Wednesday, August 29, 2012

Humankind's Natural Propensities

Peter Boettke:
I often tell students that humankind has demonstrated two natural propensities--to truck, barter, and exchange (as Adam Smith taught); and to rape, pillage, and plunder (as Thomas Hobbes taught us)--and which propensity is pursued is a function of the institutional framework within which individuals find themselves living and interacting. The life experience can be a virtuous cycle of wealth creation and healthier and wealthier lives, or it can be a nasty and brutish hell on earth.  So while economics cannot give us exact point predictions, it can, as a science, inform us of tendencies and directions of change as well as the wealth-creating or wealth-destroying capacity of the political economic system. [Living Economics: Yesterday, Today, and Tomorrow, p. 385]

Friday, August 24, 2012

The Doings of Man

Peter Boettke:
If we fail as economic educators, then we fail in our job as economists. . . .The wealth and poverty of nations is at stake; the length and quality of life turns on the economic conditions individuals find themselves living within.
The discipline of economics illuminates all walks of human life, and as such it is an ambitious science.  It explains the doings of man, whether in the marketplace, the voting booth, the church, the family, or any other human capacity.  The economic way of thinking is not just one window on the world; it is the only window that deals with man as a human actor.  This may sound arrogant to the casual reader, but economics also teaches humility.  As F.A. Hayek put it, "The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design." [Living Economics, p. 383] 

Tuesday, August 14, 2012


Nicholas Quinn Rosenkranz has recently published a very interesting, and dare I assert important, paper in The Stanford Law Review. He opens his paper with this very interesting idea:
"Two centuries after Marbury v. Madison, there remains a deep confusion about quite what a court is reviewing when it engages in judicial review. Conventional wisdom has it that judicial review is the review of certain legal objects: statutes, regulations. But strictly speaking, this is not quite right. The Constitution prohibits not objects but actions. Judicial review is the review of such actions. And actions require actors: verbs require subjects. So before judicial review focuses on verbs, let alone objects, it should begin at the beginning, with subjects. Every constitutional inquiry should begin with a basic question that has been almost universally overlooked. The fundamental question, from which all else follows, is the who question: who has violated the Constitution?"
Perhaps because I come to study the constitution from the conceptual view of an economist this idea makes perfect sense to me. After all, I recognize that, like Mises, I study human action. Like the neoclassical economist, I study the choices made by an individual.  So, it seems to be in my nature to understand that if the Court declares a statute unconstitutional, the Court is really saying that Congress took an action it did not have the constitutional power to take.  Still, I have to agree with Mr. Rosenkranz that it does seem to be the case that Court opinions, law school faculty, politicians and voters tend to say that it is the statute in question that has some fault.

Is it really important to emphasize who violated the Constitution? I think it probably is very important. Surely it is a good idea for voters to think about the actions of the people they vote for and against. Personally, I can read the Constitution, and when I hear my representative argue publicly that he or she has a power I do not see enumerated in the Constitution I usually vow to vote against that representative in the future.  It seems to me, after all, that when a member of Congress votes to use the power of government in a way that is unconstitutional, that member of Congress is abusing the power of his or her office. 

I think our republican form of government would be improved if our representatives believed it was their personal responsibility to act in a constitutional way.  It seems to me it is possible to hide from this attitude if you are a member of Congress that thinks: "Bummer man, the Court said that law I voted for was unconstitutional."

Consider also that Article VI requires an oath of office for members of Congress. The Oath of Office which is taken by both members of the House and Senate is as follows:
I do solemnly swear (or affirm) that I will support and defend the Constitution of the United States against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same; that I take this obligation freely, without any mental reservation or purpose of evasion; and that I will well and faithfully discharge the duties of the office on which I am about to enter: So help me God.
It seems to me that a member of Congress cannot defend, nor bear true faith and witness to the Constitution if they think it is the statute that is unconstitutional and not their action that is unconstitutional. It is the obligation of each member of the House and the Senate to read the Constitution they take an Oath to defend and be faithful to, and then to act within the bounds of the specific, and enumerated, Constitutional powers granted to their office.  In other words, it seems to me the oath of office makes it the responsibility of each member of Congress not to abuse the power of the office by voting in support of legislation that is inconsistent with the Constitution.

The President also takes a similar oath of office: "I do solemnly swear (or affirm) that I will faithfully execute the Office of President of the United States, and will to the best of my Ability, preserve, protect and defend the Constitution of the United States."  It is not just members of Congress who can act unconstitutionally.  A President that signs a law which is inconsistent with the Constitution is not only violating the constitutional oath of office but is abusing the constitutional power of the office.  I've even read that James Madison believed Presidents would see it their duty to veto Congressional measures that were unconstitutional.  Of course, that doesn't happen today because vetoes are about politics and not about the Constitution.  But why should vetoes be about the Constitution, since it is the job of the Supreme Court to decide which laws, or which parts of laws, are unconstitutional.

It seems to me that by thinking a law is unconstitutional, rather than thinking government is acting to use power in ways that are unconstitutional, we have all come to take the questions of constitutionality too lightly.  Saying "unconstitutional" really should be saying that someone in government, or perhaps many someones, has chosen to abuse the constitutional power of his or her office.

Monday, August 13, 2012

Our Founders and Adam Smith

I guess it has always seemed likely to me that people like James Madison and Thomas Jefferson were influenced in their views of government by the work of Adam Smith.  Perhaps it was the coincidence of the 1776 publication dates for both the Wealth of Nations and The Declaration of Independence.  Or perhaps it was the similarity in conceptual ideas about liberty.  In any case, I just read an interesting article by Samuel Fleischacker which provides evidence that this intuition of mine was not ill-founded:
Adam Smith's influence was thus deeply present in the founders' thought.  This influence was complex, in part because the founders actually read Smith's tome rather than treating it as a hieroglyph for a free trade slogan.  Smith's influence can be seen in James Madison's subtle notion of the relationship between interest and virtue, in the remarks Madison and others made about the link between economic occupation and moral character, and in the trust in ordinary people's judgment that Madison shared with James Wilson, Thomas Jefferson, and some of the other founders.  Smith's importance to American political thought in the 1780s should be taken much more seriously than it has been.  It is remarkable that America has a Constitution that, in the functions it gives to government, the structure its provides for the military, and the strict separation it proclaims between religious and secular powers, fits Smith's conception of politics better than any government of his day.  When this remarkable fact is combined with evidence of significant interest in Wealth of Nations among America's political elite--several years before it received much attention elsewhere--it must be concluded that the relative inattention of historians to the influence of Wealth of Nations on the American founding is an oversight badly in need of correction. ["Adam Smith's Reception among the American Founders, 1776-1790," The William and Mary Quarterly, Third Series, Vol 59, No 4 (Oct 2002), 924-924]
I also found it interesting to realize that Adam Smith was especially interested in what was going on in the Colonies and in America.  He apparently thought this was the most likely place for his ideas to take hold.

Wednesday, August 08, 2012

The Politics Of Friends & Enemies

While in the tribal society the condition of internal peace is the devotion of all members to some common visible purposes, and therefore to the will of somebody who can decide what at any moment these purposes are to be and how they are to be achieved, the Open Society of free men becomes possible only when the individuals are constrained only to obey the abstract rules that demarcate the domain of the means that each is allowed to use for his purposes.  So long as any particular ends, which in a society of any size must always be the ends of some particular persons or group, are regarded as a justification of coercion, there must always arise conflicts between groups with different interests.  Indeed, so long as particular purposes are the foundation of political organization, these whose purposes are different are inevitably enemies; and it is true that in such a society politics necessarily is dominated by the friend-enemy relation.  Rules of just conduct can become the same for all only when particular ends are not regarded as justification for coercion (apart from such special passing circumstances as war, rebellion or natural catastrophes). [The Mirage of Social Justice, p. 143]

Thursday, August 02, 2012

Hayek On Social Justice

Here are a few insightful and interesting quotations that I think are relevant to understanding "social justice" from Hayek's The Mirage of Social Justice:
. . . the importance for the functioning of the market order of particular prices or wages, and therefore of the incomes of the different groups and individuals, is not due chiefly to the effects of the prices on all of those who receive them, but to the effects of the prices on those for whom they act as signals to change the direction of their efforts.  Their function is not so much to reward people for what they have done as to tell them what in their own as well as in general interest they ought to do. [pp. 71-72]
It is not good intentions or needs but doing what in fact most benefits others, irrespective of motive, which will secure the best reward. [p. 72] 
The most common attempts to give meaning to the concept of 'social justice' resort to egalitarian considerations and argue that every departure from equality of material benefits enjoyed has to be justified by some recognizable common interest which they differences serve.  This is based on a specious analogy with the situation in which some human agency has to distribute rewards, in which case indeed justice would require that theses reward be determined in accordance with some recognizable rule of general applicability.  But earnings in a market system, though people tend to regard them as rewards, do not serve such a function.  Their rationale (if one may use this term for a role which was not designed but developed because it assisted human endeavour without people understanding how), is rather to indicate to people what they ought to do if the order is to be maintained on which they all rely.  The prices which must be paid in a market economy for different kinds of labour and other factors of production if individual efforts are to match, although they will be affected by effort, diligence, skill, need, etc., cannot conform to any one of these magnitudes; and considerations of justice just do not make sense with respect to the determination of a magnitude which does not depend on anyone's will or desire, but on circumstances which nobody know in their totality. [p. 80] 
I think it is very important to understand that the prices that emerge in the world of voluntary exchange (or, we might say, in The Political Order of a Free People) are signals that can be useful  with respect to choices about future individual human actions as well as future social interactions.  The world of human action is dynamic and evolving, and the prices that emerge with the market process are signals that help people figure out effective ways of adapting to ever changing conditions.  Thus government actions in the name of social justice will amount to introducing force into the political order in a way which necessarily interrupts the function of prices as such signals.

Wednesday, August 01, 2012

Commerce Clause

Justice Thomas's opinion in the health care case:
I dissent for the reasons stated in our joint opinion, but I write separately to say a word about the Commerce Clause.  The joint dissent and THE CHIEF JUSTICE correctly apply our precedents to conclude that the Individual Mandate is beyond the power granted to Congress under the Commerce Clause and the Necessary and Proper Clause.  Under those precedents, Congress may regulate "economic activity [that] substantially affects interstate commerce."  I adhere to my view that "the very notion of a 'substantial effects' test under the Commerce Clause is inconsistent with the original understanding of Congress' powers and with this Court's early Commerce Clause cases."  As I have explained, the Court's continued use of that test "has encouraged the Federal Government to persist in its view that the Commerce Clause has virtually no limits."  The Government's unprecedented claim in this suit that it may regulate not only economic activity but also inactivity that substantially affects interstate commerce is a case in point.
Right on target!