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A Tale From Our Libertarian Present

by Mike Kimel

A Tale From Our Libertarian Present

I’ve been getting a lot of calls on my cell phone from telemarketers lately. So has my wife. Our numbers on the do not call registry, but just to be safe, we registered them again. I’ve had random conversations with people about this, and found that some people are having similar experiences – lots of calls from telemarketers – while others aren’t getting any at all. Very odd, but it seems the do not call registry is becoming useless. This morning I got one such call at 1:40 AM.

To me, this gives us a clue as to what a libertarian society might look like. Because it doesn’t matter how many laws and rules and regulations a society has, if they aren’t enforced, they don’t matter. And it seems that the do not call registry is, for practical purposes, no longer enforced.

So what does that mean? Well, my cell phone number, like my home, and my internet access, is my property. I pay for it. I pay for that property because I want to be able to use it in certain ways. I like to be able to pick up my cell phone and reach family, friends, and business associates. I like to be able to be reached by family, friends, and business associates. I do not pay for these services to get calls from telemarketers at 1:40 in the morning.

But there are others who want to use the property they pay for in ways that affect me. They want to have a dialing machine call me up at 1 in the morning, just on the one in a million chance that I might buy whatever they’re trying to peddle. And why not? The cost to them is infinitesimal. Which means I not only have to pay a price for my property, but I also have to pay an additional price to keep other people from using my property.

That’s already true with e-mail. We all have a spam folder. But there’s a cost to that spam folder – false positives. Every so often you find out that you didn’t get a message you needed to get. I just discovered that I was supposed to confirm a speaking engagement for a conference… and that notice ended up in my spam file somehow. That provides no cost to people producing spam, but their use of my property, their placing things I do not want in my e-mail account, costs me money.

This issue of other people using one’s property rights has long existed with physical property. If you’re neighbor doesn’t wish to keep the music or odor or pollution he produces on his property, which is usually the case, he exports onto other people’s property. Causing an earthquake on someone else’s property is not an issue of bargaining over conflicting property rights, its taking someone else’s property rights away. Ditto placing toxic fumes on other people’s land. Because the party producing those fumes only has the right to place those fumes on its own property, not to someone else’s. If the music one neighbor produces crosses the boundary onto property someone else is paying for, the producer of that music is trespassing.

Sure, to some degree, everyone produces externalities, but the question is, how big can the externalities be before they must be regulated? As laws cease to be enforced, the government’s footprint diminishes and we move closer and closer to a libertarian society. And the sad truth is, what libertarians haven’t thought through and realized is that such a society is one where individuals have to spend a lot of resources keeping other people from taking their property. And its a society where we are all poorer. All of us, even the captains of industry. How much work would Howard Roark do, how productive would Dagny Taggart be, how much use for life would John Galt himself have if their respective neighbors decided to build a nuclear reactor and dispense with any effort to contain the radiation from crossing property lines?

PS. The call came from this number: 972-280-7286

(Dan here…minor grammatical corrections made for flow.)

Follow up to a Libertarian future

Reader Jazzbumpa suggests taking a look at Yves Smith’s Journey into a Libertarian Future series as part of Mike’s thought experiment on the subject here. A very good read.

He also offers one of his own posts on the matter at Retirement Blues
Brute economics of slavery.

And opines at the end of his e-mail “It really makes me think about the 13th century”.

In comments at Mike’s post is an interesting discussion in real terms using the development of the electricity industry as an example of interaction of government and private enterprise.

Making E-Verify Mandatory: The Perfect Storm

In addition to the controversy over the ARRP position on Social Security, there are other issues affecting retirement that surface via immigration legislation. Scott Hochberg has given Angry Bear permission to post his article from this weekend from Huffington Post. (hat tip coberly)

Making E-Verify Mandatory: The Perfect Storm for Crippling the Social Security Administration and Jeopardizing the Social Safety Net by Scott Hochberg

There has been much recent buzzing about AARP’s ambiguous, half-denied statements about their (new?) willingness to cut Social Security benefits, and rightly so. As the largest membership organization of seniors in the country, AARP’s tactical gamble could be an unfortunate game-changer in any deficit deal negotiated behind closed doors in Washington.

But believe it or not, one of the biggest threats to Social Security this summer could come from an entirely different direction, from an initiative whose main target is not even related to social program spending. I’m talking about E-Verify, a proposed system for curbing the legal employment of every single undocumented worker in America. While seemingly immigration-related, a mandatory E-Verify program could cripple the Social Security Administration (SSA) by concurrently draining already-limited funding while imposing heavy burdens on one of the most efficient government programs in existence. Oh yes, and it would threaten the timely distribution of all new Social Security benefits.

For those not familiar with it, E-Verify is a tool designed to prevent the employment of undocumented workers in the United States. Employers run the personal information of new hires though the E-Verify electronic system, which is connected to the SSA master database of Americans with Social Security numbers. In its developmental stages, the program has been optional for employers, but new legislation proposed by Rep. Lamar Smith (R-TX) would make it mandatory. This would be dubious policy for a number of reasons, and many diverse groups, from the pro-immigrant community to businesses and agricultural companies, have come out against it.

One key message of these groups that is often overlooked is that E-Verify would add significant responsibilities and workload to an agency that is already overworked and underfunded. The Social Security Administration is one of the most efficient government agencies, operating at less than 1 percent overhead costs. Forcing SSA to handle the administrative nightmare of E-Verify is worse than the usual conservative position of “starving the beast” — it is more like starving the beast and making it run a marathon while carrying a 50 lb. backpack. That’s because in addition to drastically increasing the responsibilities SSA would be faced with, the agency is already dealing with massive budget cuts that limit its administrative capacity. There are three compelling lines of argument against mandatory E-Verify:

1. Mandatory E-Verify would cost American workers their jobs and create confusion at SSA.

When E-Verify finds an inconsistency between a name and that person’s work authorization, it issues a “tentative nonconfirmation” (TNC), after which an employee has several days to contact SSA or DHS to correct the error or risk losing their job. Unfortunately, a significant number of these TNCs are issued in error. (Errors are usually due to clerical mistakes from inputting data, especially with hard-to-spell names or ones that have been hyphenated or changed, as well as errors by the workers themselves when filling out government forms.) In 2010, of the 16 million E-verify queries by employers, 128,000 (0.8 percent of the total) required the employee to go to SSA or call DHS to fix the problem. Of those 0.8 percent errors, 0.3 percent were discovered to be in error and were later corrected. But 0.5 percent — over half of all errors — were falsely issued “final nonconfirmations,” essentially forcing their employer to wrongly fire them. 0.3 percent may not sound like very many, but with a total American workforce of 154 million, that translates to over 770,000 jobs lost. (Tyler Moran, Policy Director of the National Immigration Law Center, has a thorough explanation of how many workers would be affected, and why it is so hard for workers to challenge the system.)

So what does this mean for SSA? It translates to an already overburdened staff that now has to deal with hundreds of thousands of extra calls and office visits, sometimes entailing a lengthy review process for individual cases. In 2008, when there were only 7 million E-Verify queries, 88,000 people called the 1-800 number or visited SSA due to E-Verify errors. If the program were mandatory, SSA would have to review 154 million records in the initial implementation period: if the rate of people calling SSA was the same as 2008, that would be nearly 2 million more calls into the agency during that period alone.

2. SSA is already underfunded and overburdened, and cannot afford to take on the consuming and perpetual E-Verify project.

SSA has long been underfunded. Agency administrative expenses alone have been shorted 8 of the last 10 years (compared with the amount it requested of Congress to operate at full capacity). There was a particularly huge cut in 2011, almost a billion dollars below the required level, that was part of the last-minute compromise between Speaker Boehner and the Democrats a few months ago.

Because of those negotiations, SSA has already had to take several measures to limit its regular operations because it simply can’t afford them — many of which (ironically, although perhaps not unintentionally) will increase costs further. For one, last month the agency stopped sending out annual earnings statements to all workers under 65. (Leave aside the fact that they only cost SSA $30 million in 2011, and help millions of Americans with their retirement planning while double-checking that SSA has the correct data for them.) The agency still expects that it will experience increased call volume from confused people wondering why they didn’t get their statements and hoping to confirm their information either in person or on the phone.

E-Verify proponents often claim, in response, that SSA would be funded to keep up with its new responsibilities. While that’s theoretically possible, it’s unlikely, given the Republicans’ current impulse to cut every government program in sight. It’s easy to imagine a scenario whereby SSA is forced to cut even more of its regular operations in order to accommodate the new E-Verify agenda. Critical goals of the agency, such as reducing the unacceptably long backlog for pending claims, would have to be ignored further into the future. Or maybe it was the point all along to cripple the administration of Social Security benefits themselves and attack this extremely popular program through the back door.

3. E-verify would remove millions of taxpayers from the pool that pays into Social Security, thus weakening the solvency of the Trust Fund.

As we’ve seen, the point of E-Verify is to remove illegal workers from legal employment, likely ending their tax contributions to Social Security and other federal revenue streams. This is a wasted opportunity, as any undocumented worker that pays taxes provides a net gain to the system (since they don’t collect benefits). As we all should know by now, undocumented workers are not going to leave the country when E-Verify comes knocking. They fill an important niche in our economy and are here to stay — the only difference is that more of them will be funneled into the underground economy, or miscategorized as (partially tax-exempt) independent contractors. One 2008 bill that would have made E-Verify mandatory without a pathway to legalization would have decreased federal revenue by $22 billion over 10 years.

Of the approximately 8 million undocumented workers, it is estimated that about two-thirds of them pay payroll taxes into the Social Security Trust Fund, accounting for $12 billion in 2007. (The Trust Fund is the total pot of surplus money paid into Social Security that is not immediately sent out as benefits, now totaling $2.7 trillion.) In sum, undocumented workers have contributed somewhere between $120 and $240 billion to the Trust Fund, accounting for 5.4 to 10.7 percent of its total assets. In addition, these workers tend to be younger than the average American, so the impact of their tax contributions will grow as the Baby Boomers retire and the percentage of seniors in America rises from 12 percent to 18 percent. According to the chief actuary of SSA, without the contributions of undocumented workers, the Trust Fund would run out of assets six years earlier than estimated in the 2010 Trustees Report. That’s staggering.

According to most experts, mandatory E-Verify wouldn’t affect those who already receive Social Security benefits, because current beneficiaries receive their checks through a mostly automatic process. But this much is sure: nearly everyone else would be affected. It is anyone’s guess how SSA would respond to being buried with new caseloads at a time when, even pre-E-Verify, “unprecedented workloads combined with declining budgets [have] damaged [the agency’s] service delivery,” according to the SSA Commissioner himself. I’ll leave it to the immigration experts to suggest how E-Verify needs to be improved before making it mandatory — but for now at least, mandatory E-Verify is the surest way to threaten the social safety net with paralysis. Let’s hope that if E-Verify makes it through the Senate without comprehensive reform attached, Obama will roll out the veto on this one.

Scott Hochberg

Chairman of Connecticut Libertarian Party responds

Angry Bear invites Dan Reale.

Dan Reale, Chairman of the Libertarian Party of Connecticut replies with this e-mail:

Libertarians oppose the initiation of force to promote social or political goals. We acknowledge that a “right” is a power, faculty or ability inherent to ownership and incident upon another. This applies to both to your property and yourself, as you own both.

This also applies to what people myopically characterize as “economic”, “civil” or “social” rights, as if the principle is somehow different or distinct. Rights function on the same premise no matter who owns the property in question. If the action of the property owner (as in the person with the corresponding rights inherent to that ownership) would take action that would risk damage to property, infringe the rights of others or limit the rights of others, that person taking such action needs to obtain (or contract for) permission.

Libertarians are minarchists. We believe that government’s only function is to protect individual rights. There are a variety of things that government does to accomplish that end, among these being a court system. These things cannot include invasion of privacy, taking of property without due process, restrictions on the type of gun you can purchase, where you can work, the type of light bulb you can use or who you can freely contract with to purchase health care along with what terms you can agree to. Libertarians assert that you either have a right or you don’t.

Libertarians are neither left nor right. In history, “left” and “right” merely came from what side of a physical aisle French legislators stood in during the early 1800s, and that has no factual bearing or relevance to our world today. In practice, “left” and “right” are means to an end both in terms of how major parties parse the debate and erroneously polarize the electorate. Our question is not “left or right?”; our question is “libertarian or statist?”.

Dan Reale

My reply in comments.

An Invitation for Libertarians

An Invitation for Libertarians

Here at Angry Bear, we’ve had a number of posts on LIbertarians over the years. Inevitably, someone writes to tell us we’re misrepresenting Libertarians… even when we’re quoting well known libertarians.

So… if you are libertarian consider this an invitation. Send me one to three paragraphs on what it means to be a libertarian or what libertarianism is. Or put it in comments. (I beg the indulgence of non-libertarians to please not put up comments of their own.) If you feel what you are writing about applies particularly to one or another strain of libertarianism, please make that clear.

I will put up as a separate post, verbatim, those e-mails and comments I get sent that seem to me to best tell the libertarian story from the libertarian perspective to the slightly left of center audience that resides here at Angry Bear. (I can’t promise to print everything that comes in to avoid the sort of repetition that will simply detract from the story.)

Here’s your chance to have your story told in your words.

I am not a Libertarian Because I Believe in Freedom and Property Rights, And I’d Like to Minimize Government Coercion, Part 2

by Mike Kimel

I am not a Libertarian Because I Believe in Freedom and Property Rights, And I’d Like to Minimize Government Coercion, Part 2

This is a follow-up to my previous post on libertarian philosophy, the aftermath of which was a surprising amount of, well, let’s just call it assorted vigorously uncomplementary communication. (Shows what I get for making myself easy to find, eh?) But I also got some more interesting comments from libertarians which have led me to think further, and perhaps they can help me refine my thoughts.

To quote something I noted in the last post below the fold:

In the end, the question is – who will be coerced, how many will be coerced, and how bad will the coercion be? I tend to come down on the side that the coerced party should be the one that is the first to try to coerce others, and that the coerced party should be as small as possible, and that the coercion should be the least bit possible.

By that I mean the following… when people in an apartment complex listen to loud music, or they let their lawn get overgrown with weeds, or they don’t vaccinate their children, or they dump toxic waste in a river that passes through their property, or engage in any number of other of activities, there can be very large negative externalities created. This is because the loud music doesn’t stop at their property line, and the weeds emit seeds or shelter vermin that move beyond their property line, and stuff dumped in a river keeps going past their property line, etc.

Now, just about every activity produces some externalities, positive and negative. Externalities are a byproduct of human activity and progress, and we don’t want to eliminate the good with the bad. Nothing gets produced without some amount of pollution and/or destruction. That means unless we want to live in caves, some amount of externalities have to be tolerated in society. The question comes down to how much, generated by whom, who decides, and is there some form of compensation for those who suffer the consequences?

Decades ago, Ronald Coase provided an answer. (A comment to non-economists: the paper, perhaps the reason he won a Nobel Prize, is surprisingly readable and I recommend it. A pdf version is here. Its been a decade since I looked at it last, I think I’ll reread it myself!) Essentially, he said that the problem is reciprocal – my right to prevent you from emitting toxic fumes impinges on your right to emit them. As long as the property rights are well defined, and it is easy for the various parties to negotiate, you end up with the same (efficient) outcome no matter who has the right to decide what goes into the air. The reason: the various parties will negotiate amongst themselves.

But there are some problems, aside from who decides the property rights. Coase identified one – that is is often difficult for parties to negotiate; one nightclub has a lot of incentive to generate loud music and might be able to figure out how much that generates in revenue, whereas folks two blocks away might still have their sleep disturbed by some sub-sonic thumping, but they might have a harder time realizing they were harmed or putting a dollar figure on that harm. Besides, how do you get everyone together who was harmed to negotiate?

There are other problems… my son is too young to be vaccinated for many diseases. The anti-vaxx movement is killing herd immunity. If my son gets the measles before he is old enough to get the MMR vaccine, will I know who caused it? In the unlikely even that I do know, in what world will my son be adequately compensated?

But there is one other problem Coase did not consider. I frankly don’t care if someone is listening to mind-numbing bass on their sound system down the block. I only care if I (and to be socially minded) or someone else is forced to listen to that bass. My guess is that in most instances, the person generating the mind-numbing bass doesn’t care whether other people are listening to it either. And while it is possible for the party generating the music to ensure that the music (mostly) stays on his/her property, it is very difficult for a very large number of neighbors scattered over a wider area to protect against the broad range of all possible negative externalities that might seep onto their property, any one of which might start up at any time.

In the end, someone has to decide how much a person can do on his/her property taking into account what externalities are generated. And unless you want a free-for-all or people are sufficiently distant from each other that none of the negative externalities generated is very large, that someone is the government.

From what I can tell, this is the crux of the problem as far as most libertarians are concerned. Given their distrust of the government, they want people to be left alone. And that leads a free-for-all. Galt’s Gulch may even begin as a well-ordered place, but it very quickly either develops order, or becomes an anarchy and eventually gets abandoned. If you don’t believe it, there are countless examples across the American West. Less familiar to Americans, the same pattern can be seen with settlements all across Latin America. Pick any random town in the middle of, let’s just say, the state of Goias in Brazil. (A nice place to visit, by the way, though I haven’t been there in twenty five years.) The history of that random town is probably the same regardless of which one you pick. Some settlers left a bigger settlement somewhere on the coast of Brazil, either because they were looking for gold or wanted to set up a ranch. At first there were no rules, but those settlements that are still around today are called towns and cities, have plenty of rules, and a government to enforce them. I can’t think of a functioning place that manages to remain like Galt’s Gulch after a couple of generations.

I am not a Libertarian Because I Believe in Freedom and Property Rights, And I’d Like to Minimize Government Coercion

by Mike Kimel

I am not a Libertarian Because I Believe in Freedom and Property Rights, And I’d Like to Minimize Government Coercion

I wandered over the Libertarian Party and I found their Platform. I’m sure there are a few items here and there with which some libertarians disagree, but in general, it seems to me to be a pretty fair representation of libertarian beliefs, so I encourage you to read the whole thing. That said, I do not believe libertarians live up to their stated beliefs. Here’s the first sentence of the pre-amble:

As Libertarians, we seek a world of liberty; a world in which all individuals are sovereign over their own lives and no one is forced to sacrifice his or her values for the benefit of others.

To that end, of course, the libertarian philosophy also seeks to minimize government, in particular, government coercion.

More below the fold!

And it is precisely here – in the first sentence of the pre-amble, and its implications, where libertarians go off the rails. Consider the following… my neighbor, whom we have never met and might not even have seen (we’re not certain) despite living in this house for two years, seems to enjoy letting her lawn grow uncontrollably. (Feel free to substitute “loud music” or “noxious fumes” or “toxic waste” or “rats and other vermin” or “vile (like there are any other kind) windchimes” or “measles”, etc., to make the story more relevant to you.) As I type, the place is something of an eyesore: weeds, overgrown bushes and knee-high grass. Now, a libertarian would say that our neighbor, being the home-owner, has the right to do what she will with her property, and I should mind my own business and my own property. As it happens, I agree. I may wish she would have weed collection trimmed, but the weeds are on her property and she paid for the right to do what she wants on that property.

My problem is that my neighbor also has taken upon herself to make choices about what happens on my property. See, the weeds she has chosen to grow, or rather, allow to grow, have seeds, and she has chosen to allow the seeds from her weeds to cross onto my property instead of keeping them on her property. Put another way, she has made a decision that I either have to have dandelions and weeds on my own lawn, or I have to expend resources (some combination of time, effort, and money) to eradicate outbreaks. The more weeds she chooses to cultivate on her property, the more resources I have to apply to keep weeds in check on my property the following year. But it isn’t just me – she is also making the same decision about the lawns of other people on the block too.

Now, in this instance, there is a simple solution that anyone who truly believes that property rights should be sacrosanct and nobody should be coerced by anyone else should be willing to agree upon. See, she should have every right to cultivate weeds on her property, but should have zero right to place weeds (actively or passively, it makes no difference to the rest of us) on anyone else’s property. Put another way – it should be her responsibility to ensure that she does not cultivate weeds on our property without our say so.

Now, it turns out that the city has some rules about this. Last year I saw signs placed on some people’s doors saying essentially: “clean your lawn or the city will do it and bill you for it.” As far as I can tell, a libertarian – every libertarian I have come across, would view that as coercion. I, on the other hand, see things differently – were the government to allow people to create infestations on their property that inevitably spread onto their neighbors’ property, the government is essentially coercing the neighbors of those that would grow weeds into either growing weeds themselves or spending an inordinate number of resources fighting it. And to some extent, the libertarians, and I, are both partly right. But here’s what they’re missing; someone will be coerced, no matter what, as long as there are people who will grow weeds. Or play loud music or emit noxious fumes or dump toxic waste or allow rats and other vermin to proliferate or put up vile windchimes or refuse to get their kids vaccinated for measles, etc. In the end, the question is – who will be coerced, how many will be coerced, and how bad will the coercion be? I tend to come down on the side that the coerced party should be the one that is the first to try to coerce others, and that the coerced party should be as small as possible, and that the coercion should be the least bit possible. And it is clear that while libertarians may say the same thing, it isn’t true, as the one they don’t want to see coerced is my neighbor, but they have no problems coercing everyone else on the block.

Now, frankly I can understand how many libertarians don’t see this. Many of them are misfits or eccentrics. Others simply can’t reason out that there are two sides to every equation (and this, six decades after Coase!). Some like to view themselves as lone wolves, in no way beholden to the rest of society. Some find they can be more successful in business if they don’t pay taxes and/or find export their costs onto third parties. And of course, there are the thugs. Guess which group will take over if libertarians ever get their way.