I.

“Forgive him , for he believes that the customs of his tribe are the laws of nature.” –George Bernard Shaw

Our tribe has a custom of dividing into Right and Left. The Right supports economic laissez-faire and traditional social norms. The Left wants economic regulations and greater civil liberties.

(unless of course a Democrat is in office)

If you live too long under this system, you start thinking the Left-Right division is a law of nature. I like the Libertarians’ pet Two Dimensional Political Compass because it reminds people that they’re allowed to mix and match.

And so, glory be unto the infinite variety of human thought, we have moved from an unwillingness to credit more than two possible visions of a flourishing society to a grudging acceptance that maybe there are as many as four such visions.

(one of which nobody will admit to believing)

“The limits of our language are the limits of our world”. If the only two words in political discourse are Left and Right, it becomes hard to realize libertarianism is a possibility, let alone evaluate it. What equally coherent possible views might a four-word discourse be missing?

What if we abandon our tribe’s custom of conflating free market values and unconcern about social welfare?

Right now some people label themselves “capitalists”. They support free markets and oppose the social safety net. Other people call themselves “socialists”. They oppose free markets and support the social safety net. But there are two more possibilities to fill in there.

Some people might oppose both free markets and a social safety net. I don’t know if there’s a name for this philosophy, but it sounds kind of like fascism – government-controlled corporations running the economy for the good of the strong.

Others might support both free markets and a social safety net. You could call them “welfare capitalists”. I ran a Google search and some of them seem to call themselves “bleeding heart libertarians“. I would call them “correct”.

II.

I think I only realized how committed to this position I was when I read an article about the BART strike. Workers on the BART, a San Francisco area mass transit system, were striking for higher pay. A tech CEO suggested solving the problem by firing the workers and automating their jobs. Some other people didn’t like that, said that BART Worker was one of the only jobs that people without college education could get and make good $60,000+ salaries, said employees were mostly old and wouldn’t be able to get other work, said even if their jobs could be automated it would be cruel to destroy their livelihoods just for the sake of profit.

And my first thought was: if your job can be done more cheaply without you, and the only reason you have it is because people would feel sorry for you if you didn’t, so the government forces your company to keep you on – well then, it’s not a job. It’s a welfare program that requires you to work 9 to 5 before seeing your welfare check.

Suppose BART work really can be done just as well by a cheap machine. Compare the current system – in which BART is prohibited from firing the workers and replacing them with the machine because that would be greedy – to a system where BART fired the workers, bought the machines, but continued giving the workers their old paychecks for no reason. BART gets the same profits either way. The workers get the same amount of money either way. The only difference is that the workers gain forty hours of free time a week.

That suggests that long hours worked by BART employees under the current system are deadweight loss, and the role of BART work is the same as those legendary New Deal welfare programs where they made people dig ditches and fill them in again.

Assuming society has decided it wants to give people welfare, it can do it in one of two different ways: the traditional way, where the government sends them a simple welfare check once a month. Or the sneaky way, where it gets billed as a “job” at the BART.

In the “Simple Check” condition the welfare is funded by the tax base, which presumably is the general population, with rich people paying significantly more. In the “Sneaky Job” condition, the welfare is funded by mass transit users – disproportionately poor people – and the increased cost inevitably disincentivizes mass transit. You may remember mass transit as the thing that cuts down on traffic, sprawl, and carbon emissions – you know, that thing we are trying to desperately convince people to do more of.

In the “Simple Check” condition the recipients of the welfare are the entire impoverished population, although the system may place more emphasis on those who are poorer or need more. In the “Sneaky Job” condition, the recipients of the the welfare are those few well-connected people who get cushy jobs at the BART, chosen somewhat at random but with the usual biases of employers being more likely to hire attractive, tall, Caucasian, etc people. They get $60,000 + no doubt excellent benefits, and everyone else misses out.

In the “Simple Check” condition, the recipients of the welfare can live enjoyable lives doing their hobbies – as the woman in the article puts it, hair and makeup. In the “Sneaky Job” condition, the recipients have to work long hours doing busy work, suffer the normal vagaries of jerkwad bosses and office politics, and suffer the constant stress that they might be fired for underperforming.

With all these advantages of “Simple Check”, what exactly is the “Sneaky Job” condition good for that makes it so popular? As far as I can tell, it is good for fooling people. People do not like paying welfare. But if welfare is placed in work boots and wears a big sign with the word “JOB” painted on it in bright letters, they will walk by it without grumbling. Also important, people do not like being on welfare, and as the Rogers & Hammerstein song goes, “when I fool the people I fear, I fool myself as well”.

[lest I be accused of being insensitive by pointing out how other people’s jobs are welfare, I will freely admit I have a job partly because the government pays my hospital $100,000 to employ me (of which I get less than half). This is a sufficiently complicated system that a full explanation will have to await another post.]

III.

Welfare has even more clever disguises than this. Let’s talk about those fast food workers who want $15 an hour.

No one denies that it’s pretty crappy to have to live on $8 or so an hour, which is about what fast food workers currently make. But if fast food workers get $15 not because they do $15 worth of work, but because we feel sad that they’re living on too little money, then once again it’s welfare.

And once again we can give them that welfare in one of two ways. We can send them a check, or we can pressure fast food places to pay them more.

If we send people a check, it goes to everyone, whether employed or unemployed. If we pressure fast food places to pay more, then it’s only employed people – the people who need money the least – who get anything.

If we send people a check, who gets the check is presumably determined by need. If we pressure fast food places to pay more, then who pays more is determined by media exposure and political clout. Fast food workers seem to have good union and good public visibility, so they can demand their wages get raised to $15. Garment workers aren’t as well-organized or are less sympathetic, so their wages stay at $8. It encourages a system of “squeaky wheel gets the grease” in which “squeaky” means “go on strike a lot and act miserable”.

If we send people a check, the costs are passed on to the taxpaying public, which includes rich people who pay extra taxes and does not include poor people who get out of a lot of taxes because of their low income. If we pressure fast food places to pay more, the costs are passed on to fast food consumers, who are less likely to be wealthy and more likely to be black than the general population.

And if we send people a check, there’s not much taxpayers can do to get out of the extra cost. But if we pressure fast food companies to pay people more, we punish them for hiring workers. If the workers do $8 worth of work for the company, and the government makes them pay $15, it’s the equivalent of fining companies $7 an hour for hiring poor people. Not only is this morally unfair, but companies will probably respond rationally by automating as much work as they can, hiring fewer people, or trying to figure out how to replace multiple poor people with fewer wealthier people (for example replacing several clerks with a programmer who runs a computer system).

This is a somewhat harder case as the demand for higher wages among fast-food employees seems endogenous – they’re threatening to strike and show the companies how much they need them – rather than exogenous – motivated by government fiat or popular demand. Labor negotiations are coordination problems that are more opaque to analysis than I like. But I think a case can certainly be made that here, too, people are shooting for a noticeably inferior solution just because it helps them avoid thinking about the poor. It’s not about complicated problems or a changing economic landscape – just make that greedy Walmart behave and somehow I will be freed of all responsibility and all consequences.

At the moment, I might support higher minimum wages just because doing things the right way is politically impossible. One can make all sorts of stupid political policies attractive when they are combined with other stupid political policies. But I am not pleased about it and any time people say we need minimum wages to “punish greedy corporations” it just makes me question the life choices that have made me end out on the same side of a political issue as they did.

IV.

But combining market values and compassion isn’t just about solving everything with basic income guarantees. Let me give another example of a government program meant to increase social welfare and how a more market-informed version would be better than a brute-force regulation.

Affirmative action and minority rights. I don’t trust people on this blog to think clearly about any actual minority group, so let’s pretend we’re worried about affirmative action for Martians, who have been a disempowered underclass ever since their giant heat-ray-bearing tripod machines broke down.

Modern affirmative action says that given the choice between a Martian or an equally qualified Earthling, one must hire the Martian. One big obvious problem here is that “equally qualified” is a matter of opinion. It may be that a boss is prejudiced against Martians, and so tells an excellent Martian candidate that ve is underqualified for the position – the Martian may never know. Or a Martian who was genuinely underqualified may paranoidly believe ve was denied out of prejudice and start a costly lawsuit.

There are other problems as well. Some jobs may have legitimate reasons not to hire Martians – maybe Martians make lousy pilots because their single lidless eye gives them terrible depth perception. Certainly a Martian actor is unqualified to play Abraham Lincoln in a historical biopic. One could offer to let these jobs apply for exemptions, but this means a costly bureaucratic process, and is likely to end with large companies with good lawyers obtaining the exemptions, small companies with poor lawyers not obtaining the exemptions, and no concern about fairness to Martians in any case.

In the worst possible situation, a non-prejudiced boss may decide not to hire Martians because it would be harder to reprimand or dismiss a Martian when they could threaten to sue the company or start a viral Tumblr post accusing the company of speciesism.

Compare a market-informed solution: run a bunch of controlled studies in which bosses get identical Earthling and Martian resumes, find out exactly how strong the prejudice against Martians is, then levy an appropriate tax on hiring Earthlings (or give a subsidy for hiring Martians). Maybe hiring Earthlings costs 5% extra, which is funnelled into scholarships for impoverished Martian larvae.

Now there’s no question of a company wriggling out of their obligation – no matter how stylish their lawyers’ hair is, they’re going to pay the tax. There’s no question of lawsuits – if a company didn’t hire a qualified Martian, that’s their own business and the Martian community can laugh all the way to the bank. But on a statistical basis, we expect companies to be indifferent between hiring Martians or Earthlings.

Any company that has a legitimate reason to not want to hire Martians can just pay the (small) tax. And there’s no problem with firing Martians anymore – if you decide to fire the Martian in favor of an Earthling you like more, you’re perfectly welcome to do so as long as you don’t mind paying a little extra.

If ten years later the social scientists do some studies and find that companies are still more likely to accept Earthling resumes over identical Martian resumes, they can raise the tax until that’s no longer the case. If they find that companies are more likely to accept Martian resumes now, then prejudice has decreased and the tax can decrease as well.

I think everyone has a lot to like about this proposal. Martians can rest assured that with enough time to tweak the tax level, they will have a provably equal playing field in this area. Non-bigoted Earthlings can rest assured that they’re not going to be unfairly accused of bigotry and taken to court by some Martian playing the planetary origin card. And bigoted Earthlings who just really don’t like Martians – maybe someone’s father was killed by a heat-ray-tripod during the invasion and she’s had PTSD every time she sees Martians ever since then – can stand by their “principles” as long as they’re willing to pay a little extra.

(This is my answer to Jim’s question of “How many cities are you planning to burn, how many women are you planning to have raped with large objects in order to achieve equality of opportunity?”, which I honestly have to admit is not a question I ever really considered before reading Jim’s blog)

Someone will object that small fees can’t eliminate as pervasive a social problem as prejudice, but I’m not so sure. Consider the Islamic Caliphate (7th – 12th century AD). Their modus operandi was to march into a new territory, tell the non-Muslims there that they were perfectly welcome to continue to practice their old religion as long as they paid a tax, and if they ever wanted to save those couple shekels or dinars or whatever, they could also convert to Islam – but no pressure. The current religious makeup of the Caliphate territory (Northern Africa and the Middle East through Iran and Pakistan) should be taken as some evidence of the effectiveness of this policy.

V.

In my opinion the biggest advantage of a market-based system for improving social welfare is that it allows more flexibility – it leaves your options open.

Suppose the government, noticing mercury is toxic and has few good industrial uses, bans the use of mercury in industry.

A month later, some chemist discovers a really really lucrative industrial application for mercury that will make billions of dollars and cut the price of automobiles in half.

Probably this chemist can’t single-handedly convince the government to relax its views on mercury. She could consider selling her idea to a really big company like Dow Chemical, who could afford the necessary lobbying. But then she’s lost the ability to profit from her own invention, and we’ve replaced what could have been a nimble startup with yet another Dow product that they’ll overprice and destroy a couple of Indian villages producing. And the brilliant scientist becomes a mid-level drone working for morons in suits.

Or maybe it’s worse than this. Maybe she goes to Dow, but they don’t want to take the time to understand this fringe idea. Or maybe Dow is mildly interested but not interested enough to throw all its lobbyists and lawyers at the problem. Or maybe Dow does throw all its lobbyists and lawyers at the problem, but the Sierra Club reasonably believes that this is just another evil company trying to gut vital environmental legislation, and successfully blocks them. Sure, Dow says “This will halve the price of automobiles!”, but they probably make grandiose claims about all of their products when they’re trying to look good in front of the government.

So suppose that instead of banning mercury, the government just places a tax on it. The tax could be the cost of mercury cleanup, it could be enough money to treat and emotionally compensate mercury poisoning sufferers, or it could just fund public health programs that do more good than fighting mercury ever could. It could be all these things combined plus a little extra. Let’s say the tax on mercury is 500%. Every company that has any possible alternative to mercury switches to that alternative. The companies that have no alternative to mercury close down if the benefit of their product to society is less than the cost of the mercury they produce. And the companies that use mercury in a way that net benefits society stay open and subsidize lots of environmental and public health programs.

Now the chemist who discovered the brilliant unexpected use for mercury is able to start her startup – at increased costs, sure, but if it’s as lucrative an idea as she thinks she’ll be able to get the investment or just swallow the losses. In any case, it’s nothing compared to the cost of pushing around an entire government agency. The price of automobiles decreases by half, the taxes are more than enough to clean up the mercury and improve public health, and everyone is happy.

VI.

The problem with banning and regulating things is that it’s a blunt instrument. Maybe before the thing was banned someone checked to see whether there was any value in it, but if someone finds value after it was banned, or is a weird edge case who gets value out of it even when most other people don’t, then that person is mostly out of luck. Even people operating within regulations have to spend high initial costs in time and money proving that they are complying with the regulations, or get outcompeted by larger companies with better lobbyists who can get one-time exceptions to the regulations.

In short, the effect is to decrease innovation, crack down on nontypical people, discourage startups, hand insurmountable advantages to large corporations, and turn lawsuits into the correct response to everything.

The problem with not banning and regulating things is that the rivers flow silver with mercury, poor people starve in the streets, and Martians get locked out of legitimate industry and are forced to turn to threatening innocent cities with their heat rays just to get by.

The position there’s no good name for – “bleeding heart libertarians” is too long and too full of social justice memes, “left-libertarian” usually means anarchists who haven’t thought about anarchy very carefully, and “liberaltarian” is groanworthy – that position seems to be the sweet spot between these two extremes and the political philosophy I’m most comfortable with right now. It consists of dealing with social and economic problems, when possible, through subsidies and taxes which come directly from the government. I think it’s likely to be the conclusion of my long engagement with libertarianism (have I mentioned I only engage with philosophies I like?)