Nine years after the terror attacks of September 11, 2001, we’ve all had plenty of time to think about war and its justifications. My own views have moved me steadily towards the viewpoint that war is hardly ever justified either morally or in terms of the rational self-interest of those involved. The obvious problem is that, if no one else is willing to fight, an aggressor could benefit by making demands backed by force. It seems to me, however, that this problem can be overcome by admitting that self-defense (including collective self-defense) is justified only to the extent of restoring the status quo ante bellum. That is, having defeated an aggressor, a country is not justified in seizing territory, unilaterally exacting reparations or imposing a new government on its opponent. Conversely, and regardless of the alleged starting point, countries not directly involved should never recognise a forcibly imposed transfer of territory or similar attempt to achieve advantages through war.

This isn’t a novel idea by any means, but I haven’t found an adequate discussion, and the discourse of International Relations theory seems to me worse than useless, being dominated by unrealities like ‘international realism’ , opposed to the strawman of ‘idealism’. Just war theory seems a bit more satisfactory, but I haven’t found it helpful in relation to the hard cases. [1]

Following up on the discussions we’ve had here recently, the status quo ante bellum position can be defended in game-theoretic terms, with no need to invoke unrealistic assumptions about international idealism.

The status quo ante bellum is, in game-theoretic terms, a salient point that provides a natural focus for a coalition, particularly for third countries with no direct stake. An interest in preserving international order provides third countries with a motive not to recognise gains secured by others through military force. While the gainer may be able to secure recognition from close allies, the absence of general recognition renders such gains costly and uncertain to hold, no matter how long they endure.

This isn’t merely a theoretical claim. International practice since 1945 has typically been to deny recognition to territorial gains secured by force, regardless of “facts on the ground”, no matter how long-lasting. Examples include the Indonesian annexation of East Timor (shamefully, Australia was one of the few countries to recognise this claim), the Turkish occupation of Northern Cyprus, the various ‘frozen conflict’ mini-states created under Russian patronage after 1991 and of course the Israeli occupation of the West Bank[2].

But there’s still, it seems to me, a widespread presumption that having gone to war in self-defense (as judged by themselves), countries are entitled to set whatever objectives they see as reasonable. The point of proposing status quo ante bellum as the only legitimate goal is to close off this capacity for self-defense to turn into aggression.

Of course, none of this would matter if the strategic use of military force reliably or even commonly yielded net benefits, as is assumed by ‘realists’ and, until relatively recently, by most holders of, and seekers after, political power. The experience of the 20th century shows the opposite – many cases of wars ending disastrously for those who launched them, and hardly any that produced clear and sustained net benefits.

I don’t intend merely the limited, and obvious point that, taken as a whole, the people of a country that goes to war are worse off as a result. Looking at the evidence, the same is typically true of the ruling classes, and of the individual rulers who make decisions to take their people to war. Of course, there are beneficiaries in the armaments industry and the military hierarchy, but almost any policy, no matter how disastrous, benefits someone.

I haven’t so far discussed the case for humanitarian intervention, punishment of war crimes and so on. The Iraq war showed that if individual governments (or coalitions) are allowed to set themselves up as judges in their own cases, disaster will ensue. The only legitimate basis for such action is a decision of the international community as a whole. At present, the best, admittedly imperfect, bodies for making such decisions are the UN Security Council and the International Criminal Court. The cumbersome nature of their processes mean that many wrongs will go unrighted, and many crimes unpunished. But that is true of all legal systems. And even if such interventions are justified, that does not mean they will be feasible or, if undertaken, assured of success.

Finally, most of what I’ve said about war applies to revolution and other forms of political violence. The fact that the existing order of things is unjust and not amenable to change is not sufficient justification for the certain suffering and far from certain benefits of revolutionary violence. Most revolutions, like most wars fail, and, as with wars, initial success is rarely enduring.

fn1. I’m aware that I’m an amateur dismissing the efforts of the professionals, and therefore likely to have got a lot of things wrong. But, as an economist, I’ve often been on the other end of this kind of criticism, and I think it’s useful to face it.

fn2. I mention this example because it would be silly to omit it, but I absolutely do not want to derail discussion into another rehash of this issue. Any comment referring in any way to the Israel/Palestine conflict will be deleted with prejudice.

My thoughts on 11 September, 2010

In my post on EU-US convergence, I found that the US was similar to the leading eurozone countries in both productivity (output per hour worked) and employment-population ratio, so that the difference in income per person is mostly explained (in some cases more than explained) by differences in hours worked per employment person. I didn’t take the distribution of income into account, since the data sources I was using there did not provide anything useful. But commenter Detlef found a blog post by Maximilian Hagemes at the World Bank site which links to a useful paper by Piketty and Alvaredo on cross-country comparisons of income concentration. For most eurozone countries, they show that the top 1 per cent of households gets about 8 per cent of total income (the presentation is graphical, but in any case, there is no point in going for spurious precision with numbers like this). For the US, the most recent data gives an 18 per cent share. So, the share of national income going to the remaining 99 per cent is about 10 per cent smaller in the US than in the eurozone.

There are a couple of ways of looking at this.

Update I was too subtle for my own good in the original version, putting up the idea that the share going to the rich could be viewed as a kind of tax, and leaving it to readers to draw the conclusion that (99 per cent of) Europeans get better returns from the money they pay to governments than do their American counterparts from a system where a large share of total income goes to the top 1 per cent. In the update, I’ve spelt this out.

The data on the top 1 per cent share I used was out of date. The figure for 2007 was 23.5 per cent. At this level, the share of US income that flows as disposable income to the bottom 99 per cent is probably below that of most European countries (the exact outcome depends on how much tax is paid by the top 1 per cent). The recession probably took a bit more from the very rich, but they are already bouncing back, at least on Wall Street.

The simplest is to adjust the comparisons given in my previous post by excluding the income of the top 1 per cent. There we saw that income per hour worked in the US is about 15 per cent higher than for the EU as a whole. But, given the much larger share going to the top 1 per cent, most of this difference disappears for the remaining 99 per cent, taken as a group. Within that group, Americans in the the top decile or top quintile (but not the top 1 per cent) do much better in relative terms than Europeans, while those in the remaining 80 or 90 per cent do relatively worse, as Piketty and Alvaredo show. So, in terms of income per hour worked, most Americans are probably a bit worse off than their counterparts in the EU as a whole.

But of course, the EU is a very disparate place, as is the US. France, Germany, Belgium and the Netherlands are all above 90 per cent of the US level in terms of total income per hour worked, and therefore ahead of the US as a whole once the top 1 per cent is excluded. We can then say that (excluding the 1 per centers) income per hour worked in the US is significantly below that in the leading eurozone countries. The gap is made up by longer hours of work and (to a smaller extent) by higher female participation in market employment[1]

There’s another way of thinking about this that I find a bit more interesting. In some sense, the top one-percenters are competing with the state for the job of running the economy. If they aren’t burdened down with high taxes and income redistribution, so the free-market case goes, they will do a much better job in promoting innovation, better resource allocation and so on, to the benefit of all. And through philanthropy, the top 1 per cent can help to provide public goods, health services and so on that would, in a social-democratic system be the responsibility of the state.

So, the income share accruing to the top 1 per cent may be seen as an alternative to paying more of national income in tax revenue for governments. It makes sense then, to combine the two, to see how much of total market income is being turned over to those who run the economy, fund public services and so on. Conversely, post-tax market income, excluding the proportion going to the top 1 per cent, is what is left over for private expenditure.

As with the earlier post, the answer is that, on this combined measure, the EU and US are fairly similar. Wikipedia cites Heritage estimates that the US tax revenue share of GDP is 28 per cent compared to 40 per cent for the Netherlands, 41 per cent for Germany and 46 per cent for France. Simply adding in the proportion going to the very rich (a very crude way of doing the adjustment, but this is a blog post after all) brings the US share up to 46 per cent, while the other three come out at 48, 49 and 54 per cent respectively

Within the inevitable margin of error, we can reaffirm the conclusion from the earlier post that there is no significant difference between the US and the eurozone leaders on output per hour worked or on employment population ratios. The big differences between the two are
(a) Employed Americans work longer hours (offset by the fact that Europeans do more household work)
(b) In both the EU and US, ordinary income earners receive about half of total market income as private disposable income. In the US, however, a much larger proportion of the other half goes to those in the top 1 per cent, while in the EU it is mostly tax revenue. It seems clear to me that that the Europeans get a better return for their money

fn1. Conversely, other parts of the EU are behind. And while it’s difficult to get really accurate state-level or regional figures for the US, it’s obvious that you can go the other way, and point to US states that are better off or worse off than the EU as a whole or the leading eurozone countries.

With the country still waiting for the final results of the Saturday vote, reporters in the capital, Canberra, got a dose Wednesday of the self-described “force from the north” and the other independent legislators who could hold the balance of power in Australia’s first deadlocked Parliament in 70 years.

“If you live in a country town in Australia, every year you own a business, you know it’s going to get worse and worse,” Mr. Katter, a 65-year-old former stockman, said at the National Press Club on Wednesday. “Every year, you know your kids are going to leave because there are no jobs for them. Maybe a high school closes this year, maybe you lose your dentist next year.

“The people of rural Australia have put some of us here. They expect a return for having done that. As far as I’m concerned, they will get a return.”

Since the voting Saturday, the Australian news media have been scrambling to get a fix on Mr. Katter and the other once-obscure lawmakers who may be called upon to resolve the stalemate in the House of Representatives, where neither the incumbent center-left Labor Party nor a coalition of the conservative Liberal and rural-based National parties appear to have captured the 76 seats needed to form a majority government.

The final election result may not be known for another week. But Prime Minister Julia Gillard and her conservative rival, Tony Abbott, have already begun courting Mr. Katter, who has made no secret of how he intends to use his newfound power: to demand a “fairer go” for rural Australians.

All three independents hail from sparsely populated rural areas, where voters have long been at odds with the mainstream parties in Australia’s urban-focused political debate. Access to education, hospitals, jobs and telecommunications are key issues for voters in “the bush,” the vast stretches of scrubby grasslands that are home to about a quarter of Australia’s 22 million people.

The divide between urban and rural voters has long been a feature of Australian politics. The country’s vast expanses and relatively small population and tax base make it difficult for the government to provide basic services to many remote areas. But many country dwellers feel that their concerns are ignored by politicians scrambling for the bulk of votes in Australia’s heavily populated cities.

The three independents are all former members of the center-right National Party, the rural element of Mr. Abbott’s conservative coalition. But they have all bristled at suggestions that their former allegiance makes them more likely to support Mr. Abbott in a hung Parliament. While Mr. Katter does not endorse the Labor Party, he has described the conservatives as being “about as popular as a black snake in a sleeping bag,” with many farmers unhappy about the free trade deals enacted by the former prime minister, John Howard.

Tony Windsor, an independent representative from a northern part of New South Wales, told Sky News this week that he had rid himself of “two cancers” when he gave up smoking and split from the Nationals in the early 1990s. The 59-year-old former farmer and economist has been a bipartisan negotiator since he entered Parliament in 2001 and has said he is now more interested in forming a stable government that will last a full three-year term than in trading on particular favors for his electorate.

Rob Oakeshott, a 40-year-old from New South Wales, has been one of the loudest voices for parliamentary reform since he gained a platform as potential kingmaker in this election. He has said that he wants to reduce the stranglehold that Labor and the coalition hold on Parliament by making it easier for third parties and independents to introduce and debate legislation.

Mr. Oakeshott, who is widely reported to have allowed a refugee to stay in his home and has called for a more compassionate approach to asylum seekers, has also called on his fellow lawmakers to adopt a more collegial tone in Parliament, where petty insults and name-calling frequently dominate the debate. A young, charismatic leader with a personable style, Mr. Oakshott was once hailed as the next great hope of the National Party, but he left the party in 2002, saying that it had been co-opted by property developers and other special interests.

“Australia was completely underwhelmed by both major parties and by the way Parliament itself has been behaving,” Mr. Oakeshott said. “This is a moment where we can all do some things for all of us to get some better outcomes.”

After holding closed-door talks on Tuesday, the three emerged saying they would not necessarily vote as a bloc if called upon to break the Parliamentary stalemate. While they are all advocates for rural Australia, they differ on several key points, namely climate change, how to handle a recent influx of asylum seekers and the government’s proposed tax on mining profits.

They have said they will not engage in formal talks about the possible shape of a minority government until the official election result is finished. But on Wednesday, the three presented Ms. Gillard and Mr. Abbott with a list of seven demands, including a full briefing on the state of the economy, and an independent audit of how much the two opponents’ election promises would cost.

Ms. Gillard and Mr. Abbott could wind up having to deal with a fourth independent, Andrew Wilkie, whose election to a formerly safe Labor seat in the southern state of Tasmania appears likely but has not been confirmed. Another factor is Adam Bandt, a Greens party representative from Melbourne, who has said he would prefer to support a government led by Ms. Gillard but has not ruled out a compromise with the current opposition.

Meanwhile, Mr. Katter said he would continue to push the hardest bargain for his constituents on the banana plantations and in the coal mines of northern Queensland: “I’ve bought and sold cattle for a large portion of my life, and I like to think I can drive a deal.”

Bob Katter on the front page of the NYT. Who’d have thunk it?

The NYT ran yet another round in the long-running EU vs US series a week or so ago. Although it’s not covered explicitly in the NYT, there is actually some news to report here, in addition to rehearsal of the same old themes.

For quite some time, the US and the leading EU countries have been fairly comparable in terms of output per hour worked. The US has had higher output per person for two reasons: a relatively high employment/population ratio and very high average hours worked per person. The first of these is important because it raises the possibility that EU countries performing well on productivity measures are benefiting from the “Thatcher effect” . If low-skilled workers are excluded from employment, for example by restrictive macro policy, as in Thatcher’s case, or by labor market sclerosis, as claimed by critics of European institutions, then productivity measures are artificially boosted.

This issue is now moot. As a result of the crisis, the US employment/population ratio has dropped sharply, to the point where the US is now little different from the EU. The difference in GDP per person between the US and leading European countries is driven primarily by differences in average hours worked by employed people.

To get the data on this, I’ve had to combine Eurostat and OECD info (always a little problematic, but neither had all the info I wanted).

From Eurostat, the E/P ratio (total employment/pop 15-64) for the euro area was 58.5 in 1997 and rose to 64.8 by 2009 (France 64.2 , Germany 70.0). Over the same period, the US ratio has fallen from 73.5 to 67.6, with the bulk of the decline in the last couple of years. The remaining difference is entirely due to the higher US employment-population ratio for women – the ratios for men are virtually identical.

Turning to the OECD for information on productivity and GDP per capita, these tables shows that relative to the euro area as a whole, the US still has a substantial lead in productivity (about 15 per cent). But for the leading European economies, like France, Germany and the Netherlands, the productivity gap is below 10 per cent, which is well within the margin of error associated with PPP conversions[1]. Particularly for the latter two, the big difference is in annual average hours worked (1681 for the US, 1390 for Germany, 1378 for the Netherlands). The difference in average hours almost entirely explains the gap in GDP per person between Germany and the US, and more than explains the gap for the Netherlands.

As is well known, Europeans tend to offset their lower hours of paid work by doing more household labor. Taking this into account properly would diminish the gap in both directions – relative to the US, European hours of work would rise, and so would output per person.

I was hoping for a good exposition of this from Peter Baldwin whose book The Narcissism of Minor Differences: How America and Europe are Alike has a promising title (I haven’t read it yet). Unfortunately, he only gets half of the story, saying

Americans work 23 percent more than Germans in the marketplace. However, once we factor in household labor, the drudgery that allows us to function in the world, the difference in total work drops to 12 percent. And interestingly, the figures for time actually spent at leisure are almost precisely the same for the two nations.

That Americans work 12 percent more than Germans seems to be the hard kernel that emerges from the statistics. Considering that for that 12 percent investment the American G.N.P. per capita is 32 percent higher than the German, this seems a defensible trade-off. Perhaps Americans have collectively decided to work somewhat harder to be substantially better off.

The problem here is that Baldwin has missed the point that household labor is productive.

Coming to my own take on all this, it seems that the European and US systems yield roughly equal productivity, and roughly equal labor market performance (as measured by E/P ratios). Higher European taxes mean more and better public services (at the cost of reduced private consumption) and they are also (along with social preferences) reflected in lower hours of work and more household labor. I know which looks more appealing to me, but there’s no obvious way of saying which is best.

Rather more clear-cut is the price paid by the US in terms of greater inequality. Compared to the European case, and to the US in the past, the top percentiles of US households collect a much larger share of total income, and there doesn’t seem to be any net economic payoff for this.

fn1. (Very wonkish note) Although PPP numbers are often treated as if they are are raw facts, they are index numbers which are fundamentally imprecise (even if the underlying data is perfectly accurate, which it isn’t). From work I did with Steve Dowrick in the 1990s, I estimate the difference between upper and lower bounds at around 10 per cent. It’s likely that any bias in PPP numbers favors the US. That’s because they are a generalized kind of Laspeyres index, and (as I understand it) the base data is derived largely from Europe.

As I was reminded in comments last time, snarking about libertarians is not a very productive substitute for writing well-argued posts about The Way Forward for Social Democracy, or writing my nearly-due examiners report for that PhD thesis, or revising my article on climate change on discounting, or getting the yard under control. But if I was capable of responding to that kind of reasoning, I wouldn’t be a blogger would I. So, in lieu of something useful, here’s a thought that occurred to me.

Among the more plausible candidates for an Actually Existing Libertopia, the US in C19 (with asterisks) is pretty prominent. Also, on the basis of fairly thin historical evidence, the Iceland of the sagas. It seems to me that these examples have one crucial point in common that hasn’t received much attention

Looking at the US case, it seems fair to say that, if you ignore the asterisks (women, blacks, native Americans and the emerging industrial working class), the 19th century setup was a fair approximation to the libertarian ideal. I’m going to ignore the industrial part of the economy for the moment, and, for the sake of argument, treat slavery and Jim Crow as aberrations peculiar to the South. Finally, and again for the sake of argument, I’ll concede the possibility that the legal rights of women and men could have been equalized (at least in formal terms) without upsetting the C19 applecart.

That leaves on remaining asterisk – native Americans – and it seems to me that this is the one that can’t be avoided. In a largely agricultural society, the historical norm has been the emergence of an aristocracy based on the ownership of land, and ruling over a tenant peasantry or landless laborers. The only case that doesn’t happen is where there is an appealing exit option for the peasants, such as migration to the city.

But another exit option exists wherever there is a frontier (that is, a border with a less militarily advanced society) as in C19 US. With a frontier, agricultural land is freely available to anyone willing and able to kill, drive away or enslave the current occupiers. That obviously makes life difficult for any aspiring aristocrats[1]. The Icelanders were in a similar position. If any local jarl got too big for his boots, it was a simple matter to hop into a longship and go off to loot some abbeys.

It is, as my Marxist friends used to say, no coincidence that the end of the era of (white male agricultural) US libertarianism came to an end with the “closing” of the frontier. I’d guess, though I have no real evidence that the same was true in Iceland once the Viking option was no longer available.

The standard Lockean case for (propertarian) libertarianism rests on the (universally false) assumption that an appropriation of land leaves “enough and as good” for anyone else. As long as land can be stolen from people who are outside the pale in one way or another, Lockeans (and a fortiori Jeffersonians) can convince themselves that they are devotees of liberty rather than of the forcible imposition of property rights in land (and, for Jeffersonians, other people). Once there’s no more land left to steal, it becomes obvious that propertarianism is fundamentally dependent on coercion, just like (for example) socialism or any other form of government.

fn1. The only place a real agricultural aristocracy emerged was in the South with slavery and then, in a more attenuated form, with sharecropping, dependent ultimately on Jim Crow.

Henry’s post linking to Charlie Stross reminded me of one I was planning to do on the question – why has there never been a serious attempt at a real libertarian utopia? Most other utopian ideologies have inspired at least someone to attempt a practical implementation. On the face of it, libertarianism seems ideally suited to the belief in a fresh start, with no messy pre-existing claims. All sorts of ideas have been floated – island buyouts, sea-steading, co-ordinated moves to New Hampshire and so on, but none has gone anywhere. The only explanation I’ve seen, that libertarians are too independent and ornery to organise a utopia doesn’t convince me.

Thinking about the discussion we had though, it strikes me that there is a simple explanation: Actually Existing Libertarianism (see below) offers a better economic deal for nearly all libertarians than any feasible version of Galt’s Gulch. Once you do the math on going Galt, it’s not hard to see why no self-respecting libertarian would actually do it.

Let’s start with our oppressed libertarian, paying a 50 per cent tax rate, and waiting every year for Tax Freedom Day (July 1). Say that half this money is spent (highly inefficiently) on public services and the rest is given to the undeserving poor, bureaucrats and so on. I’ll make him (gender assumed advisedly) a computer programmer, so he can continue to earn his living from the comfort of his cruise ship, island or whatever. So, immediately he makes the break for Libertopia (island, ship or whatever), his disposable income doubles.

But then the problems start. The state may not do a great job providing services of all kinds, but those services have to be replaced. Libertopia doesn’t sound like a very appealing place for schoolteachers, nurses, and so on, so most public services would probably have to be supplied by external contractor. The cost of that would wipe out any savings from eliminating government inefficiency. So, the net gain in disposable income falls to 50 per cent.

More generally, you have the Stross problem. Suppose a starting population of 10 000. That’s too small to provide more than basic goods and services, so everything else would have to be imported in small quantities. As everyone who has spent time on an island (even one close to the mainland), or a small remote community, knows, that means everything costs more (often double) and most things aren’t available at all. Even if all the registered Libertarians in the US (about 250 000) moved en masse they would still be heavily dependent on high-cost imports. Almost certainly, that would more than wipe out the gain from tax freedom.

Finally, while our hero would never become disabled or unemployed, it’s bound to happen to some people. That means either budgeting for organised charity or putting up with lots of beggars. Randians might appreciate this daily testimony to their own superiority, but I suspect others would prefer that these losers move elsewhere.

All things considered, it seems pretty clear that Libertopia would yield its residents a greatly reduced standard of living, compared to what they could get from a government. Of course, the ideal would be a nearby government jurisdiction that would provide the large-scale industry needed for a ready source of consumer goods, a home for contracted-in service providers, support for losers and so on, but would not be able to tax the Libertopians.

But once you think that you realise that a partial approach to this outcome already exists, and has millions of inhabitants across the US. They’re called suburban Republicans. The suburbs benefit from urban centers, but resist paying for them, mostly successfully. It’s not exactly Libertopia, but it’s obviously close enough to be more appealing than going Galt.

Doing the math on Libertopia

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It’s hard to know what is most deplorable about this story, so I’ll leave it to readers to choose what they deplore most. For me, I think the comments from an Education Queensland[1] official supporting the teaching of creationism