Is the perfect really the enemy of the good? Or is it the other way around? In 2008, Duke University economist Michael Munger ran for governor and proposed increasing school choice through vouchers for the state's poorest counties. But some lovers of liberty argued that it's better to fight for eliminating public schools instead of trying to improve them. Munger realized his fellow free-marketers come in two flavors: directionalists--who take our political realities as given and try to move outcomes closer to the ideal--and destinationists--who want no compromises with what they see as the perfect outcome. Listen as Munger talks to EconTalk's Russ Roberts about two different strategies for achieving political goals. Along the way, they discuss rent control, the minimum wage, and why free-market policies are so rare.
Dan Klein of George Mason University talks with EconTalk host Russ Roberts about the marvel of economic coordination that takes place without a coordinator--the sequence of complex tasks done by individuals often separated by immense distances who unknowingly contribute to...
Russ Roberts talks to Milton Friedman about the radical ideas he put forward almost 50 years ago in Capitalism and Freedom. Listen to the most influential economist of the past 50 years discuss the principles of liberty, social responsibility of...
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Podcast Episode Highlights
Intro. [Recording date: March 14, 2023.]
Russ Roberts: Today is March 14th, 2023 and my guest is economist Mike Munger of Duke University. This is Mike's record-extending 44th appearance here on EconTalk. And, we are recording this just two days before the 17th birthday of EconTalk's first episode in 2006.
So, Mike averages two plus episodes a year, which may not be everyone's cup of tea, but it is mine and I know there are at least a few others who agree. Mike was last here in October of 2022 discussing industrial policy. Mike, welcome back to EconTalk.
Michael Munger: Thank you Russ, I appreciate it.
Russ Roberts: Our topic for today is a recent essay of yours. I love the title: "This is Why We Can't Have Nice Things: Directionalists Versus Destinationists." It's at the website of the American Institute for Economic Research. Mike, what are those things? What's a directionalist? What's a destinationist? And why does that have anything to do with why we can't have nice things?
Michael Munger: I first came up with this kind of distinction or classification when I was running for governor of North Carolina in 2008. My education plank in my platform was that I was in favor of increasing school choice. And, in particular, I favored vouchers for at least the 40% of the North Carolina counties that were least well off. And, many of my--and I mean many--of my libertarian colleagues--I was running as a libertarian candidate--many of my colleagues said, 'Well, no, that's completely unacceptable. The state would be involved. The only conceivable libertarian policy for education is the immediate elimination of all taxes.'
Now, that sounded to me like a nonsequitur. We have a public school system: the question is how can we do it better? But, their point was, as long as we have a public school system, you're only fiddling at the margins.
And so, I came to realize that there are people like me and I'm a directionalist and that means that I sort of take things as given. And, I would prefer that we move in directions that increase personal liberty and personal responsibility. So, we will leave it up to individuals to make these choices and you can push me back on some things. But, most of the time I will accept any policy that moves us in the direction of what I think is the better destination. So, there is a destination I have in mind, but I'm interested in something that is moving in that direction.
There are many people who would say, 'you are just countenancing evil.' It would continue to be true then that people's choices would be restricted by having basically a monopoly state school system. Yes, we'll have vouchers where you can decide which one of those to go to.
So, that got me thinking about the problem of directionalism and destinationism. And, the directionalism actually fits well with the way a lot of economists think about this because economists tend to say, 'we're going to take the political process as given and then we're going to choose the most efficient way of accomplishing that.' I used to teach that in economics class.
So, there's a number of different ways to accomplish something. Let us choose the Pareto-superior one of those three, four, or five, whatever they are. But, the political objectives are going to be taken as given.
A destinationist--someone who is mostly concerned about their view of the good in politics--is going to argue, 'That's not the way to think about this. You're conceding too much. Instead, we should advocate for what we think is the best system, not movements within a system.' So, if the system is bad, movement within the system, you're just being complicit.
So, I have found that that distinction, that difference of opinion, is a lot of the reason--and this motivates my title--a lot of people on our side end up fussing with each other rather than actually contesting elections and trying to influence policy.
So, we're really hard on heretics. I have, there's a number of people--I won't name names--but a number of people who are extremely critical of even tiny points of difference because these are dogmatically important. This is the doctrine we all believe in. How could you have made this mistake? And, we never go after the infidels. We never go after the people we disagree with. And, the infidels meanwhile are formulating political policies. They're putting people in office and they're appointing people to commissions. The result is the reason we can't have nice things is that we fight among ourselves about directionalism versus destinationism. Whereas we're going in the wrong direction. We're moving in the wrong direction.
Russ Roberts: I don't know if that's the reason we can't have a nice things. Maybe we'll talk about that. But, I think that distinction is quite interesting. I remember when I was younger, somebody called me with incredible excitement because there was this new thing called a charter school. I thought, wow, that's exciting. I knew this person was sympathetic to my views on education and the poverty of the American public school system. And, I kept saying, 'But wait a minute, it's still a public school.' 'Yeah, yeah, but the rules don't necessarily apply,' and I'm thinking, like, 'That's it? That's all you got? Is it the--you can have a little more freedom within the public--that's it?' And at the time I was younger and a little more idealistic, much more of a destinationist. And, I could not--it didn't make any sense to me. And, it did feel like heresy; and worse, it was exactly what you said. It was, 'You're going to settle for that?'
Michael Munger: Yeah.
Russ Roberts: I'm older now, perhaps wiser. I'm more excited about charter schools for sure now than I was then. And, I think this question of--the catchphrase is 'The perfect is the enemy of the good'--I think is an interesting question, whether that's true or not. And so, those people who went ahead and who have a utopian goal--I will call it a perfect goal--that is: No public schools; that's the goal. Those people never countenance any movement within the public school system, any policy that maintains it. And, they would argue, perhaps correctly, that by considering those other goals, we will never get to a good outcome. And, I think that's your claim about why we don't get nice things.
Michael Munger: Right. And, it is interesting. This doesn't happen just on our side, to the extent that we have a side. Lenin was very concerned about trade unions because trade unions would improve the quality of life for the working class and it will put off the Revolution. So, these sort of half measures, not only are they not enough, they may be actively harmful because if you make the state monopoly school system, my colleagues would say, good enough, that reduces the pressure to get rid of the whole thing and actually have a private school system, which in their mind is better. And, I'm not trying to argue the merits of that.
I think it is a legitimate question. And, one of the things--sometimes some of your listeners in comments mention the fact that there's this trope--I always use it every time I'm on EconTalk now where I say, 'Well, I used to think this but I made a mistake. And, now I think this.'
At the end of the essay, I actually, after thinking about it some, I'm not sure, I'm not sure that I'm right.
It may be that the reason we can't have nice things is that my side has constantly--that is the directionalists--have constantly conceded the moral high ground. And as a result, people who believe--now, I would say wrongly--but people who believe that the morally right thing to do is to have only public schools, who have only rent-control in apartments, who have full public healthcare--we're only arguing the consequences of that. We're not arguing the moral position.
And, as a result, there's many people who might be persuaded by the moral argument that--I mean these little things, this green eye-shade stuff about consequences where you have costs and benefits, they don't care about that. What many people care about in politics is the moral right. And as a result, our side may be losing because of people like me who just take a consequentialist position and don't argue the moral side.
Russ Roberts: You're a horrible person [?]. Yeah, okay, we got that established, but it's only a handful of minutes into the conversation. No. I think--I hesitate to say this Mike, but for me you're confusing two things.
Let's take Capitalism and Freedom, which is a phenomenally readable and interesting book even though it's 60 years old, approximately. It's a great book. It's still interesting. And, Friedman lays out in that book--Milton Friedman--a lot of arguments for what at the time were unbelievably extreme positions; and some are more in between, but some of them are extreme. He argues for a volunteer army for example, which in 1962 when the book came out--I think when the book came out in 1962--was literally unimaginable. It was an absurd idea. He argued for, I think he argued for private social security in there--I'm not 100% sure.
Michael Munger: And floating exchange rates.
Russ Roberts: Floating exchange rates, getting rid of agricultural subsidies. He had a bunch of radical ideas, not marginal improvements.
And, if you had--looking back on it, he was wise. We didn't get all those things. We did get a volunteer army, which is really an extraordinary thing. And, if he had just tried to make the draft more efficient or some other phrase, it wouldn't have been very interesting. We never would've headed to the final destination of a true volunteer army, meaning soldiers were paid rather than conscripted by force. And, a lot of his other ideas, they're still on the table; they remain unattained, but there are people who advocate for them because of the case he made.
Where I disagree with you is that some of the case he was making was moral, but often it was purely pragmatic. He argued that these reforms, it's not that they were morally superior: they were practically superior.
So, I think there's two issues--for me, there are two issues here. I don't believe that the public school system is evil. I just think it's ineffective. And so, I'm willing to make inroads into that system that I think would serve students better. In that sense, I'm a pragmatist rather than a dogmatist. But, I think there are other cases where you would go to--you should go to the wall for a particular policy because it is attainable in theory, it would be a great policy in isolation even, not with all the other things we might want to accomplish; and therefore we ought to argue for the hard extreme destination rather than the direction.
Michael Munger: There was a--Milton Friedman appeared on an actual podcast. It was obscure at the time, it was called EconTalk. And, in--
Russ Roberts: Yeah, 2006.
Michael Munger: And in that podcast, the host--whoever it was--asked Milton about the things that he had written about. And, Friedman expressed frustration, saying, 'Yeah, there's basically one thing that we've accomplished in 40 years.' And, very few of--and that was the volunteer army which connected to the moral claim. There's no doubt. But, that was a feeling that was pretty common on the Left, that we should get rid of the draft, the particular circumstances of the war. Yes, it was miraculous that it happened. And then the exchange rates also happened, but it was--that's something that people don't understand very well. But, those two--floating exchange rates and the all-volunteer army--in Friedman's own view were the only ones that had been accomplished. And, he found it pretty frustrating that we have accomplished so little when there is so much agreement for economists about the bad consequences of these things.
Now you're right that Friedman did often try to make the moral case. Most economists don't; and George Stigler would usually say: The best we can hope for [inaudible 00:14:02]. Politics, you shouldn't participate in that. That's not going to work very well. You can't really have an influence. But, you can talk about things that are relatively more or less efficient. That operates at the scale of where you're conceding to the other side: We've already decided what the basic framework is. Now we're just going to talk about efficiency within this framework that since we're not going to contest, it just gets worse over time.
When I look--and I know another guest, you've had a number of times--when Dan Klein looks at what's happened to the United States, say, since 2008--the last 15 years--I don't see a movement in our direction. And so, I would say we're losing.
And I want to at least raise the possibility that we're losing because all too often we take a directionalist instead of destinationist perspective.
Russ Roberts: I think that's a hard case to make. I don't--and I'm going to let you make it--I mean, let me tell you why I find it unappealing.
There are plenty of other reasons we're not winning, those of us who want free markets or more less government. And, I think to put so much weight on our strategic failure--in other words, and again, I don't think it's the direction/destination distinction. I want to push a different distinction, and you can push me back if you want; but I think it's a question of moral versus pragmatic.
So, let's take another example. Let's take the minimum wage. Most economists--the minimum wage argument is about the impact. Overwhelmingly in our profession, the argument is over the impact on employment or unemployment. They're two very different things, by the way. But that's the argument. And, an enormous amount of econometric, statistical firepower has been unleashed in trying to tease out the impact of a small change in the minimum wage on the employment level of, say, low scale workers.
And the cost of that, to me, has been a failure to think about the other impacts of the minimum wage on training, civility, security--all kinds of other--freedom of movement, meaning if I know it's really hard to find a job and I already have one, I better hold onto it. I shouldn't change towns, I'll never find another job; huge excess demand for these high paying jobs for people with low skills, tragically. And so, that, I think has been a tragedy in our profession--that the focus on the efficacy of the minimum wage in helping low wage workers, whether--it helps the ones who keep their jobs, it hurts the ones who lose their jobs; and therefore the debate is how many lose their jobs or how many can find work? That's the debate in our profession.
No one, virtually--no one in the mainstream of economics--with a straight face makes the argument that the minimum wage is immoral: The government has no right to intervene in the decision of an employer to hire a worker, the decision of a worker to take, to accept a job. They should be free to do that at any pay that they can agree on mutually. And, that argument is not used.
Now, it's not used for the obvious reason that most people don't find it compelling. But, if you could make it compelling and you could show that the consequences of failing to take note of that led to other problems in public policy, you'd really[?rarely?] get very far.
The other strategy, which would seem to be the winning strategy, has totally failed. We have had virtually--those of us who don't like the minimum wage--first of all, we've failed to attract friends. It used to be almost unanimously agreed in the profession that the minimum wage was a bad idea and raising it was a bad idea. Now it's become much more the case that the minimum wage is a good idea; it's question of how high, and it's probably okay now, we could probably make it even a little higher.
What changed there? Is it the nature of the debate, what the terms were? Is it the nature of the body politic and the lack of interest in these kind of moral arguments? Those I think are the questions.
Michael Munger: Well, sure. For the sake of argument, I'm going to defend my framework of destinationism versus directionalism. So, the destinationist--and I actually have an article coming out at AIER [American Institute for Economic Research] that will be out by the time this airs about the minimum wage in exactly this framework. And, I cite the work by my Duke colleague, Richard Salsman, who makes the objectivist--that is, the sort of Ayn Rand style--argument that the problem with the minimum wage is that it interferes with the freedom of contract of individuals. And, if an individual wants to take a job at a very low wage so that they can serve an apprenticeship, so that they can learn things, so that--it's up to them. It's not up to anyone else, then it is simply wrong. It is something that the state should not be able to do.
Now, one way to think about things the state should not be able to do is that elected officials will forbear and they will say, 'No, that's--the state shouldn't do that.'
The other would be to have some legal or constitutional stricture that prevents them from doing that. So, it's unlikely we can get the second. I guess I'm trying to rely on something more like the first. And my colleague Richard Salsman is trying to rely on something more like the first. But that's a destination where all of us, or at least a substantial consensus exists that the individual responsibility for their own lives entails--since we're going to hold people responsible for their own lives--that entails the ability to negotiate contracts that are the best that I can find. Saying that we will not allow you to work at a wage below some level, which we have decided--and I don't know what 'we' really means. There's some political process; it's not 'we'--there's some political process that spits out $15 per hour is the minimum that you can work.
And, then we're arguing just from a utilitarian perspective about whether $15 per hour--the people who are still working, they'll be better off. The people who can't find a job, they'll be worse off. And, we will use some sort of complicated cost-benefit analysis to add this up. Our argument as economists has been that if you do the cost-benefit analysis, minimum wages are probably worse or at least slightly worse than not having a minimum wage, but it depends how you weight things. That seems complicated.
The argument--the destinationist argument--which we have not made except for a few people--and objectivists are an example. The followers of Ayn Rand are an example where they say, 'You people have to stop this. Morality is the argument that we should be focusing on because yes, it's a harder argument to make, but once you've made that argument, all of the other policies follow from that because the principle is: we're going to hold people responsible for their own lives and we're going to allow them the freedom to achieve what they can because they're responsible for their own lives.' That's not an argument that any economists ever make about the minimum wage.
And so, I agree with you, we have been too directional and not destinationist enough in arguing against the minimum wage. And that's why we're losing.
Russ Roberts: So, the question would then be: Why is that? I mean, why wouldn't we obviously see this argument and try something else, try the destinationist viewpoint. And, I think the answer is--I'm going to really get down, I'm going to be, this is unpleasant, but I'm going to take a crack at it. And, Mike, you know--and I think most of my listeners--I'm pretty free-market oriented. But here's the problem I have, and we've probably had this argument before on this program, maybe 27 episodes ago, but who knows?
So, it turns out when you make that moral argument, you don't make any friends and you lose some, and that's not so fun. So, you figure: Well, let me concede the moral--let me ignore--the moral case, which is in many ways orthogonal--meaning totally not related [inaudible 00:22:44] real issue for my opponent: my opponents has zero interest in that.
So, my opponent, they just care about helping poor people. So, I'll argue on--this is Milton Friedman's argument for sure. He would say, 'I'm going to take your goal as given and show you even under your goal, you're not going to get to where you want to go.' And, that is at least an argument where you get invited to some cocktail parties. Not too many, because it's annoying after a while.
But, the real question is why did--not economists per se, but people who believe in liberty--start making arguments that were more fundamentally pragmatic rather than principled?
So, I'm not even moving away from the moral side of it you're talking about. Why did they move toward those utilitarian-type arguments?
Let me try this on you. You can agree or disagree. I think the United States moved its policies over the last 50 years--certainly in other countries as well--moved way to the side of bigger government, way to the intervention side.
As you say, we're losing. We're not winning. And, I think one of the reasons that our side--so-called our side, the side of liberty, more personal responsibility, less active government--the reason that that side is struggling is that we've moved away, as you point out. And, guess what? Not so bad. Not so bad.
Now, my dad would argue he doesn't care whether seat belts save lives. He would say the state has no right to tell me how I act in my car. If I want to take my life under--put my life at risk, I should be allowed to. I want to smoke, I should be allowed to. I want to ski, I should be allowed to.
And, I think if you extend that, our argument, the next piece is: And if the state continues to treat me like a child that will lead to the atrophy of other muscles of adulthood. I will become less of a responsible agent and more ward of the state.
And, that to me is an interesting argument. And you could win that argument, maybe.
But if you just argue on the principle and say, 'Okay, the outcome is good: it saves lives. But I don't think the government should be allowed to do that,' you don't make a lot of friends. And, we've moved in that direction and life's pretty good away from our so-called liberty-oriented views. And, life's pretty good in the United States and the standard of living is higher.
And so, you've got to really twist yourself in an intellectual pretzel to argue that somehow this is a disaster. Which we would, if it was a principled argument: you may say, 'Oh my gosh, this would destroy the fabric of life.' And, most of us would say, 'Well, it hasn't yet.'
Michael Munger: That's interesting. The argument that you made about our--it is typical for economists to say, 'We're going to accept the policy decision and then we're going to try to decide what is the most efficient way of achieving it.'
Now, the question of how much do we chip away at this principle of individual responsibility before there isn't much left?
And, seat belts are a really interesting example. Seat belts are--Gordon Tullock actually said probably seat belts made sense from a consequentialist perspective. But what it establishes is the principle that the state is going to make decisions on behalf of individuals, and substitute the judgment of the state--hopefully experts--for the individuals.
And so, maybe it's a slippery slope argument that I'm making, but maybe it's an accretion over time of these kinds of substitution of judgment, which end up infantilizing people. Because, since we're not used to exercising our judgment, we allow the substitution of someone else's judgment.
And, there's no reason to think, on many things, that someone else's judgment is better than mine.
But, once we've established that precedent, it becomes harder to fight because then you're trying to argue case-by-case about each of the individual policies.
So, in my essay I came up--it was something that I had looked at a number of times before, but one of the great--immediately post-war in the United States in 1946, one of the great examples of directionalism versus destinationism made me want to go back and look at the actual contestants in this.
And so, what the essay is about--the "Why We Can't Have Nice Things"-essay is about--is a pamphlet that was published in 1946 by the Foundation for Economic Education [FEE], the President of which was Leonard Read. So, Leonard Read, after the Second World War had wanted to establish the Foundation for Economic Education as a place that people looked to for useful arguments in policy debates. Because the worry was that there was a lot of emphasis in universities and other places on the Left, Foundation for Economic Education was going to be a source for people who wanted to argue against policies that were going to move in a politically Left direction.
Leonard Read commissioned a piece on capitalism versus socialism that just--it was 50 pages long. It died aborning. It wasn't very interesting because it was just about the moral case for capitalism versus socialism. And, this was something people had mostly already decided about. And, if they hadn't, they weren't interested because it was already in the water.
So, the second pamphlet that Read commissioned was a famous--now-famous--pamphlet by two then-obscure economists, one of them, George Stigler, who was a professor at Brown, and the other, Milton Friedman, who was pretty newly a professor at the University of Chicago.
And, the pamphlet was about rent controls on housing. And, this was a live issue. The advantage for the Foundation for Economic Education [FEE] was this was a live issue. It would give policy advocates actual ammunition and arguments to make in debates.
So, you know, you're having lunch or you're talking to someone in a political setting--it was supposed to be some arguments that could be used against rent control.
And, what Friedman and Stigler did was something that was pretty standard for economics--economists, you already mentioned it: Let's grant that the objective is an increase in inexpensive affordable housing. Let's just suppose that that's a good policy goal. Now, does rent control lead to that? Not only does it not lead to that, but there's two kinds of problems. One is it will reduce the quality of the housing stock because landlords will have no incentive to do upkeep.
And, the second is, there will be no incentive to increase the amount of housing stock.
For those two reasons, if you care about poor people who can't find housing, rent control is the last thing that you want to do.
And, they framed it in, I think--but I'm an economist--but I think it's a brilliant way. This essay starts by saying in 1906, there was a giant earthquake in San Francisco, but there was no housing shortage because it turned out that people--this is sort of pre-Airbnb--but there are a lot of advertisements that said: We have an extra room, you can stay with us.
And so, although more than 20% of the housing in San Francisco was destroyed--and all of the hotels--there was no housing shortage.
Now, we go 40 years later, and it's not an earthquake, but it is all of the soldiers, sailors, Air Force, all the other military people are leaving the military. Many of them either already lived and want to go back, or they want to move to San Francisco. And now there's a catastrophic housing shortage. Why? Well, in 1906, we used the price mechanism to--and here's a loaded word--ration the housing stock to make, to decide who gets which housing. And, in 1946, we're using politics and favoritism to decide that. Now which of those two should we pick? And, Stigler and Friedman say, 'You want the market to do this, not have politics and favoritism do it.'
Russ Roberts: And, saying politics and favoritism--because if you put in a rent control, there's going to be a shortage. There's going to be excess demand for apartments. And, that will allow landlords to pick the kind of people they want--
Michael Munger: And, it may be innocuous. I call my nephew and say, 'Look, my apartment is coming up. I can't raise the price. Why don't you move in?' So, it's not anything terrible. It's pretty innocuous. But I don't put it on the market. Most of these apartments would never go on the market. Which is basically what happens in New York today.
Russ Roberts: Yeah. So, what happened when Leonard Read published that article?
Michael Munger: Well, the--one more thing about the article itself, because economists take this so much for granted that--maybe some of the listeners who are not catechized as economists will be surprised. They framed it as a rationing problem. And, that is that we as a society have to make choices about how we're going to allocate the housing stock. Now already bwaa, bwaa, [sound effect] alarm bells are going off because there's no 'we' here. I own a house. You own a house, she owns a house. Each of us have these things that we own. The idea that we as a group are somehow going to ration things that are owned by individuals, that seems like a problem. That seems like an enormous concession, but the--
Russ Roberts: It's a repugnant framing to some people.
Michael Munger: It is conceding exactly the moral point that is the heart of the matter.
But, the reason that Friedman and Stigler did this is that they wanted to put it in a context of social policy. And the fact is, we're going to have one social policy, and that is how are we going to decide who gets with what housing? Now, one possibility is we use the price mechanism. Another is that we use kind of local favoritism. And, the third, which they mentioned--and I think there was an attempt at irony here, saying, 'We're just coming out of a war. You all know what rationing is. We can use the OPA [Office of Price Administration]: we can use the office that decided on ration cards and decide who gets what housing.' That would be a terrible idea. Why would we use wartime rationing when there is no war? We can let the private market do this. But they're conceding the metaphor of rationing.
Russ Roberts: And so, what happened?
Michael Munger: Ayn Rand, the novelist and then political economic philosopher, had offered to Leonard Read to--for free now--for free to read all of the things that he was considering publishing to vet them to make sure that they would actually benefit what she thought the movement should do. And, she, on reading this, wrote--and it's interesting to see, you can actually, I'll send it to you. You can put up the link to the Howard Mullendore letter. This is a five page, typed letter, and it's not typed on a word processor. It's typed on a hand typewriter with underlinings and headings. It must have taken her three or four hours to write this letter. This is a significant document. And, she says, first that Friedman and Stigler are communists--that they are reds. That the very idea that you would concede that this is a rationing problem means that we've already lost.
What should be talked about is the moral right to decide what you want. And, it can be anything that you want for your own property, so long as it doesn't hurt someone else. And me offering you a price doesn't hurt you because you can say no. There's other places where you can live. And, if there's not, then the price was justified in the first place.
So, in writing to Mullendore, she said she was very disappointed that Leonard Read would have done this and that the publication by FEE was a mistake. And, she was particularly upset that since she had volunteered to vet these, that it would be--this could have been avoided.
Now, what Leonard Read had done was he had added a footnote. So, in the section where Friedman and Stigler had said, 'We want equality as much as anyone else, but if you want equality, you should not choose rent control. It's a bad way of achieving it.' It seemed to Leonard Read that, 'Well, we don't want equality. What we want is fairness and morality.' Saying that we want equality--
Russ Roberts: Freedom, we want freedom--
Michael Munger: Freedom and responsibility--we want those two things. So, there's a footnote that Leonard Read added, without the knowledge of Friedman and Stigler--it was just on the way to be published. So, Leonard Read had asked Friedman and Stigler to take out the paragraph that they had about, 'Of course, we all want equality.' And, Friedman and Stigler said, 'Well, no, that's actually really important to the argument because our point is if you want equality, don't choose rent control. It's an essential part of the argument. We can't take that out. Because, we're granting the other side. We're granting our opponent.' And, this is a debate tactic. This is actually a very standard debate tactic--
Russ Roberts: Classic--
Michael Munger: Let's suppose we really want what you claim we want. Your means doesn't lead to your ends; therefore you lose.
So, here's the footnote:
The authors fail to state whether the "long-term measures" which they would adopt go beyond elimination of special privilege, such as monopoly now protected by government. In any case, however, the significance of their argument at this point deserves special notice. It means that, even from the standpoint of those who put equality above justice and liberty, rent controls are "the height of folly."
Friedman never spoke to Leonard Read again. He was so angry about this, that he, they never--and Stigler actually, he found it kind of funny. But--you knew George--he was: 'This is ridiculous, I mean you guys just stop this.' But Friedman was absolutely outraged.
So, they had said, 'We care about equality.' Read said, they said, 'We're going to put equality above justice and liberty.' They never said that. But, that's the moral point.
For Leonard Read, if you grant the point about equality, then you're saying that the justice of having control over my own property, that is I own this house. I get to decide who lives in it. I've offered a price. And, if you don't want to pay that price, that's absolutely fine. We'll go somewhere else. You cannot be made worse off by having another choice offered to you. I cannot possibly harm you by offering to participate in a voluntary exchange. So, Leonard Read now has Friedman and Stigler really mad at him, and he has Ayn Rand so angry at him that she won't speak to him either.
So, we've got these people--Milton Friedman and Ayn Rand, if you ask anyone on the Left, they're interchangeable. They agree on absolutely everything, and they're both these Right-wing nut jobs that are trying to lead us to perdition. But, to them, they both hate Leonard Read--who is publishing a journal that is supposed to improve the political effectiveness of the movement.
So, this is just a disaster, that we're all just chasing after heretics with torches instead of saying, 'We all agree on this policy.' What they're arguing about is why we don't like rent controls. Nobody is saying rent controls might be okay. No: rent controls are terrible, but we're going to argue about why we disagree about rent controls. And, since we can't agree about that, we're not going to participate in the debate.
Russ Roberts: Just, first, a side note about Stigler and Friedman; and I think it's fairly well known, and I think it's actually true--not always the same thing--that Friedman was an activist. Friedman wanted to make the world more like the world he wanted it to be. Stigler stepped back from the world and viewed it like a circus. You look at the world not to fix it, but to be entertained. There's something there[?] to understand it. How is it that the clown is able to do that trick? Or, how is it that you can do a trapeze act? But you wouldn't try to change it. I mean, it's there for your amusement. It's not--in fact, you would argue more powerfully, it can't be changed. If you actually think that your rational arguments on behalf of this policy or that are going to change people's minds, you're a fool because the only thing that matters are the incentives and the rules of the game that they're in.
And, therefore, as the circus attendee, your job as an academic is to see what the rules are that are causing the clown to do what he does. Not to try to teach the clown that it's not good to cram 12 people into a car or wear that goofy red nose. I mean that's the difference between them. So, the idea that they wrote this together where they came together, and this is of course somewhat entertaining.
Russ Roberts: Somewhere--I think I'm a little older than you; I know I am--in my lifetime, the kind of arguments that we're talking about--the kind of strategic forays of rhetoric that we're talking about--that lovers of liberty used to use, they fell out of fashion. And, I think that the challenge, what I was trying to suggest earlier is why that might be the case.
If you go back and look at--to take a crazy example--if you go back and look at Barry Goldwater's acceptance speech before the 1964 Republican Convention--I've mentioned this long ago on the program--it's a philosophical essay. It's nothing like a modern political acceptance speech. I mean, it's about making the case for a smaller government from a philosophical viewpoint.
Michael Munger: It was very successful among the 10% of people who were destinationists.
Russ Roberts: Yeah, exactly. And, I would, to be a little more charitable to the argument, I think if you look at Maggie Thatcher, one of the things that if you go back and look at clips of her speaking, what's shocking to a modern ear, whether you're on the Left or the Right, is the kind of argument she makes. She makes arguments on principle, not on pragmatism.
And, there has not been, I would argue--correct me if I'm wrong--there has not been a Republican nominee--and, I mention Republican because they are in theory the home of free markets. I don't think it's true, but they are, at least in theory the rhetorical home. And they don't make these arguments anymore. John McCain could not make an argument on behalf of economic liberty to save his life. George Bush really struggled. Ronald Reagan could, but that might be the last time. Donald Trump had no interest in it. Mitt Romney, not really.
So, that viewpoint--the viewpoint that I would call--so let me say it a different way. The irony is, I think, the number of people who believe in the value of liberty for its own sake in the United States is larger than ever as a proportion of the population. It is an intellectually--so I'll say it differently--it's a socially defensible position. And some people make it, but not politicians. And, for whatever reason. It's just not in fashion.
I suggested earlier that it's because as we've moved away from those principles, the world hasn't fallen apart. And, again, like a good Marxist, the free marketer has to argue: 'Yet. Yeah, give it time. I'll show you. You keep ruining,'--and they might be right--'You keep ruining the ability people to make a decision as adults, eventually you'll infantilize them to the point that they'll be wards of the state.' But, I think that's where we're at. It's almost a parlor game. And, in some sense, and by that I mean: It's fun intellectually to argue about how you could make that case. I don't think people believe in it deeply anymore.
Michael Munger: The response, more and more, I think among people on the Right--and there's a movement that is sort of derisively called NatCons, National Conservatives--and, always, if there's some name that's a bunch of abbreviations, you know it's people who are enemies rather than friends--that are making that argument. Neoliberals--almost no one that I know called themselves a neoliberal. It was a label that people used against them. But NatCons or national conservatives, I think, are increasingly saying it is important to emphasize the moral aspects of policy.
And, I wonder in the 2024 election--there's a lot of young people who are very much attracted by the moral position of national conservatism. So, I wonder if there will not be in the 2024 election some candidate, because I think it would've been hard to predict Reagan, it would've been hard to predict the emergence of Maggie Thatcher. There seems to me to be a fecund setting, a very fertile place for these sorts of arguments now to resonate with a lot of the electorate.
And, I wonder if some candidate is going to emerge who is able to--and I don't want to get too close to talking about current politics--but in principle it is quite likely that I think some candidate will try to make these arguments. And, I think there are more people, as you said, there are more people who believe in liberty than--in sort of unproblematized general free floating liberty--than was true 10 years ago. And, part of the reason for that is the experience with the COVID epidemic, watching the response to people seeing what their children were being taught in school because they were doing it online. And, you could hear what was--so the worries about curricula.
I wonder if there is going to be a resurgence in destinationism in the Republican Party. I'm not very hopeful about that. I'm not a Republican. I don't have any particular hopes for that to work. But, I think you raise an interesting question: that to the extent that we're losing because we have taken a directional perspective, someone might just--an evolutionary process--take a more destinationist perspective and have it work. Not because it's a strategy, but because when you do that, there's a bunch of voters who want to support it.
Russ Roberts: I think you're half right. So, I kind of agree with you. I think morality in politics is always lurking in the background. You have the people who say, 'It's the economy, stupid'--what we call bread-and-butter issues, meaning paycheck and whether you have a job and how much it pays and the conditions of that job. Obviously that matters a lot to people. But, at the same time, I think people want to be part of something larger than themselves. And, that's the moral cause. What I think has changed is that in the Republican Party--it must also apply I think to the Democratic Party as well--in the Republican Party, it's just a different moral issue. The liberty issue is not on the table. Nobody cares about it.
Michael Munger: Nope.
Russ Roberts: Nobody finds it compelling. The books that I read as a young person that excited me about the case for liberty, whether it was Ayn Rand or Robert Nozick, nobody--I don't think those, they are as compelling as they used to be. There's different moral issues: our national identity, our sense of pride and tribe, whatever it is.
So, I think you're right. I think there is a tremendous potential always in politics for moral issues to outweigh pocketbook issues. But, to come back to our original topic, I worry that the case for liberty as a moral issue is dead as a doornail. After 19--you're talking about 1946 in the pamphlet. I think that's the same year the Mont Pelerin Society met, right?
Their whole goal was to keep alive the moral case for capitalism. You could say their goal is to keep capitalism alive, but I would say their goal was to keep the moral case alive. They failed. We failed--whatever you want to call it. Didn't work. People do not believe in capitalism because they think it's moral. To the extent that anybody believes in it, they believe in it because they think it, quote, "delivers the goods." And, the reason it's so unpopular is because people think it's not moral. Socialism [inaudible 00:49:27] whatever capitalism isn't, but moral.
Michael Munger: Well, in that first Mont Pelerin meeting, famously Ludwig von Mises stormed out of a room saying that, again: 'These are just a bunch of damn Socialists.'
Now, it is unlikely that anyone else would've thought of the people in that room as being Socialists.
So, this sort of schismatic tendency among dogmatists that share almost everything about their beliefs, but who split because we disagree about the reasons that we're in favor of something or opposed to something--I think that's typical of all political movements. And, there's that, the great scene in Life of Brian, where the different people are sitting in different little clusters in the coliseum because they've all split. And, this is the People's Front of Judea and this is the Judean People's Front. And we hate each other precisely because we agree about everything.
That happens on the Left also. In the case of the movement that I care about, which is the cause of liberty and responsibility, the difficulty is that there actually is a methodological difference that articulates pretty poorly.
Economists generally do use, if not utilitarian then consequentialist arguments. And a lot of political philosophers, including the followers of Ayn Rand, are much more interested in the moral case. And, they do have different implications.
So, what Rand said about the Friedman-Stigler pamphlet is: What reasons do Friedman and Stigler offer in support of free pricing? Not one word about the inalienable right of landlords and property owners. Not one word about the inalienable right of tenants to pay whatever they wish to pay. Not one word about any kind of principles. Just expediency: We'll get more housing space and humanitarian '[sic]'--she puts 'sic' after 'humanitarian.' That is: It is a mistake. This is clearly a misprint. They can't omit the S-I-C after humanitarian--concern for those who can find no houses.
Here is my question. At a time when good, competent, conservative writers are being blacklisted and starved by the pink clique that controls so many commercial magazines, why did Leonard Read hire two Reds with money entrusted to him by conservatives anxious to preserve capitalism?
So--by the way[?], it's five pages of that. This is a screed. She's very unhappy.
And, the reason she's unhappy is that she feels betrayed. And, I wonder if--I mean, many people will argue something like: We need better education. And, if you read Brian Doherty's wonderful book, Radicals for Capitalism, then he describes that there's these large business firms or people that have money that want to make an argument for liberty that--what they think is we need as a book. We need to get someone to write a book. And, once everyone reads this, the debate will be over because we will have won.
And, a bunch of books were written, and some of them were pretty effective. Some of them actually were pretty effective. But, well, in 2008, I was the keynote speaker. I was running for Governor, but I was also the keynote speaker at the Libertarian National Convention in Denver, Colorado, which was interesting. I mean, it's a big room full of libertarians, and it's very difficult to get--many of whom are anarchists--it's difficult to get them to work in favor of anything.
And my speech, which was only tepidly received, was, the theme was what are we for? What positive, optimistic vision of the future can we offer that is not just: 'Don't do this. Don't do that. Don't do that.' Well, we all know what libertarians and the people who want liberty and responsibility are in favor of. What are they against? Because we have long lists of things that we're against.
And, it sounds a little bit like--the famous definition of Conservatism is standing athwart history and shouting, 'Stop.'
I think that's not what liberty-and-responsibility people are in favor of. I think that we're in favor of a society where everyone is able to be a fully realized human being, where flourishing is possible, where we're all able to choose the path that makes the best sense for us, and we're able to acquire, through our actions, the resources that we need to do that.
And so, the Rand's--that actually is exactly Ayn Rand's vision. That is the Objectivist vision. Whatever other disagreements I have with Objectivism, I share that sort of moral foundation.
It actually takes a little while to make that argument.
And so, the view of property rights tends to be Humean [David Hume--Econlib Ed.], which means that it's a convention and societies that use property do better than societies that don't use property.
The Lockean [John Locke--Econlib Ed.] view--the moral argument in favor of property as being something that is inviolable or inalienable--that argument is not taught pretty much anywhere in philosophy classes. It's not something that is--it has no authority.
And so, a lot of philosophers and political philosophy classes will teach Robert Nozick as an alternative to Rawls. But, that's because they think they have decisive counter-arguments to the Nozickian position of property being created by first acquisition. And, that's not really the best moral argument for property. So, if you look at the classes where Ayn Rand or Ludwig von Mises, the people who take this moral position in favor of property, they're extremely rare.
Most economists have literally never heard of von Mises unless they've seen him in some quote about the Socialist Calculation debate. They've never seen any of the moral arguments.
So, in writing this essay, I actually came to question my own sort of self-assurance that destinationism is the better path. I at least want to put on the table the possibility that taking the moral position first and sticking to that as saying that the argument for private property is that the individual is able to achieve a life that he or she chooses and deserves, and that that is their right, is the fundamental argument. Not, that they will have more cars than cell phones if they're allowed to have private property.
Russ Roberts: So, let me ask you: Have you ever read a book that--written in the last 100 years--made the moral case for capitalism that was persuasive to an open-minded skeptic?
Michael Munger: A lot of people when they read Atlas Shrugged actually have been, or at least willing to consider it.
Russ Roberts: Yep, I agree. It's a powerful book, if you read it when you're young.
Michael Munger: Right? I mean, there are problems with it. It's very long. And, I always worry when I assign Atlas Shrugged because if you are--well, let's be honest--if you're an 18-year-old boy and nobody likes you because they think you're a jerk, this explains why you're better than them. You are a hero. You are a Nietzschean hero.
But, there's a great deal more to it than that.
But I think some of the people who, they read it when they're 16 and they think it's great--they read it when they're 25 and they think, 'Why did I ever like this?'
So, there is something that--there's two levels. One is, it appeals to my sense that real excellence is underappreciated. And so, the reason that I'm underappreciated must be that I'm excellent. That's not actually its message. Its real message is--and the original title that Ayn Rand had wanted to use for Atlas Shrugged was The Strike, because it's a capital strike. The book is about a capital strike where the people who own all of the resources that society needs and just is parasitic on--that is, the, what has been accumulated by the work of the best people. And, then society says, 'We're going to live off of that capital.'
Ayn Rand's question is, 'Well, what if all the really excellent people just went on strike? What would happen to society?' And, her answer is: 'Society would be in really big trouble. And, maybe now people will recognize how property rights are not a consequential right, but rather a fundamental moral right because that is what allows people to produce the kind of mental and physical excellence that ends up making for a better society.'
Russ Roberts: And I think the best argument you can make along those lines is that you, dear listener--not you, Mike Munger, but you, dear listener--who thinks that the world works pretty well with all of these incursions into individual liberty and incursions that you might applaud on moral grounds. You and I might disagree with them on moral grounds, but many people would applaud them on moral grounds.
I think the argument that our side has to make, which it has failed to make--Milton Friedman tried now and then. But, I think the argument has to be that, 'Well, your experience of life, interventionist, is incomplete. Yes, you're doing okay. Yes, your children are doing okay. Yes, they went to a public school and somehow they still flourished. What about all those kids who went to a public school and who did not flourish? What about the people who cannot rise because of the minimum wage?'
Now, that's a consequentialist argument, fundamentally. But, I think it gives some validation to the moral argument that I think the defenders of economic liberty have failed to make. They don't make that argument. They generally don't make the case that the so-called underclass of American society is the result of various interventions that have gone awry. And, in particular--you could name a few--the public school system, the drug war--you could stop there. That's plenty. I mean, there's other things to add to it. If you asked, 'Why is it that certain young people in American center cities do not flourish?' you could put the blame, perhaps persuasively, at the foot of those policies.
Now, the other side would say, 'Well, yeah, we just haven't done enough. We haven't spent enough on public schooling. If we did, it would help everybody.' I think that argument is hard to win. So, I'm making--I guess it's not quite the moral argument you're making, but it's a version of it--which is: Look outside yourself. Don't just look at your own life experiences, which you found a lot of workarounds. Maybe you went to a private school. Maybe you went to a public school that was good because your parents could afford to live in a neighborhood where the housing was expensive and that's where the good schools were. But other people can't. And so, that's the direction that I would argue for. 1:02:23
Michael Munger: There's a great interview by my good friend Nick Gillespie in Reason Magazine with the Lieutenant Governor of Virginia, Winsome Earle Sears--and she is of Jamaican birth. Her parents came to New York City when she was six and the schools were so bad they sent her back to Jamaica for her schooling. She's an African American Republican, and she made a considerable link, the argument that you just made about education.
The difficulty, I think, is that--and I don't want to get too close to policy considerations--but the difficulty is that this argument, there are not enough African-American voices in the Republican Party making this argument credibly because of the other racial problems that--there's a bunch of things going on at once. And, to the extent that poverty and race cut together, then it is difficult to make the argument that we're just not spending enough. But, I would recommend, and I'll send a link: the Winsome Sears interview in Reason Magazine about education makes this point very persuasively. Although, I'm already persuaded and so I'm actually, it's just playing to my biases.
Russ Roberts: Ehh, that's all right.
Russ Roberts: So, let's close with the lessons learned here for you--not from our conversation, but from your general thinking about it. I've become less dogmatic as I've gotten older. I've become less principled in a certain dimension. The dimension of--well, when I was younger, a lot younger, I might have called myself an anarchocapitalist. And somewhere along the road I fell off that wagon and was okay with public roads. So, that was probably the first--that was the road to hell, because I thought, 'You know, I don't think we're ever going to get to private roads, so let's concede that one and let's work on the public school system.' Or whatever is your--pick your favorite topic.
As I've gotten even older, it's not just that, 'Oh, that's a pragmatic consideration.' I'm not as convinced as I was when I was younger that the dogmas that I held onto very closely were necessarily, in a consequentialist sense, led to good consequences. They often did, but maybe not always. The things that interfered with those that weren't as bad as I often had claimed when I was younger. I think some of the arguments I've been pushing here, I think are probably wearing down my pragmatism, that I don't think the world is so horrible.
And, I'm always asking my--I try to always ask myself: 'Well, my world is not so horrible.' And, I think that the deepest question we can ask is what about people who aren't like me?
And, that's what I'm trying to get at with that other argument. That's sort of where I am with this argument right now. I'm less of a dogmatist. To the extent that I hold onto my dogma, it comes from remembering that although the world is pretty good for a lot of people, maybe even more for people than it was 50 years ago. As the world has become more interventionist, there are people maybe whose lives and whose children's lives are a lot worse. And, I'm worried that that movement toward intervention could be part of the reason, and therefore there's still a little dogmatist left in me on pure economic liberty. Where do you fall on that?
Michael Munger: I was absolutely certain that--and this is an economistic kind of argument--I was absolutely certain that directionalism was the way to go on every argument. Because, anything that we could do to increase the extent to which markets were [inaudible 01:06:29] and prices were to guide our actions, that would be an improvement. I have come much closer to--this distinction between destinationists and directionalist actually fits pretty well with the Frank Knight's conception of relatively absolute absolutes. And, I encountered it through James Buchanan. And so, I've come over time much more to admire James Buchanan, who was very close to Stigler in a way, in the sense that he thought trying to intervene on specific policies was a mistake.
However, Buchanan did think that giving moral justifications for better rules was something that academics could actually work on. And so, the relatively absolute absolutes is: Most of the time we're going to accept the rules as they are, and we're going to try to choose policies that are as good as they can be under those rules.
But, sometimes we are obliged to say these--the rules themselves are bad. The way that we conduct public education in the United States without choice for the poorest--wealthy people have choices; works fine for them. We don't need choice. We need choice for the poorest. And, any policy that doesn't lead to that, we reject on destinationist grounds. That's not good enough.
And so, the advantage of the relatively absolute absolutes is that it's kind of a middle position where much of the time, sure, day-to-day going to accept that given the rules, some policies are better than others and we'll try to muddle along; and things are not in fact so bad. We're doing okay. And, sometimes we have to step outside of ourselves and say, 'Actually the rules themselves are no good and they're doing worse.' And, we have to try for large-scale change.
So, I've come more and more to admire the James Buchanan approach of relatively absolute absolutes and an emphasis on rules rather than outcomes.
The constant emphasis on outcomes, the day-to-day churn of outcomes--you can really waste a lot of time not having much effect. But, thinking what should the rules themselves be and how can we create a society in which--how can we allow, because we can't really create--how can we allow a society in which people are able to choose their own path and to achieve the kind of flourishing that they would like on their own terms? Is there a way that we can work towards that? Because, even though that's difficult, moving in that direction is actually a big benefit.
Russ Roberts: Let me close with one question that's in the back of my mind in this whole conversation. Isn't it the case of people like you and me [inaudible 01:09:19] flatter us and call us intellectuals? We create these airy castles in the sky of principles and values, philosophies, Lockean, Humean, Marxist. Doesn't matter which side of the spectrum you're on.
Michael Munger: Yeah, all the -isms, sure.
Russ Roberts: All the -isms. Most people just--they don't have any patience for that. They don't have any interest in that. It's a form of intellectual golf. And, they just want to know: "Is this going to be good? Not just good for me, but good for other people?" It's not a selfish thing at all. It's that they don't have a taste--literally--they don't have a taste or preference for grand schemes any more than they would in how they live.
And, in fact, if you think about a cultural phenomenon that we're [?] now where life-hacks and habits of successful people are constantly consumed as the road to wellbeing--because, 'I just have to have the system that causes me to lose weight, the system,' right? A lot of people--that appeals to a certain kind of person. I think I'm one of those people, probably one of the reasons I'm religious and for other people, I don't--I used to have it in a more than one area of my life.
But, I think for a lot of people, it's like, 'That's just a bunch of intellectual nonsense.' Like, 'I'm going to get on with my life and this is a good law or bad law. Don't give me this Nozickian, Humean,' in[?]--so it's the -isms and the -ians that only a tiny portion of the world cares about that.
Now, John Maynard Keynes would argue that ideas are the things, so that--I don't know if he had argued: he had a paragraph that's fun to quote, about that intellectuals ruled the world. I'm not so sure. I'm agnostic on that.
But, I do think the average person is not so persuaded by these arguments. And, it may be that's where I ultimately come down to on this question of destination versus direction. I think I was able to say, 'I don't need a system. I can't handle a system, and I'm not interested in a system.' And, there's other very small group that says, 'Yeah, how's it work? Can I build a miniature version in my backyard?' So, I don't know: what do you think of that?
Michael Munger: I'm going to stick to my claim that we have to operate at both levels.
And so, Deirdre McCloskey in the third volume of the trilogy, tries to make the argument that what really has created the great enrichment was ideas. Now, it's perfectly true, as the claim was made often by the Scottish Enlightenment political economists, that we actually don't understand that very well. And, Adam Smith, when he talked about the fact that we want to try to increase people's appreciation for a well-contrived machine, the fourth source of moral sentiments--when he talks about that in The Theory of Moral Sentiments--we have to try to operate on both levels together. And, maybe I'm sort of riffing on people who've said that both of the two elements, that one or the other is a mistake. And, I've always been a directionalist and I probably have to have more destinationist concessions.
But, Friedrich Hayek said that we have to be able to think both about the microcosmos and our relations with family, and the macrocosmos where we have impersonal relationships that are markets. And, if we insist that the rules of the macrocosmos are applied to the microcosmos, we will destroy it.
And so, the--economists have often lost debates to the extent that we depersonalize this, and we just make it about money. So, we care. The reason we care about policy is that we care about how people are able to live their lives, especially people who are not us. If every economics paper had some kind of paragraph to that effect, and it was persuasive--it's not just boilerplate--here's why you should care about this, then we could have both destinationism and directionalism in a way that I myself have too often I think been just purely a directionalist. So, this is a warning to myself as much as anyone else.
Russ Roberts: My guest today has been Mike Munger. Mike, thanks for being part of EconTalk.