Op-Ed by Stefan Kløvning
Why are Libertarians so obsessed with liberty? Many foreign to the philosophical basis for Libertarianism may wonder what exactly makes them think of liberty as so special and unique in comparison to all the other standards one can use as the fundamental basis for one’s ethics, such as fairness, justice or equality. Why should liberty be held before that, no matter whether the consequences may be that some of these others are impaired (depending on how you define the terms)?
Liberty and Ethics
The short answer is that liberty is not only the most important of all ethical values, but the precondition for all the others, as an act cannot legitimately be judged morally to be good or bad if it was not made through the person’s own free will . You may say it would be a good deed of me to donate to a charity that would help people in Africa or South Asia, for instance, but what if someone held a gun to my head and told me that they would kill me if I didn’t do it? Though the results may be deemed as good (i.e., that people potentially got better lives for the money I donated), the process cannot, as it was not done by my good intentions of donating to charity, but that I valued my own life more than the money required for the donation, and was forced to make the decision accordingly.
This hypothetical example is not mere abstract philosophizing. It also has significant implications for how all legislation in general ought to be judged on an ethical level if one accepts the premise laid forth above. With any legislation, I put it through the test of five questions: 1) are the intentions good; 2) are the means incorporated in the legislation good; 3) will the legislation actually accomplish what it’s intended for (or is it likely); 4) are there negative side-effects; and 5) are those potential negative side-effects out-weighing the benefits? Almost no, if any, legislation passes this test as I judge it, because all government activity is de facto based upon coercion and compulsion. Rose Wilder Lane, one of the founders of the American Libertarian movement, once wrote that “the need for the State is the need for force; where there is no need for force, there is no need for the State” .
The Ethics of Taxation
Take, for instance, the act of taxation, the life-blood of the State. For the State to give, it must first take. That’s the essence of one of the most important differences between the public and private sector. Taxation is usually justified on the kind of consequentialist argument solely based upon the merits of its intended results, whereas the process is ignored almost completely. Yes, some people will clearly benefit from government programs, but what about those from whom the money is taken? When Libertarians say that “taxation is theft”, they absolutely mean it literally. Taxation naturally isn’t a problem when those who are being taxed don’t mind, but the same would be the case with a non-governmental thief if he told you to give him your money and you didn’t mind (though there is a clear difference in terms of perceived legitimacy and authority, which would make the latter far less likely). It’s when the legitimacy of taxation is challenged that it becomes clearer how similar it is to decentralized theft (or extortion). If taxation was voluntary, how much do you think people would chip in in comparison to how much the State takes at the moment? If the answer is less, or even much less, it should make one wonder why fewer people don’t choose to not do so at the moment. Is it not due to the threat of potentially being fined or jailed if one doesn’t pay as much as the State demands? If you consider this case different from the one I laid out at the beginning of the article, I think you should consider how they can be distinguished logically to the extent that they are to be judged in different moral categories. You see, Libertarians question the legitimacy of taxation because they set the same ethical standards to government officials as private individuals, but it has become so common and legitimatized that most others just accept it without question. As Murray Rothbard put it, “Taxation is theft, purely and simply even though it is theft on a grand and colossal scale which no acknowledged criminals could hope to match. It is a compulsory seizure of the property of the State’s inhabitants, or subjects.”
Roger Ver, an active Libertarian crypto-investor, has additionally pointed out that “the means are the ends. There’s no unethical way of achieving ethical goals, and there’s no ethical way of achieving unethical goals. It goes both ways. Every step of the way you need to be doing the right thing…” So, though the intended results of taxation, for instance, is for the State to obtain money to use for whatever programs they may have in mind, the additional results are that those from whom the money is taken now have less to use for their budgets than they would have otherwise.
That Which is Seen, and That Which is Not Seen
The further consequences of this can be understood by the 19th century French economist Claude-Frédéric Bastiat’s distinction between the “seen” and the “not seen”. Bastiat writes that
In the economy, an act, a habit, an institution, a law, gives birth not only to an effect, but to a series of effects. Of these effects, the first only is immediate; it manifests itself simultaneous with its cause – it is seen. The others unfold in succession – they are not seen: it is well for us if they are foreseen. Between a good and a bad economist this constitutes the whole difference – the one takes account of the visible effect; the other takes account both of the effects which are seen and also of those which it is necessary to foresee. Now, this difference is enormous, for it almost always happens that when the immediate consequence is favorable, the ultimate consequences are fatal, and the converse. Hence it follows that the bad economist pursues a small present good, which will be followed by a great evil to come, while the true economist pursues a great good to come, at the risk of a small present evil .
Thus, though what is the immediate consequence, that which is seen, of a government program, for instance, is those who are seemingly benefited: the jobs it created and the increased opportunities of access to goods and services it offered the recipients. That which is not seen is the goods and services that would be bought without an income tax; the jobs which would’ve been created without a corporate tax or job-killer regulations such as the minimum wage; the private and voluntary alternatives to the programs that would’ve been created or maintained due to the inherent incentive in the profit- and loss system to act in accordance with gaps between market supply and demand, and so on.
It can be difficult to locate and investigate these “unseen” effects without having foreseen them, but it’s not impossible. A study by the Cato Institute, for instance, investigated the results of restricting U.S. firms from accessing tax havens in Puerto Rico to exclude income from corporate taxes by comparing the economic metrics of the relevant firms before and after the restriction. The Cato researchers found, 15 years after the repeal, a 7.2% reduction in employment growth, 6.7% reduction in the U.S. employment rate, and the elimination of 720,000 jobs. There’s an immeasurable amount of similar cases of economic activity being impeded by government intervention in the economy. In an “unplanned” economy, you cannot foresee accurately exactly what people are going to do, and what decisions they are going to make, but better results tend to follow in the private sphere as people know better what they want and need for themselves than politicians and bureaucrats with their own interests, and are more able to achieve it in more decentralized and less regulated economic environments.
The Role of Praxeology in Economics
The Austrian School of Economics (ASE) is unique regarding how they try to investigate and account for these unseen consequences. This methodology, called a “general theory of human action”, is praxeology. One of the major advocates of the ASE, Ludwig von Mises, claims that “No treatment of economic problems proper can avoid starting from acts of choice; economics becomes a part, although the hitherto best elaborated part, of a more universal science, praxeology .” Praxeology essentially treats the investigation of human action more like making inferences from logical axioms in geometry than from the observation in accordance with the scientific method as is done in the natural sciences. We cannot think a priori to what an atom might do in particular circumstances, but we may do so to a certain degree with what other human beings may. To illustrate, if someone has a desire X, they will best fulfill that desire by doing activity Y. Thus, we may deduce that they are incentivized to do activity Y. It’s certainly possible, however, that the person doesn’t know that Y is a viable alternative, and thus instead chooses to do Z, though that may be a less efficient alternative and/or one less likely to fulfill its desired ends. Praxeology tends to analyze action in a similar manner.
One advantage with this method, besides making it easier to foresee “unseen” consequences, is how it gets around the common economical phrase “ceteris paribus”. Presented by Dr. Daniel Lacalle of the ASE as “the two most dangerous words in economy,” ceteris paribus means “all other things equal” and is used for hypothetical circumstances where certain conditions and consequences follow if, but only if, there aren’t “other forces acting on the system”, so to speak. Practitioners of the ASE may fall into this trap if they don’t take into account of all the possible factors that may be involved, just like a physics student would end up with wrong or misleading numbers if there were certain forces acting on the physical system at hand that he overlooked. Praxeology may be an advantage as a methodology, however, in understanding and evaluating aggregated statistics that encompass a bunch of information that must be carefully and accurately dissected. Followers of the ASE focus on the fact that all economic activity must be the result of individuals acting, and that to understand the activity (and the aggregate of many individuals’ actions), one must first look at the context the decisions are made in, such as the reasons they are made and what incentive structure made it the most desirable option (perceivable). The followers of the ASE may thus use ceteris paribus for the analysis of each individual factor that may influence the system, and then make a general overview with a cost- and benefit analysis of the consequences. The ASE is often criticized for being “pseudo-scientific” for its reliance of praxeology and by extent an a priori basis for understanding human action, but its track record of accurate predictions by followers of the ASE of business cycle phenomena, as well as their deep insights in their literature, should, in my opinion, make one consider that there may be some merit to the contributions that the ASE has made to the field of economics, and that one either way should be open to investigating heterodox ideas.
What I’ve tried to lay forth here is an understanding of ethics as indivisible from liberty. Activities done by those who are coerced, or who are threatened by coercion, cannot, according to this framework, legitimately be judged as good or bad; it must be made in accordance with his own desires and decisions unimpeded from such coercive entities. As seen, this has significant implications as to how to ethically judge government legislation, and that it sets a much stricter standard to what ought to be accepted of it than how it is perceived generally. The ethical issue of taxation was in length delineated in order to challenge a fundamental element (or function) of the government, and to explain what Libertarians mean when they equate it with theft. Further, Bastiat’s distinction between the “seen” and “unseen” consequences of economic and governmental activities is presented as having great significance for how one ought to better analyze economic matters, and the methodology of praxeology of the Austrian School of Economics is shown to be a prominent way to uncover these unseen consequences.
- By “ethics”, I mean in this regard the reasoning upon which moral judgments are made. The reasoning in this regard is that the person doing the activity that is to be subjected to a moral judgement cannot meaningfully be either condemned or praised for performing certain activities when they are not based on the person enacting his will in the form of the activity, but rather that he would face off a worse scenario if he did not.
- For this article, I will not address a myriad of the different activities that the State is involved in and explain how the market would do a better job at each and every one of them. Much of this blog is dedicated to exactly that, and I will continue with further efforts to getting more sectors covered in this regard.
- Bastiat, C. F. (2007 ) ch. “That Which is Seen, and That Which is Not Seen”, Bastiat Collection, p. 1
- Mises, L. (1998 ) Human Action, p. 3
Stefan M. Kløvning is a Norwegian high school student studying economics in his spare time, with aspirations of eventually taking a PhD in economics and afterward contributing to growth in the private sector. He’s a follower of the Austrian School of Economics, drawing inspiration mainly from Ludwig von Mises and Murray Rothbard, and blogs regularly about thoughts on a variety of topics, mainly economics and politics, but also philosophy, psychology and history.
This article was republished with permission from MisesRevived.