Category Archives: Argumentation

Retro Book Reviews: A Capitalism for the People: Recapturing the Lost Genius of American Prosperity by Luigi Zingales (Basic Books, 2012)

University of Chicago economist Luigi Zingales’s book A Capitalism for the People: Recapturing the Lost Genius of American Prosperity, which celebrates its 10th anniversary this year, attempts to frame free-market policies in terms that appeal to populists, who generally oppose free markets.

I first read A Capitalism for the People not long after it came out. At the time I wrote:

I am wary of populism in all its forms, from Ancient Roman populares to William Jennings Bryan, right on up through John Edwards and John McCain. But if Zingales’s approach succeeds at making thorough illiberals a little more liberal at the margin, he will have done a valuable public service.

Zingales’s timing was prescient. As the historian Stephen Davies and my colleague Iain Murray have argued, much of the world has gone through a fundamental political realignment over the past decade. Since Zingales’s book was published, a worldwide populist wave put in office politicians such as Brazil’s Jair Bolsonaro, Hungary’s Viktor Orban, and America’s Donald Trump.

Did Zingales come up with a viable strategy for making such illiberal populists more liberal at the margin? That is a difficult question, but the answer is probably no. That isn’t Zingales’s fault—it’s because liberalism and populism are fundamentally incompatible. Populism is about conflict, while market liberalism is about cooperation. It is impossible to meaningfully combine them.

Populism is tricky to define because it lacks a common set of policies or principles, the way conservatives, progressives, and liberals do. Conservatives will reliably support policies that increase social order, such as law enforcement, national defense, and faith-based initiatives. Progressives will reliably support policies intended to reduce inequality, such as social spending programs, minimum wages, and progressive taxation. Liberals will reliably support policies that increase openness, tolerance, and dynamism, such as free markets, free trade, and deregulation.

Populists have been known to support almost any combination of any of these issues, even when they contradict one another. Populists can come from the right, the left, or nearly any combination of the two.

So what do populists rally around, if they lack defining principles or policies? Populism is about the conflict between us and them. It pits regular people against elites, whether in media, academia, or business. It pits one’s fellow countrymen against foreigners, or one’s coreligionists against outside faiths, or one race against another. It pits Republicans against Democrats.

Populism is more of a mindset, or more accurately, an emotionset. Populism comes more from the amygdala rather than the cerebral cortex, which is why it will always be with us to some degree.

A strong sense of in-groups and out-groups gave a survival advantage in hunter-gatherer times, as members of small nomadic bands helped each other out. Their hostility to outsiders improved their defenses. Thinking of people as “Other” also reduced moral qualms about taking food and mates from outsiders, giving another survival advantage in harsh conditions.

We moderns live in different circumstances, but genetically we are still the same people. Populism—and its cousins such as nationalism, socialism, racism, and identity politics—are all different applications of our hunter-gatherer instincts to modern conditions.

Who the outsiders are differs by circumstance; that there are outsiders is the common populist theme. That is why populists can have no coherent policies or philosophies, yet still have something important in common—us against them. The liberal project of preventing the Hobbesian war of each against all is about keeping that universal tendency in check.

So that is what liberals are up against—roughly 95 percent of human history, and millions of years of evolution before that.

Zingales’s contribution is a bit of judo—using the populists’ own tactics against them. If you can frame a policy in an us-against-them way, some populists might warm up to it.

Many populists favor trade protectionism as a way to shelter domestic industries from what they perceive as “unfair” foreign competition. But there are other ways to frame the same issue. If the “them,” rather than foreigners, turns out to be politically connected industries that profit by hurting “us,” the consumers, by lobbying for price-raising tariffs, then some populists could be convinced to oppose trade protectionism and other forms of cronyism. The political strategy is neutral on the policy; it’s about the framing.

But this lack of philosophical mooring leaves Zingales’s argument vulnerable. For example, he argues that globalization increases inequality, which is a classic populist grievance—thinking in terms of ratios, rather than how people are actually doing. As to that more important question, people around the world are doing better than in any other era of history—poverty rates, life expectancy, disease, violence, air and water pollution, and other measures of well-being are nearly all getting better, in both rich and poor countries. Zingales seems to think in terms of conflict, as a populist would, instead of in terms of cooperation. Yet, the beneficial results of the latter are what show up in the data.

Zingales argues on page 38 that “the most powerful argument in favor of antitrust law is one that is rarely made: antitrust law reduces the political power of firms.” That is not the case; regulatory capture is rampant in antitrust. Large companies often welcome antitrust enforcement and other regulation if it puts up barriers to entry against smaller competitors. For instance, Facebook can afford to spend millions of dollars complying with new content moderation regulations as part of an antitrust settlement; the small startup that could someday overtake Facebook cannot. Antitrust doesn’t fight cronyism, it provides more opportunities for it.

For Zingales, the problem is that while his populist framing of antitrust law is spot-on, it is just as easy to give identical framing to the opposite side of the issue. How do you decide which side is better on the merits?

Zingales makes a similar slip on page 51 when he argues that “One beneficial side effect of the Glass-Steagall Act, as with most of the other banking regulations, was to fragment the banking sector and reduce the financial industry’s political power.” In reality, Glass-Steagall made the banking sector more vulnerable by forcing banks to put their eggs in fewer baskets. It also reduced competition among banks, which could compete in either commercial banking or investment banking, but not both.

When various companies in an industry create non-compete agreements like Glass-Steagall did, it often results in an antitrust case. Yet in the case of Glass-Steagall, Congress passed a law forbidding competition.

While that ban went away in 1999, benefiting consumers, banking regulations as a whole have continued to grow. Rules aimed at boosting home ownership for political reasons required banks to take on more risks. When the resulting bubble blew up, unleashing the 2008 financial crisis, Congress passed the Dodd-Frank financial law in response, which exacerbated the “too big to fail” problem it was intended to solve. Yet, it was the repeal of Glass-Steagall that got much of the blame, including from Zingales.

Again, it is easy to make populist arguments both for and against bank bailouts. Bailout supporters can say that bailouts are necessary to protect households’ savings against big banks’ irresponsible behavior. Bailout opponents can argue that bailouts are another example of cronyism. They create moral hazard and make banks even more dependent on their political connections.

In the end, it still comes down to merits and principles. With a little creativity, almost any issue can be framed in populist terms. That means liberals still need to be careful about choosing which issues to frame in an us-vs.-them way for populist audiences.

Zingales is more careful about this in his concluding chapter, which draws out the distinction between being pro-business and pro-market, and comes out strong against cronyism. He writes on page 255:

What would also help minimize cronyism is not a plethora of new government regulations (they are the first to be captured) but a village of potential whistleblowers.

His book would have been better had he applied his advice consistently.

In the decade since A Capitalism for the People was published, Zingales has drawn some company in framing market-liberal policies in populist terms. Last month, George Mason University economist Bryan Caplan, who is openly pro-liberal and anti-populist, compiled two lists of populist deregulation proposals, ranging from ending airport security theater to deregulating shower heads. Arnold Kling, another market-liberal economist, writes regularly about populism and its framing in his Substack blog. CEI founder Fred Smith has a longstanding interest in what he calls value-based communication, of which appealing to populists is a part.

Will Zingales’s framing strategy help to improve policy in the current populist moment? Maybe a little bit at the margin, but it won’t help with substantive change, because the root problem is populism itself. It is at the cultural level, and can’t be fixed by liberalizing a regulation here and there. It takes active engagement, using insights from Zingales, and from Fred Smith, Caplan, Kling, Aaraon Wildavsky, and other thinkers. It takes civility and listening.

Fittingly, it takes cooperation, rather than conflict, to convince people that cooperation is better than conflict for achieving prosperity and security. It is possible to somewhat defuse today’s polarized politics, but it is a long-run process that takes ongoing effort and keeping calm.

By listening, engaging, and appealing to populists on their own terms, liberals can help convince people that an open society is a better place to live than a closed one, that principles are more important than parties or political personalities, and that long-term governing institutions are more important than winning this year’s election. The values of July 4 must prevail over those of January 6.

Different Attitudes Towards Life

In today’s polarized discourse, there is a stark difference between thinkers who spend most of their time being for something, and those who spend most of their time being against something. One attitude is healthier than the other, and is more likely to lead towards truth, and is likelier to succeed in persuading others and getting its policies enacted.

Think of it as the difference between between favoring liberalism, openness, and dynamism on one hand; and owning the libs or the cons, depending on one’s tribal affiliation, on the other.

Which makes this passage from near the end of Evelyn Waugh’s 1943 novel Brideshead Revisited especially poignant (p. 383 of the Back Bay Books edition):

I said to the doctor, who was with us daily: “He’s got a wonderful will to live, hasn’t he?”

“Would you put it like that? I should say a great fear of death.”

“Is there a difference?”

“Oh dear, yes. He doesn’t derive any strength from his fear, you know. It’s wearing him out.”

Best Books of 2020: Virgil Henry Storr and Ginny Seung Choi – Do Markets Corrupt Our Morals? (Palgrave MacMillan, 2019)

Most people see markets as dens of greed and moral corruption. In their new book, Do Markets Corrupt Our Morals?, Virgil Henry Storr and Ginny Seung Choi, of the Mercatus Center at George Mason University, argue the opposite. In fact, they go one step further: Markets make people more moral. Make that two steps further: Because markets have moral benefits, restrictions on markets have moral costs. They back up their argument with a healthy mix of theory and evidence. Along the way, they make a case for rethinking how people approach markets. Their arguments, rather than traditional “markets are efficient” arguments, are the liberal movement’s best hope for the future.

Storr and Choi describe their main thesis on p. 225:

But the evidence suggests that the consensus is wrong. Markets do not corrupt our morals. Not only are people wealthier, healthier, happier, and better connected in market societies, market activity makes us better people. Markets are spaces where we discover who is virtuous and can expect many of our vices to be revealed. Additionally, markets reward virtue and punish vice. As such, markets are moral training grounds.

In short: Less of Alfred Marshall’s supply and demand graphs, and more Adam Smith’s Theory of Moral Sentiments. Less Homo economicus, more Homo sapiens.

Their phrase “moral training grounds” is important. One of the most common mistakes in economics is the Nirvana fallacy. This says that because markets are not perfect, government can make things better. Storr and Choi know that perfection does not exist. Markets fail, but they also have a built-in improvement mechanism. Markets are an ongoing discovery process. People have to learn from experience what works and what doesn’t. They make mistakes, learn from them, and make changes. But because conditions are always changing, the adaptation process never ends.

People use markets to learn how to trust and to be trustworthy. This takes practice. It takes trial and error. The feedback people get from profit and loss help. So does learning what it takes to earn someone’s trust or their repeat business. Evidence from experimental economics shows that people who participate in markets learn these things more quickly than in other systems.

In one-shot games in lab experiments, people can cheat and get away with it, like doing a dine-and-dash at a restaurant in a town you’ll never visit again. Despite this, people in these studies who come from market-oriented societies cheat far less than one would expect from a traditional blackboard-economics model. They also cheat less than people from non-market societies who play the same games.  

Repeat-play games give the opportunity for cheaters to learn from their moral decision. Other players can punish cheaters in future rounds. They will often do so even when punishment also comes at a cost to the punishers. Upholding honesty is important enough that most people are willing to pay for it. In the long run, this reduces cheating. In fact, it happens almost automatically.

Without coaching, players often spontaneously settle on a tit-for-tat strategy. You start by assuming the other players are trustworthy, but if they cheat, return the favor. Depending on a game’s rules, this may mean punishing cheaters, or simply refusing to do business with them again. Regardless of whether the players come from countries with free markets or not, they tend to behave better in repeat-play games than in one-shot games. And again, players from market societies cheat less often than players from non-market societies.

Storr and Choi also take a tour of the different ways in which markets affect morals. The obvious one is that because people in market societies are richer, they can afford to be more moral. They can afford to give to charities. They can also afford a fuller life. Education, literature, the arts, and world travel all cost money. Dollars are nice, but they aren’t really wealth. Wealth is being able to treat others well, to have leisure to spend time with family, and to pursue friendships, hobbies, and to try new things. Market societies can afford far more of these life enrichments than non-market societies—and these experiences positively shape people’s characters.

Moreover, people in market societies have longer life expectancies, lower infant mortality, are more respectful of women’s rights, minority rights, and LGBT rights, are more religiously tolerant, go to war far less often, and have lower crime rates. All of these are moral outcomes. All of them are backed by abundant data. All of them are made possible by embracing markets. The moral conclusion is obvious.

Storr and Choi represent the future of the liberty movement. The Cold War is a generation in the past now. People still throw around the word “socialist,” but usually just to mean they don’t like something.

But markets are still very much under attack in the current political realignment. The in-groups and out-groups people are using are different now; capitalism-vs.-communism is out, and populist nationalism-vs.-liberal cosmopolitanism are in. Yet, most libertarians are still using the same materialist arguments.

Yes, markets are efficient and create more wealth than other systems. That’s important, but that also isn’t the main point. Markets have other positive effects that are ultimately more meaningful—and more persuasive in today’s society. Not only is Storr and Choi’s moral defense more versatile in today’s intellectual climate, it is more in tune with most people’s values. As CEI founder Fred Smith argues regarding values-based communication, it is important to speak to people in their language.

Most people don’t care about adding an extra decimal point to this quarter’s GDP growth, even though that is important in the long run. They do care about their kids growing up to be decent people. They don’t care that subsidies and taxes cause market distortions. They do care about having a well-rounded life.

Many market liberals only speak a niche language of efficiency. This is one reason why they remain a curiosity. Their disconnect is a major reason why so many people continue to oppose markets despite their moral benefits—hardly anyone makes the moral case.

Storr and Choi are not the only thinkers trying to correct this oversight. CEI Julian Simon Award winners Deirdre McCloskeyJohan Norberg, and Steve Horwitz are among them. But Storr and Choi just might be the ones to do it best. They deserve far more company.

Don’t Trust Political Memes, and Don’t Share Them

Think of this post as a public service message.

In some ways, memes are the 21st century version of the comic strip or the political cartoon. They can be quite funny, and they make their point in just a second or two. Memes have been a boon for comic-strip-style humor. Someone needs to fill the void left by Calvin and Hobbes and The Far Side, and a lot of people have ably volunteered. Anyone with a joke and basic computer skills can make a funny meme, and millions of people can share the fun. National distributors no longer serve as gatekeepers and censors, allowing some unique talents to shine that would have remained dark just a decade or two ago. This has been a wonderful development.

But for many reasons, political memes are typically riddled with factual errors and offer little more than confirmation bias. They should be shunned, not shared.

Here is a quick statistics lesson from one political meme I saw making the rounds recently. That’s not to pick on this meme specifically. There are millions like it, just as bad, floating around the Internet. This is just one I happened to see, though I should note that Turning Point USA has a poor reputation, even by its genre’s low standards.

Also keep in mind that this meme is on the correct side of its issue. Imagine how wrong the wrong ones can be! As Frederic Bastiat wrote, “The worst thing that can happen to a good cause is, not to be skillfully attacked, but to be ineptly defended.”

Here is the meme:

turning point meme

Here is a list of things it gets wrong.

1: This meme is undated and cites no sources.

2: There is no publication titled “World Economic Freedom Index.”

3: For indexes that do exist, their data do not go back 60 years. They go back to 1970 for the Fraser/Cato index, and 1995 for the Heritage/WSJ index.

4: Venezuela does rank 179th in the 2018 Heritage/WSJ index. But it gives no rankings from roughly 60 years ago. If the 4th place figure comes from a different index, that is not a valid apples-to-apples comparison. But we don’t know where that figure comes from. None is cited. Google doesn’t turn one up, either. For all we know, some intern could have just made it up, and now people are sharing it.

5: Hugo Chavez was first elected in 1998. His brand of socialism was 14 years old when Turning Point USA was founded in 2012, not 10 years before this undated meme was created.

That’s five errors in one meme that took less than ten minutes to dig up. That says more about Turning Point USA and political memes in general than it does about Venezuela’s ongoing tragedy.

Don’t trust unsourced political memes, don’t share them, and take people who heavily rely on them as seriously as they deserve–even, or especially, if they share your ideological priors.

Aristotle – The Poetics

Aristotle – The Poetics

A shorter work with useful insights for appreciating storytelling in general, and Greek drama and poetry in particular. Aristotle offers a key insight for making a character believable: a character’s every action and every word should be based on either necessity or probability.

The plot necessitates some actions on the character’s part. What the audience knows about the character’s personality dictates the probability that his reactions are believable. To use a lowbrow example, the reason it’s so funny when Homer says something intelligent on The Simpsons is that is so out of character.

Some of Aristotle’s other ideas about what makes good drama or good poetry seems to be his personal taste. This being subjective, it need not be taken as gospel.

Aristotle – On Rhetoric

Aristotle – On Rhetoric

Rhetoric is a morally neutral tool that can equally be used for good or bad purposes. It is important to use it wisely and only towards good ends. Athens having no professional lawyers, On Rhetoric was Aristotle’s guide to pleading one’s case in court, and to persuasion in general.

Aristotle first goes over the different elements of rhetoric, than turns his attention to the structure of an effective persuasive speech. Aristotle’s main concepts are the three pisteis of logos (logic and truth; basically the facts of the case), ethos (audience emotions about the orator as a person) and pathos (audience emotions about the orator’s arguments).

Another key Aristotelian concept of argumentative structure is the enthymeme, which has many forms, but always leaves at least one of its premises unstated. This is both a strength and a weakness. It can hide vulnerabilities, if only by failing to mention them. But to hide a weakness, it must have one in the first place.

The most famous example of an enthymeme is Hegel’s structure of thesis, antithesis, and synthesis—with the unstated premise being that the synthesis is, in fact, plausible. This is often not the case.

This is the first place a skilled rhetorician should attack such an argument. But few people can identify such an argument on the fly when it is being made, let alone know where that weak spot is.

So in many cases, especially in ancient Athens’ non-professional legal system, enthymemes can be used on offense with little fear of having to play defense. Again, Aristotle stresses, rhetoric by itself is morally neutral. Its powers can be used for good or for evil, depending on who wields it. Use it wisely.

Rhetoric and Emotion

The beginning of Aristotle’s On Rhetoric has a lesson for staying informed despite today’s dominant political strategy:

Appeals to the emotions warp the judgment.

One of Aristotle’s main points is that rhetoric by itself is morally and ideologically neutral. A skilled rhetorician can use this weakness in human cognition for either good or evil. To do sound policy analysis, one must be aware when the emotional appeal strategy is being used, especially towards illiberal ends.

Ten Hard Questions for Libertarians

Over at the Bleeding Heart Libertarians blog, Jason Brennan has a brilliant bit of satire that reminds me of one of my favorite Voltaire quotations: “I have only ever addressed one prayer to God, and it is very short: ‘My God, please make all our enemies ridiculous.’ God has granted my wish.”

Of the ten questions Jason poses, I was saddened to realize that I have been asked at least four of them, without irony, in various contexts, including on air.

How to Shut Off a Great Debate

Aaron Ross Powell has an excellent, thought-provoking  post over at libertarianism.org on how many of classical liberalism’s opponents tend to argue against libertarian caricatures that have very little to do with the real thing. This talking past one’s target instead of to it hurts both sides. Progressive and conservative thinkers would benefit from testing their ideas against quality opponents. And libertarians/classical liberals are unfairly tarred. Ad hominem attacks are getting in the way of what could be an enlightening intellectual discussion for everyone involved.

Aaron held his fire to one common attack fallacy, that state equals society. But there are more. One of them has been around for at least 80 years, when Hayek made his first public lectures in the 1930s at the London School of Economics. One of those lectures later became the title chapter of volume 3 of his collected works, The Trend of Economic Thinking. His familiar lament appears on pp. 14-15 of that book:

 No serious attempt has ever been made to show that the great liberal economists were any less concerned with the welfare of the poorer classes of society than were their successors. And I do not think that any such attempt could possibly be successful.

Instead, (classical) liberal apathy towards the poor is simply assumed. The argument can be summarized as follows:

  1. The primary concern of many progressives is helping the poor.
  2. Libertarians tend to favor different economic policies than progressives.
  3. Therefore, libertarians do not care about the poor. QED.

This is not a rigorous argument. Steps 1 and 2 are mostly true. But an Olympic-caliber long jumper couldn’t make the leap to step 3. It denies the possibility that the two sides simply prefer different means to similar ends.

This is a shame. There is a wonderful debate just waiting to be had on a number of fronts. Are the poor better served by letting economic processes emerge from the bottom up, or by expertly managing the economy from the top down? Which focus is more important to bettering the lot of the poor, absolute poverty or relative poverty? Is it better to approach the economy as a biologist, seeking merely to understand evolving market processes, or is it better to be an engineer, with an aim to tinker, fix, and improve specific outcomes?

Classical liberals tend to prefer the first answer to each of those questions; progressives tend to favor the second answer to each. But to the extent that the two sides engage each other at all, it tends to be of roughly the same tenor and quality as the “they don’t care about the poor” argument outlined above. An honest debate requires the end of such reflexive ad hominem attacks.

Adam Smith himself, painted by people who haven’t read him as the ultimate atomist individualist, based his whole defense of free markets on his belief that they would bring the masses out of poverty and into prosperity. This was his highest priority. His belief in the deep interconnectedness of people across the world, brought together by our shared natural tendency to truck, barter, and exchange, is also why economics is inherently a social science.

But reading Adam Smith can be a chore, which is why few people bother. Let’s look instead at the raw data, as provided by Jim Gwartney and many others in the annual Economic Freedom of the World report. They find that, in absolute terms, poor people are far less poor in relatively free-market countries than in more controlled economies.

This opens up an entirely new area for honest intellectual debate. Nothing close to a pure free-market economy exists on Earth. So is this free-market prosperity due to the free-market elements that do exist, or is it due to the mixed economy’s more constructivist elements? To my knowledge, this debate has not happened. This is largely because of thought-closing fallacies such as Powell takes on in his post, and the ones I discuss here and elsewhere.

How to Lose an Argument

Thomas Erskine defended Thomas Paine after authorities decided to persecute him for the radical ideas contained in his Rights of Man. Here, Erskine tells a story that explains to Paine’s prosecutors why someone who threatens force during an argument is almost surely wrong:

You must all remember, gentlemen, Lucian’s pleasant story: Jupiter and a countryman were walking together, conversing with great freedom and familiarity upon the subject of heaven and earth. The countryman listened with attention and acquiescence while Jupiter strove only to convince him; but happening to hint a doubt, Jupiter turned hastily around and threatened him with his thunder. ‘Ah, ha!’ says the countryman, ‘now, Jupiter, I know that you are wrong; you are always wrong when you appeal to your thunder.’

Quoted from J.B. Bury, A History of Freedom of Thought, pp. 130-31.

He’s right. An argument can only truly be won on the merits.The world would be a better place if more people realized that.