The Diablog

Earlier today, while coffee was still percolating through my system, I characterized myself on Facebook as a "market-oriented-left-libertarian." I wrote it somewhat flippantly, as I often do with such comments, but it also immediately resonated. And throughout the day as other things occupied my time, I think some chunk of the grey matter was ruminating away (probably much like a cow).

 Here's what I've come up with. Without footnotes, paragraphs of justification, attempts to derive each from sound theoretical principles in economics, anthropology, or evolutionary theory. In other words, without any of the stuff I usually say, which tends to appeal only to people "like me" (overly nerdy, overly educated, academic obsessives).

 In other words, a simple platform. This is for people, perhaps like myself, who love liberty and freedom to do what we want with our lives, but expect government to play a role in ensuring a reasonably fair playing field, don't believe that unfettered markets have any way or mechanism for ensuring reasonably fair playing fields given incomplete information and incomplete contracts, but expect government to be kept firmly in check, reasonably efficient, and not squander our collective wealth. It's for people who expect that we'll provide a safety net against ultimate disaster for citizens, but not coddle them so they don't want to contribute to society.

 In other words, for those who want the best of what both American political parties have to offer, with some strongly libertarian views on rights and privacy added into the mix.

 So here goes.

 1. Competition is good because it forces everyone to try to do better, and thus improve the conditions of our lives. Competition doesn't have to be aggressive or socially combative, and often isn't. And it can be taken too far, both in our philosophies and in our actions.

 2. Competition, in the form of a market in which we match buyers and sellers of goods and services, is the best way we've figured out as a species to make sure things which require skills, or only occur in specific places, get distributed to the places and people that need them. With a reasonable degree of efficiency and while providing incentives to those who produce to keep making things we need.

 3. Markets work best when everyone has the information needed to make reasonable decisions about buying and selling. "Best", in this sense, means a roughly pareto-optimal outcome.

 4. Markets, however, are subject to manipulation behind the scenes and via the processes of governmental regulation. Some of these manipulations can be very, very bad, as when private companies make decisions which create hidden risk for everyone else in the marketplace, without disclosing those risks. To some extent, we've seen this in the financial system, credit card industry, and insurance industries.

 5. Some manipulations or interventions in the market can be good; since most of us cannot personally collect the data needed to ensure that a packaged food product is safe, we demand that someone do it on our behalf which is not overly manipulated or accountable to the manufacturers of the products being tested. This is what we expect the FDA to do for us, for example, and most of us would consider some version of such regulation to be a good use of taxation.

 6. Such regulation is key in any number of areas. A good example are public investment markets. Even if we had full, transparent, completely public access to the internal records of all public companies and investment funds, most citizens will lack the expertise along one or more dimensions -- financial, accounting, domain experience for what the company does -- to properly evaluate the veracity of what we're told. Nor do most citizens directly want this responsibility. Instead, we collectively insist that an independent, accountable group which is insulated legally, and if necessary constitutionally, be in charge of validating claims made by public companies, banks, and investment entities. Today we have the SEC and other agencies; these are worth funding and improving.

 7. In other words, markets and regulation are two sides of a coin. Markets should be preferred whenever there's a reasonable expectation that the participants will get a better deal by doing it privately, and if the market can exist without a lot of hidden manipulation. Markets + regulation should be the solution for situations where participants can get a better deal by doing it privately, but need some kind of structure to ensure that buyers get reliable information from sellers -- i.e., where it would be impractical or impossible for a buyer to verify information themselves.

 8. Public projects, used in lieu of markets, are useful primarily in situations where suitable incentives in the private sector don't exist to provide a social good or service that at least a good majority of us believes should be a social service, and that we're willing to be taxed to pay for. Maintaining roads, operating public universities to provide higher education at prices that smaller private schools can't match. And so on.

 9. Most importantly, as citizens I see us as both in competition with, and in cooperation with, each other. Neither predominates. Occasionally we pull together, as we did in WWII or in some of the Depression-era programs, and put aside the competitive impulse for very good reasons. Much of the time, though, it's alright to try to get ahead, and do better for yourself and your family, aim for the goals that will make your own life good. But that doesn't exclude the ability to want to help everyone else too -- through volunteering in our communities, at churches, running for office, or giving to charities.

 10. Being "in it together" means that we should all consider our taxes as the "membership fee" for citizenship and its privileges. We should actually feel good about paying our taxes, because we know we're building a place we want to live with them. That brings me to the next key point:

 11. Being "in it for ourselves" means that, at the same time, we should be concerned that our taxes be spent wisely, and that we control the costs of the public projects we undertake. To the extent that some independent entity, like the SEC is expected to do on Wall Street, would report back to the American people about how its money is truly being spent. Today we have no such independent agency. The OMB isn't it. The closest thing we have is the Congressional Budget Office, but although they report to Congress, they're part of Congress. Really, they report to the people *through* Congress. We need more independence than that, to account for what our elected officials do when we give them money to spend.

 12. Being "in it together" also means we should be willing to help those in need. For many reasons, each to our own. Some, because of religious belief. Some, because we fear that if we were in a similar position, we'd want a helping hand. Some, because we understand that we understand that the highest payoff of all in the Prisoner's Dilemma is for mutual cooperation, and we believe that it's worth trying to overcome the PD occasionally since it improves things for everyone including ourselves. Whatever the reason, we believe we should not leave anyone behind.

 13. At the same time, we accept that there's inequality built into the outcomes of any system which uses competition as a force for improvement and innovation. We can't, and aren't interested in, *eliminating* economic inequality. We're not egalitarians in this regard.

 14. But we also remember that income inequality used to be much less in this country, and that yielded more people going to college and becoming skilled, and that led to more innovation and opportunity, so there's good logic behind trying to find the right incentives and market regulations to keep income inequality under roughly stable conditions -- in other words, not levelling it but not letting it geometrically increase.

 15. Ways to do this are incredibly tricky and fraught with ways to "game the system," and thus our hardest thinking of all has to go into ways to design those incentives and regulations. And then, of course, they need to be monitored and reported by someone independent, someone we can trust, back directly to the people. Because THIS information, and their fiscal responsibility, is at the core of how we'll judge our elected officials come election time.

 16. And while business needs a voice in the deliberation process towards public policy, and while corporations are "fictitious persons" in our legal system, corporations ARE NOT PEOPLE, AND DO NOT HAVE THE RIGHTS OF CITIZENS. In practical terms, while we might make a public policy decision based on how it might affect investors and employees -- i.e., real citizens -- the welfare of a corporation itself is not the concern of government. People are.

 17. This means that when issues like personal privacy of information come up, government MUST set policy that benefits the greatest number of citizens possible. If this means that regulations can be made which benefit both ordinary citizens (i.e., holders of personal information), and allow companies to make money doing things with personal information that don't harm ordinary citizens, such regulations are preferable to regulations that only protect ordinary citizens and bar all business use of information. But if this ideal state can't be reached, personal privacy and individual citizens must win, every time.

 18. Governmental corruption must be a much, much bigger deal than it is considered today. The Founders lived in a world where the material rewards for corruption were much more obvious and detectable, and the channels for accomplishing it more easily detected. We live in a world of complex systems, money that never assumes material shape, legislation that is hundreds if not thousands of pages long, agencies that enforce, and a crushing load of governmental activity that citizens cannot adequately monitor for themselves, even if there were access. Thus, the Founder's remedies for corruption -- three branches of government, bicameral legislature, checks and balances -- are necessary but not sufficient to tackle corruption today. We need fresh ideas, and a determined citizenry that actually punishes politicians for malfeasance. Make no mistake, we don't need much more in the way of criminal law -- it's illegal to peddle influence -- but we need ways to detect and enforce it much, much more strictly.

 That's it for now. There's undoubtedly more, but this is the broad outlines of what I meant by "market-oriented-left-libertarian."

 I look forward to questions and comments.

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