Do classical liberals and social democrats share common objectives?

Social democrats seek to use the powers of government to modify the outcomes of the market system in order to achieve widely-shared objectives. They often talk in terms of trade-offs between efficiency and equity. They believe that in the name of fairness it is sometimes appropriate for government to use coercive power to help some people (e.g. the deserving poor) at the expense of others (e.g. high-income taxpayers).

Classical liberals tend to be skeptical of such compromises because the classical liberal visions of freedom and fairness are the same - a world in which no-one exerts coercive power at the expense of others.

It does not necessarily follow, however, that classical liberals have no sympathy with the outcomes that social democrats seek to achieve. Even though classical liberals do not have collective views about the desirability of different societal outcomes I think that many who like to wear this label would consider that most of the outcomes that social democrats seek to achieve as having merit. For example, like most other people, many classical liberals would consider it desirable for everyone to have access to incomes above minimal levels and for everyone to have access to education and health services that are above minimal standards.

Such views can be the result of enlightened self-interest – e.g. choices of distributive principles behind a veil of ignorance - rather than the result of altruism. As James Buchanan has pointed out, the Golden Rule clearly implies the ethics of reciprocity (a relationship among natural equals) rather than the ethics of benevolence - a relationship that implies that givers and receivers have different status. (See: “Why I, too, am not a conservative”, 2005, p 49.)

In conceptual terms, the difference between classical liberals and social democrats lies in the willingness of the latter to use the coercive powers of the state to achieve outcomes that they consider to be desirable (i.e. the things they label as social objectives). In practice, however, even such luminaries among classical liberals as Adam Smith, Milton Friedman and F. A. Hayek saw some circumstances in which use of the coercive power of the state was warranted to achieve better social outcomes (such as in provision of education and alleviation of poverty).

How can a person who claims to be a classical liberal rationalize the use of coercive power for such purposes? Different people do it in different ways and sometimes the same person does it in different ways at different times. It seems to me (at the moment at least) that if we can assume that a very high proportion of the population support provision of a social safety net then it is reasonable to choose the method of providing it that minimises costs. I imagine that the transactions costs associated with use of the tax system for this purpose would be much lower than for voluntary contributions.

I acknowledge that funding of a social safety net via taxation involves unfair treatment to those who would not choose to have such a social safety - even behind a veil of ignorance - but I don’t know how it would be possible to distinguish such conscientious objectors from potential free-riders who would like to have a social safety net without helping to pay for it. It seems to me that the welfare costs of taxing conscientious objectors for this purpose may not be large they retain the right of exit (i.e. the right to move their capital and place of residence to a lower tax jurisdiction).

In addition to support for a social safety net classical liberals and social democrats may potentially also have other objectives in common. For example:

• Supporting use of more efficient methods to pursue government objectives. It is important to avoid creating unnecessary welfare dependency. It is important to avoid creating unnecessary disincentives to work effort, saving, investment etc. It is just as important for delivery systems for health, education services etc to be exposed to market disciplines as for other goods.
• Resisting attempts by narrow interest groups to corrupt the political system. For example, all government programs should be subject periodical public reviews to consider whether stated objectives are being met efficiently and equitably. For more about the role of such transparency requirements, see here.

Do moral instincts always promote human flourishing?

There is strong evidence that moral beliefs come from a small set of intuitions that evolution has prepared the human brain to develop. Morality, like sexuality and language, can be seen as emerging from the child in response to guidance from family and culture, rather than placed into the child as a result of these external influences. People have a preparedness to acquire certain kinds of moral knowledge and a resistance to moral teaching that is not consistent with these intuitions. The evidence has been presented in an article by Jonathan Haidt and Fredrik Bjorklund in their paper entitled, ‘Social intuitionists answer six questions about moral psychology’ (here) and has been recently summarised by Steven Pinker in a New York Times article (here).

On the basis of examinations of moral virtues and concerns that are common in the world’s cultures, Haidt and his colleagues suggest that five sets of intuitions should be seen as the foundations of ethics: dislike of pain and suffering in others; fairness (reciprocating favours, rewarding benefactors and punishing cheaters); respect for status hierarchies; concerns about purity (related to the emotion of disgust) and concerns about the boundaries between in-group and out-group.

There is, however, a great deal of scope for moral virtues and concerns to be pursued to advance the interests of some at the expense of others. Some people believe that they are acting morally when they seek to use the coercive powers of the state to reciprocate favours and to advance the interests of their families and communities at the expense of others citizens. Some people are so concerned about the pain and suffering among some groups that they seek to use the coercive powers of the state to redistribute the ownership of property and or modify contractual obligations. Some people are so disgusted with the behaviour of fellow citizens, including the clothes they wear or don’t wear, that they attempt to use the coercive powers of the state to prevent the behaviour that offends them, even though this behaviour does not interfere with their own rights.

What is it that holds modern societies together in the face of the ongoing pursuit of moral objectives that were shaped by evolution to protect self, kin and clan? When societies do hold together there seems to be a great deal of respect for decision-making processes that require people to state their case in a way that treats others as moral equals. Steven Pinker suggests that the core of this idea – the interchangeability of perspectives – keeps re-appearing in histories best-thought-through moral philosophies, including the golden rule, Spinoza’s viewpoint of eternity, social contract theories, Kant’s categorical imperative and Rawls’s veil of ignorance.

However this does not explain why in some societies many people have high regard for conventions that treat others as moral equals, while in others such people are in a small minority? Such rules of conduct seem to have gained a foothold in various parts of the world through accidents of history, but it is no accident that when they do gain a foothold people tend to flourish. F. A. Hayek made the point that the rules of conduct that make society a positive sum game have evolved through the successive relaxation of prohibitions. For example, bartering with outsiders, recognition of private property, enforcement of contractual obligations, competition among fellow craftsmen, variation of customary prices and the charging of interest on loans, were all initially infringements of customary rules ( Law, Legislation and Liberty, 1982, V 3, p 161).

I think Hayek was correct when he argued that “one of the most important tasks of our intelligence is to discover the significance of rules we never deliberately made, and the obedience to which builds more complex orders than we can understand” (p 163).

Does climate change have implications for freedom and flourishing?

The most obvious implication of climate change has to do with adaptation. There is nothing new about adapting to climate change. Our ancestors managed to survive ice ages and periods of global warming, and to flourish by making changes in the way they went about their lives. No doubt our descendents will face similar challenges.

How can we best adapt? It seems to me that collectivist adjustment strategies that involve putting all our eggs in baskets designed by government agencies would be highly risky. The overall outcome is likely to be much better if individuals have maximum freedom to adjust as they see fit.

Does it make any difference if the challenge of climate change that our descendents face is attributable to human activity – namely, global warming due to greenhouse gas emissions? It seems to me that there are two ways in which it may make a difference. The first concerns personal ethics and the second concerns public policy.

There are not many individuals who would feel happy about pursuing a lifestyle that is likely to be seriously detrimental to the interests of their children and grandchildren. So, why aren’t we all making efforts to reduce our greenhouse gas emissions or to take action to offset them?

An excuse that some of us have is uncertainty about the science of global warming. In November 2007 I wrote: “ I now accept that the probability of net adverse consequences following from growing greenhouse gas emissions is somewhat higher than zero. I may be wrong.” Five months later, I think I might have been wrong. In a few months time I could change my mind again. I am easily swayed by the latest research findings.

What attitude should a climate change waverer, like myself, have toward environmental puritans who not only accept that there is an emerging problem of climate change caused by human action but also take action to minimize their own contribution to the problem? Some of my sceptical friends make no secret of the fact that they think these people are being foolish because their individual actions have an insignificant effect on the global problem that they perceive to exist. I think my sceptical friends should mind their own consciences and leave the environmental puritans alone – provided, of course, that environmental puritans are prepared to reciprocate.

Before ridiculing those who seek to minimize their own contribution to greenhouse gas emissions we should consider whether the fact that an individual’s actions have an insignificant effect on outcomes is seen to absolve her/him from responsibility for personal actions in other areas of conduct. It isn’t. For example, we do not view pilfering as being ethically OK for individuals who work in large firms, even though the amounts each individual steals may represent an insignificant proportion of the total costs of the firm.

So, let us have some respect for the environmental puritans who act conscientiously. In my view we should reserve our ridicule for the hypocrites who seek to impose restraint on others – through use of the coercive power of the government - without first exercising restraint themselves.

When government action is proposed this is not just a matter of saying: “Let us all agree to adopt a lifestyle that involves less emission of greenhouse gases so that our consciences can be clear”. It actually involves saying: “Let us make a collective decision that will induce people to emit less greenhouse gases whether they want to or not”. When governments make that decision they are disadvantaging some people who do not support the objective they are pursuing. Furthermore, the objective they are pursuing of reducing global greenhouse gas emissions cannot be achieved by the Australian government acting alone.

No amount of reduction in emissions by Australia can be anything more than a drop in the bucket relative to the global greenhouse gas emissions. If our government gets ahead of the rest of the world on this issue, citizens of this country risk the worst of all outcomes – bearing the cost of involuntary emission reductions without benefiting from any amelioration of any adverse effects on our climate.

It seems to me that until the world develops something approaching a global consensus in favour of reducing greenhouse gas emissions the Australian government would be wise to view this issue as a matter for individual conscience. However, I doubt whether this point of view will find much favour with our prime minister, Kevin Rudd. It seems more likely that he will prefer to follow the inner voice urging him to lead the world in reducing greenhouse gas emissions. After all, he has probably been in office long enough by now to believe that this inner voice is the collective conscience of all Australians.

Postscript: 28 April, 2008.
 Two years on it is now apparent that I owe Kevin Rudd an apology. The rhetoric that led me to fear that he wanted Australia to lead the world in reducing greenhouse gas emissions turned out to be just political spin that led nowhere. It seems that Rudd's inner voice has told him that Australian voters would not like pointless increases in electicity prices that could be sheeted home to his policies. The government has suspended its proposals to reduce greenhouse gases for a couple of years. I don't imagine the proposals will re-surface until there is a strong lead from the U.S. that might actually result in a significant reduction in global emissions.
I promise that I will be much more careful in future before assuming that Kevin Rudd's rhetoric is anything more than political spin.

Can government be restrained by transparency requirements?

I ended my last post by suggesting that procedures that promote transparency can be an important constraint on the expansion of government if voters understand their importance and expect governments to comply with them (see here).

The expansion of government is often discussed as though it is perfectly obvious to everyone who are the net gainers from redistributions and who are the net losers. In fact, however, when we look at government programs we find that the redistributions they involve are often far from transparent. Non-transparent redistributions are often favoured in order to hide redistributions that are difficult to justify in terms of widely accepted ethical standards. It seems to me that procedures that promote transparency can therefore be an important constraint on the expansion of government.

What I had in mind were things like: legislative requirements for governments to specify monetary and fiscal policy objectives publicly and make public any departures from those objectives; requirements for publication of formal coalition agreements to make governments less vulnerable to attempts by minor parties to extract additional concessions at times of their own choosing; and requirements for governments to refer matters to independent public review before introducing measures (such as tariff changes) that assist some groups at the expense of others.

Such procedures certainly cannot be relied upon to restrain government from doing things that are popular with a majority of voters, or things that governments feel that they must do to preserve their tenure of power.

However, it seems to me that democratic governments can be deterred from over-turning inconvenient transparency procedures if they believe that such actions would contravene the concerns of voters about procedural fairness.

It is obvious that the concerns of voters about procedural fairness must encompass some transparency requirements if you consider how voters would react to a proposal for future government budgets to be secret. It would be reasonable to expect widespread opposition to such a proposal, including among government supporters, because of concerns that the removal of the limited transparency that publication of budgets provides would enable members of the government to enrich themselves at public expense without anyone knowing.

How far can transparency requirements protect against the expansion of government? The concerns of voters about procedural fairness clearly do not provide much protection against redistributions that are widely perceived to be equitable. I agree with Gerald Gauss that “for many citizens, their understanding of moral norms related to fairness endorses government-made rules over-riding the conventional rules of property” (here).

Nevertheless, many government programs involve redistributions that seem to me to be inconsistent with widely accepted moral norms. An example of the kind of thing I have in mind is the way the provision of universal services by government without charge to users (e.g. public education and health services) discriminates against people (including low-income people) who elect not to use these services. I think there would be less support for such redistributions if they were made more transparent through procedural requirements e.g. for periodical independent reviews to consider whether stated objectives are being met efficiently and equitably.

The important point is that voters’ concerns for procedural fairness can reinforce transparency procedures that can help to raise concerns about fairness that, in turn, can help to restrain the expansion of government.