Happiness by Decree

The mountain kingdom of Bhutan was widely praised for their measures of Gross National Happiness. But as Alan Beattie persuasively argued, Bhutan’s GNH is a bad idea whose time has gone. In practice, it has been “a deeply illiberal means of legitimising undemocratic rule.”

The GNH is assessed by asking survey respondents about a variety of indicators, from more conventional issues like health and education to more nebulous concepts like emotional fulfilment and perceived national ecological sustainability. It is noticeable that the haziest ones seem to do better: the highest-scoring indicator is “Values”, denoting that Bhutanese tend to concur that murder, stealing, lying, creating disharmony in relationships and sexual misconduct are a bad thing. Good for them, but, on the other hand, less than half of respondents are happy with their literacy, employment opportunities, government services and schooling.

Such outcomes are hardly surprising: the autocratic monarchy that ruled Bhutan until the first free elections in 2008 substantially failed to deliver better lives for most of its duration. Literacy is still only around 50 per cent, and only around half of children attend secondary school. Most Bhutanese are still subsistence or other small-scale farmers, unemployment is rife and suicide rates are alarmingly high. Corruption in government is believed to be widespread.

Moreover, GNH has proved no guarantee of individual human rights. Taking it at face value, you would never know that Bhutan has for decades been carrying out a brutal ethnic cleansing policy against the country’s Nepali-speaking minority. Once around a sixth of the population, a “Bhutanisation’ campaign that began in the 1980s resulted in tens of thousands of Nepalis being expelled from the country. Their houses were seized or burned down and people deported for speaking Nepali, refusing to eat beef (Nepalis are generally Hindu while ethnic Bhutanese are Buddhist) or declining to wear traditional dress. The displaced are still living in refugee camps in Nepal, or have been resettled in the US or elsewhere: none has been allowed to return.

GNH defines and imposes a unitary set of values that does not protect diversity or individual rights, or at least addresses them only in ways that can be defined and controlled by the government. It is a communitarian view of the world distinctly reminiscent of Hu Jintao’s ideal of a “harmonious society”, a concept frequently cited by the Chinese government when clamping down on free speech and dissent. It should give GNH’s foreign supporters a long pause for thought that as soon as Bhutanese voters had a choice after decades of dictatorship, they threw out its backers and brought in its critics.

Beattie is justly irritated that Bhutan’s measure distracted attention away from “more transparent and participative attempts to measure wellbeing.” Citizens are better served, he rightly said, “by the novel procedure of asking them, not defining it on their behalf.”

Social wellbeing cannot be measured by per capita income alone. It has multiple dimensions. But these are not fully commensurable, which is why no single index is ever a neutral measure. Embedded within any such index is a political judgment about how they should be weighed against each other, about how the common good should be defined.

Social welfare should be defined by citizens for themselves—not by Platonic Guardians. Individual voters are not always wise, but as John Dewey said, “there is one thing they are wiser about than anybody else can be, and that is where the shoe pinches, the troubles they suffer from.”

Who Are These Jihadists?

Like many Americans, I have been trying to make sense of the jihadists formerly known as al-Qaeda in Iraq. Fortunately, a number of talented scholars have been studying these fanatics for years. Their commentary is assuredly worth your time.

  • Charles Lister traced their history here.
  • William McCants and Thomas Hegghammer discussed The Management of Savagery here.
  • John Horgan explained how they recruit for jihad here.
  • Brian Fishman clarified what the caliphate of the Islamic State is, and what it is not, here.

I should probably say something about my choice of words. I call the jihadist insurgency in Iraq and Syria a caliphate, because they call themselves a caliphate. A refusal to use their self-description would not deny them legitimacy. It would also be wildly at odds with how we speak of other violent fanatics, as J. M. Berger said:

Extremist groups always adopt a name that reflects their greater ambitions, and as a rule, we refer to them by the names they choose. Do we legitimize the concept of a white-only state when we refer to the Aryan Nations? Do we legitimize Marxist-Leninist philosophy as shiny when we use the name Shining Path? Are we implying that fascism will bring a Golden Dawn when we talk about the Greek political party?

No, no and no. Ultimately, I suspect this comes back to a fundamental problem I’ve discussed before in the U.S. government’s approach to Muslim extremists—condescending overkill. The theory is that “legitimizing” IS by referring to it by its chosen name will have repercussions in the Muslim world that would not somehow apply to Christians when we talk about Christian Identity.

The Islamic State is not a special case, and ironically, we elevate its claim to legitimacy when we treat it differently from every other two-bit megalomaniacal movement that seeks to establish itself as the claimant of a global mandate.

When a gunman murdered three people near a Jewish community center and shouted “Heil Hitler,” liberals had no problem with calling him a white supremacist. None of us worried about legitimizing killer’s belief that Aryans were the master race.

UPDATE (September 4, 2014): Mccants and Hegghammer interview added to the bulleted list.

Occupy Disruption

A founding member of Occupy Wall Street, one of the many de facto leaders of the “leaderless” movement, has dismissed liberalism as simply “one of the worst ideas ever.” Justine Tunney came to Occupy as a software engineer and an anarchist. Tunney created the Twitter account @OccupyWallSt and the website OccupyWallSt.org. Earlier this year, she changed the passwords and locked out previously authorized users. She also created a petition to depose President Obama and replace him with the CEO of Google, who would then run America as she believes it should be run—as a technocracy.

What would attract an illiberal and imperious fanatic to an anarchist carnival? Fellow Occupier Arthur Chu argued in a recent column at The Daily Beast that “Tunney was never against the one percent—she just thought that the one percent were the wrong people.” For Chu, Tunney is an embittered nerd who has been lead astray by the darker extremes of tech culture. His account is very plausible, but I suspect another story is crucial. That story is older than the Z1 mechanical computer, and it should impart a lesson far less convenient to Occupiers or anyone else who would make common cause with anarchists.

Anarchism turns liberal slogans against all institutions, including those which make a free society possible. It is the self-negation of all liberal orders. It easily serves as a midwife to new despotisms, as Leszek Kolakowski explained:

The anarchists often argue that the Russian Revolution bore out their criticism of Marxist state socialism: an attempt to build a “new society” by compulsion must end in a police state. But the same case can be easily turned against the anarchist doctrine. The Bolsheviks did not “make” the Revolution, they only staged the October coup. The Revolution was a large popular movement of which the predominant ideology was nothing other than an anarchist Utopia: Soviet power—not a communist state run by one minority party. The Bolsheviks succeeded in taming the anarchist-revolutionary process, by using it and imposing on it their own despotic form of government. The Revolution simply could not have won in its anarchist Utopian form, or rather it could have won only if there had been no forces, like the Bolsheviks, aiming at a monopolistic power of their own. And there is no way that the anarchists in similar circumstances—when existing institutions have nearly crumbled and dissolved—can prevent other forces, striving after power, from emerging and eventually raping the defenceless society. It is the anarchists who should know that power has already been an enormously desired good in itself, apart from the other profit people gain from it, and there is never a shortage of movements and people ready to grab power whenever the institutional fabric of a society is collapsing. Therefore revolutionary anarchists can in practice do nothing but unintentionally support the totalitarian forces operating in democratic societies.

Anarchism armed is liberalism committing suicide.

Constitutions Rightly Understood

“We are under a Constitution,” said American jurist Charles Evan Hughes, “but the Constitution is what the judges say it is.” Hughes’s blunt statement makes some Americans flinch. Senator Orrin Hatch, for example, objected that our written charter already says everything there is to say about the constitutionality of any statute before the courts. How a judge should rule is clear, if they are a literate lover of liberty.

American debates about our constitution could do with more candor and less question-begging cant. The work of John Gardner is a good place to begin. Gardner is a legal philosopher who works in the tradition of his late mentor, H. L. A. Hart. I discovered him through this podcast with Philosophy Bites. In his essay “Can There Be a Written Constitution?”, Gardner elaborated his views on what constitutions are and what judges do:

On the day it is enacted a new constitution is wholly written law. But that day does not last. As soon as ripe disputes begin to arise that concern the meaning of constitutional provisions, written constitutional law inevitably needs to be filled out with case law and/or customary law. What is written in the constitution needs to be invested with more determinate meaning, and by and large this has to be done at the point of its authoritative application, principally by judges. With the passage of time, such judge-made law tends to predominate over the parts of constitutional law that exist apart from it. With the passage of time, one knows an ever-smaller proportion of the law of the constitution – or at any rate an ever-smaller proportion of the material that goes to make up the law of the constitution – simply by reading the constitutional text.

Like other things we have said, this plain answer may strike some as political explosive. It may seem to lead us straight into the big controversies of contemporary US constitutional law. In the red corner, ladies and gentlemen, those who insist that the constitution is found in what was written and nothing but what was written by the 1787 founders and their authorised legislative amenders. And in the blue corner, those who say that the constitution is a living body of law and should not be regarded as frozen in time at the moment of enactment. Is this the fight we are getting into? No. Nothing I have just said takes sides in this or any other debate about how the US constitution should be interpreted. I do not doubt, of course, the profound political significance of such debates and – especially when the disputants are Supreme Court judges – their huge potential consequences for the future direction of America. My only point is this. Inasmuch as these debates have huge potential consequences for the future direction of America, that is over a purposivist, or an originalist-textualist over a strict-constructionist-textualist, or a original-intent-originalist over an original-meaning-originalist, or indeed a baggist over a raggist, is that each of them, or at any rate each of them in combination with some like-minded judges, will have the power to change the law of the constitution by giving the constitution a meaning different from the one that it would have under the authority of a judge or a combination of judges from some rival camp.

Garnder does not see how it could be otherwise, and neither do I.

Meaningful Liberty

Libertarianism does not follow, as a simple matter of principle, from the value of individual liberty. I made this point before, but philosopher T. M. Scanlon made it again with great clarity and simplicity.

In his essay “Libertarianism and Liberty,” Scanlon responds to three lines of argument for libertarianism. The first appeals to the efficiency of autonomous markets. But as Scanlon rightly points out, this argument “assigns individual liberty only an instrumental value: it is important only as a means to economic efficiency.” It is less an appeal to the liberty of individuals than to pricing mechanisms, which are seen as superior to planning—to conscious direction by individuals.

The second argument appeals to individual control, but strictly in terms of “negative” rights. The relevant distinction, however, is not between “positive” and “negative” rights, but, as Scanlon said, “between rights and considerations that must be taken into account in justifying them. The lesson to draw from it is not that there are no ‘positive rights’—rights to particular benefits—but rather that not every desirable thing that is relevant to justifying rights can be directly transformed into a ‘right to’ realize that thing.”

Recognizing control as an important moral value leads to the question of what system of rights—what set of laws and policies—would best secure this important form of control for everyone, since everyone counts morally. It may seem to industrialists that an unregulated market provides the greatest freedom, because regulation and taxation reduce their ability to do what they want. But as I have mentioned, an unregulated market leaves many workers with little control over some important aspects of their lives, and their liberty also matters morally. So an argument appealing to the moral importance of control over one’s life must take both of these facts into account, along with others.

If we ask what conditions are most important for having meaningful liberty—meaningful control over one’s life—in a modern society, one of the first things that comes to mind is education, which enables one to understand one’s choices and to acquire the skills needed to pursue them, including the skills needed participate in the market economy. A second important factor is a strong social safety net, including unemployment benefits, which enable people to plan responsibly for having a family despite the uncertainties of employment in an efficient market economy.

The third line of argument is that “no one should be coercively told what to do as long as he or she is not violating the rights of others.” Scanlon acknowledges the intuitive appeal, but the apparent simplicity is an illusion. Consider property rights, which “involve not only the right to use the things one owns, and to exclude others from taking them,” but also “the power to give others similar rights over a thing, by transferring it to them.”

By permissibly using something, I can make it wrong for you to take it, on Lockean grounds, because you would be interfering with my use. By ceasing to use it, and leaving it with the intention that you will use it, I can make it the case that you will not wrong me by using or destroying it. These ideas, included in the right of non-interference as I have construed it, are extremely plausible. But it is extremely implausible to think that I can, by an exercise of my will, confer upon you the right to exclude anyone else from the use of a thing, and give you the power to transfer this right to yet other people. Having this power would make me an odd kind of moral legislator. As David Hume argued, property rights require an institution that creates, defines, and enforces them, and is justified by the benefits it brings to all affected by it. It follows that if there are property rights that can be coercively enforced, justifiable coercion is not limited to the enforcement of “natural” rights. So a rights-based idea of mere non-interference does not provide a foundation for libertarian politics.

There are no property rights independent of some institution defining them, but it is generally agreed that there should be such an institution. The question is what form this institution should take.

This question cannot be answered by glib appeals to “liberty” in the abstract, because the answer—the particular arrangement of legal duties—entails a choice between rival freedoms. Again, these thoughts are not entirely original, but they merit repeating.

Diagnosing Inequality

Thomas Piketty has responded to his critics at the Financial Times. What Chris Giles rejected as clumsy errors, Piketty defended as necessary adjustments. I doubt the dispute has been settled once and for all, but two clear lessons could be drawn from this exchange.

1) Demand outstrips the available data. Reliable measures of wealth inequality are quite sparse. So, gaps are filled by making rough adjustments and splicing together data from disparate sources. The process bears some resemblance to the making of sausages.

2) Too many data pundits are quick to say, “No matter how you look at The Data, this follows.” However, they actually mean, “Following my interpretation of this particular set of data, I arrive at this conclusion.” Such pundits rely, as Daniel Davies said, on a “childish insistence that ‘the data’ must give you definitive answers.”

As I have said before, no data set is interpreted outside of some conceptual framework. In Piketty’s case, he asserted two Fundamental Laws of Capitalism. But his grandiose “laws” have been severely diminished: the first here and the second here.

As James Galbraith said, “None of this is to deny that rising inequality has occurred. Nor to claim that it doesn’t matter.” But if you botch the diagnosis, you are more likely to screw up the remedy.

Housing Capital in the 21st Century

When most people talk about rising inequality, do they mean to say that houses are valued at higher prices? Probably not, but housing capital is central to Thomas Piketty’s narrative of the new inequality. So claim four French economists—Odran Bonnet, Pierre-Henri Bono, Guillaume Chapelle, and Etienne Wasmer—in a paper sharply challenges Piketty’s theory of capital.

In Capital in the 21st Century, Piketty argued that “the process by which wealth is accumulated and distributed contains powerful forces pushing toward divergence, or at any rate, toward an extremely high level of inequality.” Here, in the words of the four French economists, is how the process works:

Divergence is a dynamic concept that arises from the process of accumulating capital. Capital produces earnings and returns and thus it accumulates and self-develops. [....]

First, the higher the capital/income ratio, the higher the earnings of capital relative to labor. Second, if the rate of return on capital (r) is higher than the growth rate of the economy (g), the capital/income ratio will rise, eventually leading to a world where a class of owners would have perpetually increasing income from capital due to rising accumulated wealth. [Piketty] documents the strong rise of the capital/income ratio, especially in France, but also provides evidence of a similar trend in other countries. He suggests a worrisome accumulation of wealth in just a few hands and a rise in inequality.

But the four critics see an inconsistency between “the theory—the model of infinite accumulation of capital through rising earnings relative to national income—and the choice to include housing capital in total capital.” They note that housing as a component of capital has long been a source of contention:

In particular, housing capital does not provide a good measure of actual return on capital. Housing is both a consumption good, the price of which comes from rental or shelter costs, and an investment good, yielding an income corresponding to the rent. Only landlords (who represent a relatively small fraction of the population) effectively receive monetary income from their housing capital. Owner-occupiers do not receive any income. However they do save on rent and receive an implicit rent. Returns on housing capital (the key ingredient in the “r” part of the “r — g” model) are therefore more accurately measured by rent on housing, be it monetary or only implicit.

The valuation of housing capital based on housing prices is actually disconnected from the inequality-generating process that the author wants to establish. For the value of housing capital to be consistent with the underlying theoretical analysis, the value must correspond to an actualized value of rent and not rely on housing prices. The two measures are only equivalent in the absence of a divergence between housing prices and rent.

The rise of housing capital, due to the rise in housing prices, they argue, is what lies behind the contemporary rise in Piketty’s capital. Capital that could be classified as productive has risen weakly relative to income.

The authors argue that rent, not housing prices, are what matter for the dynamics of inequality, “because rent represents both the actual income of housing capital for landlords and the dwelling costs saved by ‘owner-occupiers’ (people living in their own houses).” When the authors recalculate the value of housing capital based on rent indices, their results contradict Piketty. But even if one rejects this revised method, it is not even clear that long term comparisons of housing capital make sense:

[C]urrently, homeowners are the majority of households (56% in France, 70% in the UK). In 1950, this proportion was respectively 37% and 30%. This is even further away from Karl Marx’s description of 19th century England where, for 20 million inhabitants, he only counted 36,000 homeowners. It is therefore highly problematic to analyze the dynamics of capital inequality without being very specific about its distribution in the population.

The rate of homeownership in America started higher and also rose over the last century. U.S. rates were: 48% in 1890, 55% in 1950, and 65% in 2010. The authors acknowledge that rising prices for housing has consequences for access to housing and “the wealth trajectories of individuals and dynasties.” But these fall short of the “explosive dynamics” of Piketty’s analysis. This criticism is one of the smartest I have read, and I would like to see a response from either Piketty or one of his many expositors.

UPDATE (May 23, 2014): Chris Giles uncovered many questionable practices in Piketty’s estimates. Also, George Cooper wrote as smart challenge to Piketty’s narrative of the decline in capital about a century ago. There should be some account of what happened to agricultural capital.

UPDATE (May 25, 2014): James K. Galbraith clarified what Piketty’s “r” actually measures. Once the prevailing misinterpretations are corrected, Piketty’s theory comes undone. The goal, as Galbraith said, “was to turn the historical record into fundamental laws and long-range tendencies. Despite strong claims—accepted by many reviewers—it now seems clear that this project fell short.”

UPDATE (May 29, 2014): What Galbraith criticized was Piketty’s first “fundamental law.” James Hamilton debunked the second.