Not a persuasive argument about the social contract

Okay, so a few days ago Elizabeth Warren — you might know of her; she’s running against Scott Brown — said this:

Well, it just makes sense if you think about it, right?  I mean, police officers are the only thing standing between the fragile nest of civilization and marauding bands of looters with colanders strapped to their faces, aren’t they?  Nobody seriously believes that you could take away the state tomorrow with no ill effects, do they?

Not too many, no.  But it’s not just about the state: the reason we have organized trade instead of marauding bands goes far further than the laws on the books.  Will Wilkinson points out that free exchange and the respectable state (rather than the brutal Hobbesian state) both derive from the same source:

The full slate of liberal institutions that account for most first-world wealth–the rule of law, private property, well-functioning market institutions, representative democracy–can’t be bought with tax money. Not to say it hasn’t been tried. The West continues to spend a bit of its tax money trying to buy the liberal institutions of peaceful wealth-creation for countries like Bhutan, Somalia, Iraq, Afghanistan, and so forth. It doesn’t work.

The institutional infrastructure of liberal-democratic capitalism depends on a deeper moral or cultural infrastructure. One thing I’d like progressives like Elizabeth Warren and Robert Frank to get through their heads is that this deeper moral/cultural infrastructure makes possible both tax-financed public goods and wealth-producing market institutions. You can’t buy with taxes the cultural prerequisites of the productive collection and expenditure of taxes.

So, if you live in a wealthy country and made some money last year, there is some sense in which much of that wealth is an “unearned return” on your cultural patrimony. Does that have any implications for what counts as “your money”? I doubt it.

Now, despite a lot of internet commentary to the contrary, Warren isn’t claiming that the hypothetical “hunks of money” received by her hypothetical factory owner are in fact owned by the community.  She’s claiming that the factory owner ought to pay into public goods, and if that’s all she claimed I wouldn’t have a problem with it.  (In fact, the last part of Warren’s claim — “Part of the underlying social contract is that you take a hunk of that and pay forward for the next kid who comes along” — fits perfectly with my anarchocapitalist ideology, because it rests on the factory owner’s sense of obligation and perhaps ability to spot an investment opportunity, rather than insisting that thugs with guns show up to take that money by force.  She’s talking about contract, not taxation.  Oh, she means taxation, but still.)

Of course, that’s not all she claimed.  Look at the second paragraph: the rest of us paid for the roads.  The rest of us paid for the workers’ educations.  The rest of us paid for the police and fire departments.  The rest of us kept the marauding bands at bay.  This of course is false, for a couple of reasons.  First of all, while you might not think “the rich” pay their fair share of taxes, you’d have to be innumerate to the point of seeing only squiggles on a page where the rest of us recognize digits to believe that high-income taxpayers don’t pay a fucking lot of taxes.  Second, since much of those roads, educations, and public services were bought with deficit financing, the rest of us haven’t paid for them (yet), either.  We’ll leave that to our grandkids, who get to pay the interest that debt’s accrued as well.  So not only are hypothetical factory owners not freeloading as much as Warren claims, but the rest of us are freeloading a lot more than Warren claims.

I’m not done yet.  Look at the first paragraph: “You built a factory out there — good for you!”  No.  No.  Nobody can build a pencil, let alone a factory.  That factory was built by structural and mechanical engineers, metalworkers and carpenters and construction workers, miners and smelters and architects, actuaries and bankers and investors — and, more than likely, regulators and inspectors and other bureaucrats both public and private.  They benefit from the public goods Warren claims “the rest of us” paid for just as much as the factory owner — if the factory owner had looked to build a plant in Massachusetts, seen the utter devastation left in the wake of its marauding bands, and decided to build somewhere else, those carpenters and architects and &c. wouldn’t get paid.  Why isn’t Warren ranting about them?  Surely it’s not because it’s harder to score a cheap political point… is it?

Finally, tarran over at The Liberty Papers is amused to find out what happens when you switch words around a bit:

Megan McArdle has made this argument about sex as a public good before.

Update: Don Boudreaux comments on the evidence that Warren’s rhetorical target of the rich industrialist who doesn’t owe anything to anyone is a straw man soaked in oxyacetylene.


11 Responses to “Not a persuasive argument about the social contract”

  1. September 29, 2011 at 18:23

    I’ve probably wondered this here before, but when did Warren go crazy? I liked her in a few interviews around when the economy started really tanking. She sounded informed and logical, if a bit left of me. But recently, everything I read about her makes me wonder when she took the really, really big blue pill. That shit isn’t contagious, is it?

    • September 29, 2011 at 21:23

      You know, for all that I’ve complained about her speech above I really don’t think she’s all that unreasonable. The us-vs-them language in that excerpt puts my teeth on edge, but that’s not a case of the crazies so much as it is par for the course in the modern political dialect. I mean, this is a New England Democrat going on the record and saying “Hey, if you start a business that does well and makes a lot of money, good for you; that’s a great thing to do, and you deserve to make a lot of money from it”. Can you imagine Martha Coakley or Ted Kennedy saying a thing like that? For that matter, I don’t find it too hard to imagine Scott Brown giving a similar speech, in principle, although I imagine he’d emphasize “you done good, you deserve those profits” a lot more than “but you didn’t do it alone”.

  2. 3 Not Sure
    September 29, 2011 at 22:40

    I think the only reason for saying:

    “Hey, if you start a business that does well and makes a lot of money, good for you; that’s a great thing to do, and you deserve to make a lot of money from it”.

    is to have the opportunity to follow it up with “but… (insert all that “We want your money” stuff here).”

    • September 29, 2011 at 22:46

      That wouldn’t surprise me. It’s still a long step up from the “if you make a lot of money, it’s only because you’re exploiting the underclass and a sign that you’re an evil awful parasite” which is status quo for the more vocal north-eastern lefties.

      Come on, folks, let’s give credit where it’s due. Warren is closer to Adam Smith than she is to Michael Moore. I wish she was closer to Murray Rothbard — or TJIC — but she’s miles better than Martha Coakley.

  3. 5 perlhaqr
    September 30, 2011 at 06:47

    Sex is such an awesome way to focus people’s minds in political discussions. I frequently use the subject to prove to people that they don’t really believe in Democracy and are, in fact, Constitutional Republicans.

    “Ok, so, how many people does it take to outvote a woman on whether she puts out? Can ten men force a quorum with a woman and vote that she has to have sex with them? Does it cease to be rape if she votes against them, but it’s 1 to 10? No? How about a hundred? Is a hundred yes votes enough to override her one no? A thousand? A million? A hundred million?”

    “No! There is no number of votes that can make it not rape, you sick fucker!”

    “Actually, I agree. I merely wanted to use this example to point out that in essence we agree that there are some subjects which are not subject to a vote, and no amount of voting on the subject can turn something which is a concrete wrong into a right. We may disagree on what those things are, but you can’t use “”It’s democracy!”” as an argument any more.”

    • September 30, 2011 at 15:27

      That argument also works against utilitarians. It’s pretty close to tautological that the vast majority of participants in a gang rape are having a great time.

      • September 30, 2011 at 15:36

        Lesson: if you bring up interesting moral issues, it results in Alrenous attempting to derail.

        My moral system comes down against rape regardless, but I can still defend utilitarianism.
        A person shooting up is enjoying themselves, but utilitarianism supports the abolishment of heroin. Likewise, gang rapists may enjoy themselves in the moment, but cause long-term harm.

        This puts utilitarianism into the empirical realm; if the life of a gang-rapist isn’t worse than a similar non-rapist overall, utilitarianism is…while not false, exactly, it leads to repugnant conclusions.

        I just realized I can go one better by getting meta. Why do we want to stop gang-rape? It doesn’t matter, because we do. Utilitarianism includes in the calculation the fact that many would not like the idea that a gang-rape had occurred. Though again it makes it an empirical question whether utilitarianism supports harming the many to benefit the few. Which would then go into the calculation…

        I actually think the concept ‘adding’ isn’t valid when applied to sensations, making utilitarianism super-fundamentally wrong.

  4. September 30, 2011 at 12:34

    Your pile of reasons it’s wrong is impressive. I have one more to add anyway.

    As far as I can tell, the only definition of ‘ownership’ that isn’t self-defeating is, “reasonable expectation of control,” and combined with the fact nobody can rightfully impose obligations on anyone else, Warren has the right to ask to be paid by for building roads and educating by everyone who’s signed a contract stating as much. So, exactly nobody. If she was gonna get upset about not being paid back, she shouldn’t have offered to educate without any reasonable expectation of being paid back, let alone without even a formal promise.

    At least it isn’t blatant sophistry, like Austin Frakt’s.

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