either learned or "knew" on some level for a long time), its effectiveness is highly questionable. Its effectiveness being highly questionable gives yet another reason why it is wrong.
  • The notion of what many libertarians call "economic liberty" deserves respect. ("Deserving of respect" does not, in my view, have any obvious implications about the role of the state, and I certainly remain comfortable with, for example, only rational basis review by the courts over restrictions on economic liberty. But I have more respect for the argument that economic liberty is an important thing for people.)