Mark Clark: Libros Virumque Cano

Hi Dr. Clark, I was a student of yours in the University of Southern Mississippi Honors College starting in 1983, and I also took a second year of Latin from you.  You fortified my lifelong love of learning with the way you treated us undergraduates as peers in your intellectual journey.  You literally changed my life walking across campus one day with your casual question about what grad school I was going to attend.  It was only your assumption that I would continue my studies that prompted me to do so.  That resulted in a University of Michigan M.S. degree that launched my software engineering career here in Silicon Valley, where I met my wife and started a wonderful family.

Thank you!

Brian Holtz
Class of 1987

Appropriating Ground Rent Is Aggression

The standard Libertarian dogma on the needy -- let 'em beg -- is simply wrong.  The best libertarian answer to poverty derives from correcting a standard Libertarian misunderstanding of property rights.  That misunderstanding consists in ignoring Locke's insight that excluding people from the commons -- i.e. enclosing unowned land for exclusive ownership -- is naked aggression if that exclusion does not leave "as much and as good" for others.  Land (i.e. space, locations, sites, sections of the Earth's surface) cannot be created or moved or destroyed by anyone's labor, and so is a different category of property than that created by re-arranging matter.  Land (i.e. spacetime) is the coordinate system, and matter (i.e. mass-energy) is what exists in the coordinate system.  Owning a set of spatial coordinates is fundamentally different from owning the matter that currently exists there.  This seemingly academic distinction turns out to be the key to rescuing libertarianism from self-imposed moral bankruptcy.

In the state of nature there are always marginal but productive sites available for use by the destitute, and faithful historical observation of the Lockean proviso (leaving "as much and as good") should have always ensured that this remained the case even to this day.  To the extent that it is no longer the case, excluding people from access to the natural productive opportunities on what used to be the commons is unjust -- i.e. is aggression.  Standard anarcholibertarianism seeks to institutionalize this aggression -- ironically doing so in the name of de-institutionalizing aggression. The aggression that it institutionalizes is a subtle one called the appropriation of ground rent.

Ground rent is the advantage you get from exclusive use of a site compared to the most productive available site that is not in use.  In effect, ground rent is the extra income a site earns because of the exclusivity of its location within the community, as compared to what such a site would earn at the edge of the community.  Technically, ground rent is is the extra income obtained by using a site in its most productive use, compared to the income obtained by applying equivalent inputs of labor and capital at the most productive site where the application doesn't require (additional) payments for use of the site. Thus ground rent doesn't include the income from any labor-based site improvements -- buildings, irrigation, swamp drainage, etc.  Instead, ground rent includes just the benefit a site derives from the surrounding community by forcibly excluding them from it.

Geolibertarians say ground rent should be considered part of the commons (like the atmosphere, EM spectrum, etc.), with each individual having an equal right of access to it.  In practice, the way to undo the aggression of site monopolization is through a land value tax.  This allows a government to finance both rights protection and aid to the indigent, all without any force initiation.   The fundamental principle is that each person has full rights to his body, labor, peaceful production, and voluntary exchanges, but he must compensate those whose access he impairs when he monopolizes, consumes, pollutes, or congests a natural commons.  Details and references are available at http://EcoLibertarian.org.

World Philosophy Day

Yo dude, thanks for the link.  I didn't know it was World Philosophy Day. Your BBC article covers four classic questions, each of which I've written about before.

1. This is called the Trolley Problem, and I use it on fellow libertarians a lot. The crucial consideration is how much freedom you have in choosing who is the one who will be sacrificed to save the many.  If circumstances (or a bad guy) picks the one, then the right answer should be clear. Otherwise, you need to set up a lottery, and you need to weight things according to expected lifespans, objective quality of life, impact of the losses on others, risk of setting precedents, etc.  Luckily, these tragic "lifeboat" scenarios pretty much never happen, and that is why we're not used to making the hard choices involved in them.  The choices would be emotionally hard, but they're not philosophically paradoxical.

2. This is called the problem of Theseus' Ship.  The answer I give in my book is: "A given entity is identified through time with its closest close-enough continuous-enough continuer. A continuer is an entity which is similar to a previous entity and exists because of it. A continuer is close enough if it retains enough of the original entity's properties. A continuer is closest if it retains more of the original entity's properties than any other continuer. A continuer is continuous enough if there is no extraordinary discontinuity in its relationship to the original entity."  This whole topic of identity (including forked and joined identities) is covered in one of the best philosophy books I've ever read: The Metaphysics of Star Trek.  If I haven't bought you a copy before, then you're getting one for Xmas.

3. Yep, there is no absolutely certain synthetic (i.e. empirical) knowledge.  We've known this since Hume.  As I say in my book: "All synthetic propositions (including this one) can only be known from experience and are subject to doubt."  The crucial thing is to understand the level of confidence to assign to synthetic propositions, and to understand the ways in which they might be false.

4. The problem with free will is that people think of their mind/soul as something apart from the universe, rather than as a subset of the universe.  I write: "Free will is either of the doctrines that human choices are a) determined internally rather than externally (volitional free will) or b) not pre-determined at all (indeterminate free will).  Determinism is incompatible with indeterminate free will, but is compatible with volitional free will if agents have internal state that influences (and thus helps determines) their actions."

These are great classic problems.  Another really good mind-twister related to free will is http://en.wikipedia.org/wiki/Newcomb%27s_paradox.  Infinity is also a great mind-bender, such as the way it lurks in http://en.wikipedia.org/wiki/St._Petersburg_paradox.  I bet you would like http://en.wikipedia.org/wiki/Doomsday_argument.

Yes, I've tivo'd Parallel Universes, can't wait to watch it.  I'm a big fan of modal realism -- the theory that possible universes are just as "real" as this one.  It's related to the biggest of all philosophy questions: why is there something instead of nothing?  My answer: "A merely possible universe would be perceived by its merely possible inhabitants no differently than our actual universe is perceived by its actual inhabitants. [Modal Realism says "actual" just means "in this universe", and so is redundant when talking about our universe.] Thus, our universe might merely be the undreamed possible dream of no particular dreamer."

The Market Failure in K-12 Education

The primary market failure I see in K-12 education is that poor minors needing tuition money are not allowed to enter into long-term contracts that surrender a fraction of the alleged increase in earnings that a tuition investment would buy them. If education investments are as wise as we liberals claim, then such contracts should be able to make education for the poor self-financing. In the absence of such contracts, I don't mind the geolibertarian citizen's dividend financing tuition vouchers (or land value tax credits for tuition donations to) for poor families. There is no more need for the government to own and operate schools than to own and operate grocery stores.

Ballistic Missile Defense

There are distinct kinds of nuclear threats, such as:

1. Attempts by nuclear superpowers to win a nuclear war in a first strike
2. Attempts by nuclear superpowers to immunize themselves from U.S. nuclear coercion by establishing a secure second-strike capability
3. Attempts by nuclear non-superpowers to immunize themselves from U.S. conventional military coercion by establishing a credible limited first-strike capability
   
4. Acts of desperation by actors with either no return address or with good bunkers and no regard for their own citizens

In other words, we have to distinguish between ABM as used in nuclear war-fighting, and ABM as an attempt to undo nuclear arms proliferation. I see the latter as futile. Regarding the former, I'm OK with a porous low-cost ABM effort that offers an alternative to launch-on-warning as a way to restore mutual assured destruction between two adversaries armed to the teeth with heavily-MIRVed ICBMs (10x like the old MX and SS-18). But it is futile to use ABM to 1) prevent China from acquiring effective MAD parity, or 2) neutralize the ability of a North Korea or Iran to threaten anybody with nuclear ballistic missiles. We have to accept that China can incinerate an unacceptable fraction of our West Coast, and that a country like North Korea can (via speedboat if necessary) get a nuke into some city that we don't want to lose.

To get decent coverage for a boost-phase defense would seem to require either a big investment in orbiting assets or almost a cordon around the adversary, who can cheaply increase defense porosity by e.g. spinning his boosters or deploying warheads and penetration aids earlier, perhaps even while the upper atmosphere still degrades directed-energy weapons. Once you get past boost phase, I suspect that the physics and economics are overwhelmingly on the side of offense.

The Patent Value Tax

Like all brilliant ideas, this one is infuriatingly obvious in hindsight -- a straightforward application of a hardcore bid-em-off-the-land version of the land value tax. Some quick web searching reveals no prior art; did you make this up just now?

I would consider modifying the bid-em-off-the-property provision in the same way that I would modify it for land (and maybe orbits but not spectrum). People who can't pay their tax can let it accumulate (with interest) as a lien against the eventual sale or transfer of the property, and the lien is capped at the market value of the property. However, market value of patents is harder to assess, and the escalating patent value tax rate would create an incentive to just let the tax accumulate and then abandon the patent when the rate is too high for anyone to want to bid for it. So I might worry that an undercapitalized inventor will not be able to defend a patent if he and a predatory bidder understand its value more than the market does (or else the inventor could get a loan from the understanding market). However again, I'm confident that markets are good enough at valuing patents that this wouldn't be a big problem.

So I don't yet see any problem with this idea. It could be applied to copyrights too, to the extent that one even believes in copyright.

Dan Sullivan wrote at dfc_talk:

Enter the patent value tax. The holder of a patent would be required to self-assess its value, with the stipulation that anyone could purchase the patent at that value. The purchaser would have to honor contracts into which the previous patent holder had entered, to the extent that he could not increase the royalty charge or impose other restrictions.

The contracts themselves would have to be public contracts. That is, if one producer is allowed to apply a patented invention to a particular type of product at a particular royalty rate, then all producers would be allowed to produce the same product at the same royalty rate.

For the first year a patent is granted, the tax rate could well be zero. It would then gradually increase until, at the year of expiration, it consumes nearly the entire amount of the patent's self-assessed value. Naturally, the value of the patent would decrease as the tax rate increases and the expiration date approaches.

Samuelson's Theory of Public Goods

In 1954 Paul Samuelson published his landmark paper The Pure Theory of Public Expenditure, which formalized the concept of public goods (which he called "collective consumption goods") -- i.e. goods that are non-rival and non-excludable. He highlighted the market failure of free-riding when he wrote: "it is in the selfish interest of each person to give false signals, to pretend to have less interest in a given collective consumption activity than he really has". His paper showed that "no decentralized pricing system can serve to determine optimally these levels of collective consumption".

Excludability is the ability of producers to detect and prevent uncompensating consumption of their products. Rivalry is the inability of multiple consumers to consume the same good. A public good is defined as a non-rival non-excludable good, such as national defense. Because public goods are not excludable, they get under-produced. The pricing system cannot force consumers to reveal their demand for purely non-excludable goods, and so cannot force producers to meet that demand.

The evidence for under-production of public goods is so overwhelming that, as anarcholibertarian professor Walter Block admits about the resulting justification for state intervention, "virtually all economists accept this argument. There is not a single mainstream text dealing with the subject which demurs from it." For standard treatments, see e.g.

• Ch. 11 Public Goods and Common Resources in Principles of Economics by Greg Mankiw (Harvard economist fired as Chairman of White House Council of Economics for defending outsourcing).;
• The Free Rider Problem in the Stanford Encyclopedia of Philosophy;
• Public Goods and Externalities in the Concise Encyclopedia of Economics by Tyler Cowan (libertarian economist at GMU, co-blogger at Marginal Revolution).

Underproduction of public goods is inevitable in the presence of 1) the ability to free-ride (i.e. non-excludable goods) and 2) rational self-interest. Samuelson's paper did not fully explicate the modern quadripartite theory of private/public/club/common goods, let alone formalize all the kinds of market failure inherent in that analysis. There was important work related to this both before and after 1954:

• The 1939 generalization of Pareto optimality by Kaldor and Hicks to launch modern welfare economics;
• The 1950 formalization of the Prisoner's Dilemma and the subsequent avalanche of developments in game theory;
• Arrow's 1951 impossibility theorem, leading to Sen's 1970 liberal paradox;
• The 1953 discovery of the Allais paradox, and many subsequent discoveries about bounded rationality and cognitive bias and the development of Prospect Theory by Tversky and Khaneman in 1979;
• Tiebout's 1956 theorem about the optimal local provision of public goods;
• Coase's 1959 proof that markets can handle negative externalities only in the absence of transaction costs;
• The 1962 creation of public choice theory by Buchanan and Tullock; and
• Arrow's 1963 formalization of the problem of asymmetric information.

This nascent thread of work was largely ignored when Rothbard and Rand were setting their (and the future LP's) worldviews in concrete in the 1940s. That's a tragedy, because the mainstream modern libertarian theory of political economy is a far more formidable -- and palatable -- intellectual edifice than the brittle deontological dogma of Rothbardian Austrianism.