That’s why we can’t have good things: directors versus directionists. Destinationists

In my First essay for AIER, back in July 2018I wrote:

I am a “directed” libertarian. This means that if a proposed new policy or a reform of an existing policy cuts costs or increases freedom, I’m all for it, even if it’s not a “real” libertarian policy.

Destinationism insists that any new policy must to be idealor oppose it; direction is ready to support any movement to the idealif the ideal is not on the table as an alternative. Most people accept a combination of these views, depending on the context.

But on almost every important political issue—school choice, tax policy, immigration, and so on—we end up squabbling with people who agree with us on just about everything. Tiny points of doctrine (“vouchers mean the government is still involved, and I reject it!”) become the very foothold of faith. We pursue, but give the unbelievers free passage.

That’s why we can’t have good things like consistent party platforms or efficient political organization. It’s more fun to fight each other. To be fair, this is hardly new. One of the most famous examples of the never-ending “direction vs. destination” battle was the Rent and Control Pamphlet Incident in the late 1940s.

FEE hires “Reds”

In 1946, Leonard Reid attempted to establish the Foundation for Economic Education (FEE) as a political think-tank while remaining committed to classical liberal philosophical principles. In August of the same year, he published an essay by FR Fairchild explaining that profit was essential. to finance investment and raise wages. But this essay had little impact because it either seemed obvious to the true proponents of the market or absurdly false to readers of the left who all “knew” that labor was the only source of value.

President Reid wanted to commission a newspaper more relevant to politics and settled on rent control. Given the rate of inflation—8 percent in 1946 and 14 percent in 1947—politicians wanted to limit rent growth. In fact, many political leaders saw rent control as constantly solving the problem of housing shortages, when hundreds of thousands of military personnel and workers returned to civilian life.

Reed enlisted two then-young college professors, Milton Friedman (Chicago) and George Stigler (then at Brown), to write the monograph. The result was even shorter, only 22 pages.than Fairchild’s 66-page article. Two economists have approached this problem purely as a matter of welfare economics, on which directional proponents often focus in the form of occasional advice: given that the goal [Y]Then the most cost-effective way to achieve this goal is to use funds [X].

In this case, the stated policy goal was to reduce inequality. Taking this for granted, Friedman and Stigler argued (and rightly so, in retrospect, even Paul Krugman agrees) that rent control exacerbates rather than improves inequality. Friedman and Stigler used a tactic often used by directionalists, formulating a goal that we all share, including those on the opposite side, and then using economic reasoning to demonstrate that politics cannot achieve that goal. In the case of rent controls, this means that the policy will lead to a housing shortage, and this shortage will hit the poor the hardest. Therefore, if someone cares about the poor, rent control is the last thing he should choose as a policy.

As is customary among economists, Friedman and Stigler characterized the allocation of scarce resources among competing uses. rationing. In the now famous paragraph, the authors said:

The fact that, in a free market, better housing goes to those with higher incomes or more wealth is, if anything, just a reason to take long-term action to reduce income and wealth inequality. For those who, like us, would like even more equality than there is at present, not only in housing, but in all products, it is certainly better to attack the directly existing inequality of income and wealth at its source than to ration everything from hundreds of inequalities. goods and services that make up our standard of living. It is the height of folly to allow individuals to earn unequal monetary incomes and then take subtle and costly measures to prevent them from using their income* (emphasis added).

Which brings us to the “*” inserted by the “Editor” (Leonard Reed). Reed demanded that the offending paragraph be cut, but the authors flatly refused. Reed could have dismissed this article, but in the end went ahead with the following footnote:

*Editor’s Note: The authors do not indicate whether the “long-term measures” they will take go beyond the elimination of special privileges, such as the monopoly now protected by the state. In any case, however, the significance of their argument in this case deserves special attention. This means that even from the point of view of those who value equality over justice and freedom, rent control is “the height of stupidity.”

And then… manure got into the fan. Destinationists are not interested in marginal, “less bad” policy improvements. For the many people who supported the FEE financially and intellectually, any politics, whose stated purpose to reduce inequality as such unacceptable To say that one equality policy was better than another was to give up the game, because the real principle to be defended was the moral imperative: to respect property rights. The problem with rent control was not inefficiency; Rent control was a violation of the freedom of property owners to contract at any price they could get in the market.

Ayn Rand, an author of fiction and later treatises on political philosophy, was one of the pamphlet’s most vocal critics. Worried about just such a mistake, Rand suggested that FEE publications be reviewed—free of charge and without payment—before they were published. When she saw this document after it had already been distributed as the FEE’s main publication, she took it as a betrayal of the cause.

In her now famous letter to William Mulendor (September 20, 1946), Rand condemned the very idea of ​​”rationing”. For Rand, rationing was reminiscent of standing in lines in the Soviet Union in her youth. Worse, the idea of ​​​​public policy for the distribution of “housing stock” assumed that the state was primarily responsible for who gets what. In a letter to Mulendor, Rand said:

What are their reasons? [Friedman and Stigler] an offer to support free pricing? Not a word about the inalienable right of landowners and owners. Not a word about the inalienable right of tenants to pay as much as they want to pay. Not a word about any principles. Just expediency (we’ll have more housing) and humanitarian (sic) concern for those who can’t find housing…

Here’s my question: at a time when good, competent conservative writers are being blacklisted and starved by the pink cabal that controls so many commercial magazines, why did Leonard Reed hire two reds with money entrusted to him by conservatives who want to preserve capitalism?

Less than a month later, in a letter to W. Orval Watts (October 11, 1946)Former FEE enthusiast Rose Wilder Lane expressed her opinion on the Friedman-Stigler pamphlet:

I re-read RENT AND CEILINGS with the intention of revisiting it. I am shocked, shocked beyond words. This is the most disgusting piece of communist propaganda I have ever seen. And I can prove it, sentence by sentence and page by page. What does the Foundation do, Lord, and WHY? Honest American writers in this country are hungry and desperate, blacklisted by the solid communist front holding the publishing field; why in goodness (or lack of it) does the Foundation feed a couple of bourgeois-from the inside?… The Foundation writes checks to two damn smart communist propagandists that I’ve been reading for a long time. I’m physically sick of it.

we don’t win

What is the point of talking about these obscure, long-standing divisions among libertarian elites? It’s pretty “inside baseball” in terms of practical effect. Except that it’s not. There are far more housing in New York City today—over a million units—with some form of rent control than there was in 1946. We don’t win guys.

The question is why. I have focused on controlling rental housing prices because this is a case in which almost all economists agree that this is bad policy. Directionalists would argue that the problem lies in the insistence on a “whole nine yards or nothing” designation policy. The present policy is mainly related to “expediency (we will get more housing) and humanitarian (sic)” considerations. Focusing on whether a policy works for its purposes does not require a transformation of the listener’s basic moral principles, but only a willingness to listen to the evidence.

And: “sic”? Seriously? Ayn Rand said that the very idea that public policy can have some element of humanitarian interest is a category error.. You tourists need to go out more. Taking pride in the purity of one’s position by labeling Friedman, Stigler (and, let’s face it, Munger) as “Reds” is a recipe for well-deserved irrelevance in a majority-driven system.

Or is it the other way around? The destinationist could plausibly answer that it was the willingness of the directionalists to compromise on moral imperatives and focus only on consequentialist issues that led to the lack of progress. Having achieved leftovers and contented themselves with a collectivist definition of what “we should do” in matters that can only be decided by emergent structures arising from individual actions within a system of inalienable private property, it may have been the Directionists who weakened our movement. .

Of course, we can all be wrong. I’ll leave that up to the reader.

Michael Munger

Michael Munger

Michael Munger is a professor of political science, economics, and public policy at Duke University and a senior fellow at the American Institute for Economic Research.

His degrees are from Davidson College, Washington University in St. Louis. Louis and the University of Washington.

Munger’s research interests include regulation, political institutions, and political economy.

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