I am Steve Horwitz, economist, professor at St Lawrence University, and bleeding heart libertarian . AMA!

What is a bleeding heart libertarian?

I'd also like to tackle this one early. BHLs come in various flavors. What we all seem to share is that we think the primary moral concern of libertarians, if not any political philosophy, should be how well our preferred system will do for the least well off among us. For some of my BHL colleagues is is that concern that is the moral justification for any system, i.e., libertarianism is only moral justified in so far as it improves the lives of the least well off. For others, like me, it's more about rhetoric and style. I believe that libertarianism DOES serve their interests very well, but I think it's more that we should focus our arguments and our rhetoric on that point, rather than thinking it serves as the ultimate moral justification.

BHLs generally believe that libertarianism can meet the ENDS of our leftist friends concerned with social justice but through the MEANS of freedom.

So "a rising tide lifts all boats" will now be stated as...hmmm... "Free people make better choice for themselves and have better outcomes"?

It lifts ALL boats, but it also lifts the LEAST WELL OFF boats the most.

Not much freedom if you are poor.

How about "you're far more likely to be poor if you have no freedom." The Berlin Wall was not there to keep people in WEST Germany.

What do you think of the latest developments affecting the bitcoin ecosystem?

To be honest, I don't follow bitcoin that closely. I have long believed that we need to get rid of central banks, so I'm in favor of anything that creates an alternative to central banking, thus I"m rooting for bitcoin. But I'm also skeptical about it because I'm not convinced it will be anything more than a niche way of engaging in very sophisticated multi-lateral barter, but with limits. That said, I want it to stick around if for no other reason than to show folks that you don't need government to get sound money. Because.... you don't.

How would we regulate the economy without central banks?

The history of economies without central banks and with truly competitive monetary systems is that they are much more stable and much less prone to bank failures and monetary mischief than ones with central banks. Canada did not have a central bank til the 1930s and never had the problems the US did. http://www.coordinationproblem.org/2012/05/krugmans-misreading-of-us-banking-history.html

Well, without centralized banks, we wouldn't need to regulate the economy itself. A lot of our regulation is on preventing centralized banks from choking our economy or stealing from their own customers (i.e. fraudulent loans, savings theft, etc.)

So, does this theory reject the phenomenon that markets will overheat, or ever need to be stimulated?

Markets are not physical systems, they are human ones. Using metaphors from physical systems gets us off on the wrong track.

Do you think the relative unpopularity of economic liberty (laissez faire) as a policy is due to people's lack of knowledge or some predilection in favor of tangible, sold 'plans' over the unpredictability of freedom? Or neither or some mix of both?

I mean I see such broad support for raising minimum wage, for universal healthcare, for increasing financial regulation. Most people don't seem to have honestly considered the implications of those policies beyond the plan as its presented. And if you're against these sort of things, one accusation is that you have no plan to replace their proposal, ergo we can't leave these things to chance and must choose SOME plan, even if its a horrible, inefficient and wasteful one. It frustrates me that people think the absence of government action is chaos.

As a followup, how do you convince people to put their faith in free markets and free people without promising some specific plan or specific outcome? Saying "the free market will fix it" doesn't seem satisfying to most people.

All great questions. I think your instinct is right here: people prefer the (false) security of a "plan" than the more open-ended promise of market discovery. Part of the way to deal with that is to point out how often those plans fail and their propensity to generate unintended consequences that make matters WORSE and then generate a demand for more intervention, etc..

Then you have to work the opposite side: we aren't putting our faith "in the market" but in people. We have hundreds of years of history of people discovering new and better ways of doing things without a plan from on top, why should we think any different now? You might also use the science analogy: if they really believe that freedom is chaos, do they also think that government should being telling scientists what questions to research and how? I mean, if we give them the freedom to decide what the relevant problems are and how best to solve them, aren't we just putting our "faith" in scientific freedom? Won't we just get chaos?

If you can't trust a lot of people to solve smaller problems in decentralized ways with a functioning feedback process, how can you trust a small number to solve big problems with a crappy feedback process?

If state intervention is generally counterproductive, why do the Nordic/Western European countries rank higher than the United States does in quality of life, education, environment, etc.?

Because many of those countries actually have freer economies than the US, which now ranks 17th free across the globe, as the commenter below notes.

Do you get along with the Keynsians or do you sit on oppostie sides of the room at the faculty Christmas party?

Every single one of my closest friends on the SLU faculty is a leftist.

Consortin' with the enemy, eh? ;)

I'm a consorter from way back.

Do you support open borders? If so, do you think a large enough influx of immigrants from a different culture could produce such negative externalities in the process of assimilation that on net, they destroy more wealth than they create?

My friend Bryan Caplan did an AMA a little while back and I have the same views as he does on open borders, which is keep 'em wide open. I don't fear the scenario you lay out here because there's no history to support it. Immigrants who come here do so because they want to make their lives better and help their families in the process. As they assimilate, they will not just complete "become us," we will become more like them. Thinik about all the ways in which what was once immigrant food and culture have become part of who we are as Americans (that pizza you're eating..). Assimilation is a two-way street and has many more positive than negative externalities. Plus, it's a simple matter of human rights and bleeding heart libertarianism that we should give those with the least all around the world the opportunity to make a better life for themselves by recognizing their right to move to where the opportunities are and create work and property contracts with those who live there. I simply cannot see how any libertarian can support anything less than open borders on both practical and moral grounds.

Prof. Horwitz, given your work on family, what changes do you think should be considered to welfare policies?

In my ideal libertarian world, the need for such assistance would be far less and it would be provided by the various institutions of civil society. If you haven't read Dave Beito's From Mutual Aid to the Welfare State, there's the place to start. If the state is going to be involved, I would like to see two kinds of related changes. We need to get away from welfare systems that create perverse incentives that discourage the formation of healthy families. The tax/welfare system is so full of special interest nonsense that it creates huge incentives for poor folks not to get married, when doing so can be one (but not the only) way to help them climb the income ladder. The second change is to move toward some sort of basic guaranteed income program. It's not my first best, but it's far better than the status quo. If nothing else, it has far less overhead cost to taxpayers and gets rid of many of the perverse incentives of the current welfare system, especially with respect to marriage adn families. It's also FAR less intrusive on people's privacy.

Steve, what do you say to "established" - read Keynesian economists who argue that libertarians are not "evidence" focused or logically consistent?

One thing I do is point them to the link below and open a discussion about what we mean by "evidence": http://www.cato-unbound.org/2012/09/05/steven-horwitz/empirics-austrian-economics It's also important to remember the economics world does not divide into two groups: "libertarians" and "Keynesians." There are all kinds of flavors here and we need to recognize those differences.

What is your opinion on the Civil Rights Act of 1964?

Ok, I'll bite on this one.

The CRA did two things. One, it banned government sponsored discrimination such as that associated with Jim Crow (and let's not forget that Jim Crow was the state and that many private firms opposed it). Two, it banned private discrimination on the basis of race - the counter at Woolworth's.

The first was a HUGE gain for liberty and I obviously support it strongly. One element of libertarianism/classical liberalism is that IF there's a state, it must treat all citizens the same. Equality before the law is a libertarian principle.

The second was a loss for liberty - the loss of freedom of association and that's a bad thing. On net, the gains of the CRA, in my view, strongly outweighed the losses, and in the imperfect world of politics, it was the best anyone was going to get in 1964. Had I been in Congress as a libertarian, I would have voted for it.

One additional note though: with the advent of fast communications technology and the net, the belief that markets and civil society could not sufficiently punish private discriminators seems farfetched. Can you imagine what people would do on Yelp (or here!) if a restaurant put up a "no blacks served" sign? Or a "no gays" one? It's harder for bigots to hide these days, esp. when the tolerance level for those behaviors is so low.

So yes, the CRA wasn't perfect from a libertarian perspective, but it was a big improvement.

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The answer to your last question is yes. I have plenty of libertarian friends who believe things I think are wrong, but we still work together productively. That's one of the healthiest signs in our movement - we HAVE disagreements and can work together in spite of them.

If a person or institution continually supports positions that I think are deeply wrong, and especially when I think that position also undermines the good work being done by other libertarians, we should call them out on it. Social pressure and shunning is not coercion. It's freedom of disassociation. And we should use it.

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THanks for the question. I think you radically undersestimate the problems of determining how to use resources in ways that improve economic well-being. First, markets ARE about cooperation. Did you make your shirt? I'm guessing not. That shirt was make through the cooperation of millions of people from across the globe, coordinating their activity through the prices, profits, and losses of the market. Markets are the most powerful form of social cooperation (and globally so) that humans have ever discovered. You need to get beyond the competition/cooperation binary.

Second, in order to know how best to use resource to improve people's lives, we need to know their value. That requires a standard of comparison that relates back to people's wants and needs. And that is what prices do. Monetary exchange and the price system are form of extra-linguistic communication that enable us to assess value. To have meaningful prices, we need them to arise from actual exchanges by real people in real markets. And that requires private ownership, especially of capital. How would all of these firms know 1) what to make 2) how to make it? It is market prices, profits, and loss that facilitate the social learning process that enables us to answer these questions.

Profit is a social signal and what justifies using markets is that they are the only way we have of answering all of these questions about what to produce and how to produce it. If we get rid of markets, we are not giving the tin man a heart, we are Oedipus poking out our eyes.

What's the best financial advice you have for young people?

Let's start with an easy one: Pay your bills on time. Seriously. If you establish a reputation for being someone who lives up to their promises and understands the importance of financial trust, other things will follow from there. This is so important for things like your credit rating and the like. If you're in college or just out, this should be your priority. After that? Just remember that you will have a future and the future you will be happy that the present you did not put him/her in too much debt and that you saved something for a rainy day or two. But the easy best advice: pay your bills on time all the time.

So your saying paying 60,000 a year for SLU isn't a great investment

It isn't for everyone! Depends on your net cost, your ability to handle debt, what you want to do with your life etc. For some people it is a great investment, not for others. I'm not someone who thinks everyone should go to college.

How do you respond to the accusation that you don't care about poor people when you oppose raising the minimum wage?

(This happened to me, recently.)

I send them here: http://www.fee.org/the_freeman/detail/eugenics-progressivisms-ultimate-social-engineering#axzz2ueDOVRNu

Related to your research on families, what do you think about the advice (usually coming from the right) that one of the most beneficial things the poor can do to improve their lot in life is to get married?

There's some truth to that, but it's more complicated than it's been presented as. Married people DO have much better outcomes along almost any measure you care to look at (including their sex lives). But that doesn't mean you should just "get married" regardless of who the other person is and what your particular circumstances are. And as I noted earlier, public policy distorts the incentives to marry in ways that encourages it where it shouldn't and discourages it where people could benefit from marriage. So yeah, marriage is good for people (gays and lesbians too), but that's not "get married no matter what."

Are there any areas of research where you'd like to see more libertarians focusing their efforts? Are there any areas that draw too much focus from libertarians? Thank you for doing an AMA!

In general, there's too many damn economists! I think there are a ton of interesting questions that we should be tackling with more gusto. I'd like to see us do more on family and children, which is why I am working on a book on that topic, but I'd like to see it from a variety of perspectives, such as psychology. I don't think libertarians have done enough history. There are so many interesting historical episodes that could benefit from a reading through the eyes of Mises or Hayek or other libertarian thinkers, including outside economics. I'd love an army of young libertarian scholars taking on those topics, especially the ones related to race and gender, to show how the standard readings of those events, which tend to support bigger government, actually tend to show that government causes way more problems than it cures.

What is the best way to try to convince/change the minds of those who are generally inclined toward state intervention to solve problems?

Show them the practical consequences of intervention and of markets. This is why we need really good empirical work, especially good history. For example, the more we write and talk about the Great Recession and have a great command of the facts to explain why it was a failure of policy not markets, the more likely we are to push people in our direction. History is very powerful in setting people's narratives and we need counter-narratives. I also think that we need to be very mindful of our rhetoric. We CANNOT say things that allow others to tag us as racists/sexists etc, or that we don't care about the poor. And we need to be unafraid to call out leftists (for example) who make that accusation over policy differences. Objecting to minimum wage laws is NOT racist and people who say it is need to be called out both for their historical ignorance (it's the MW laws that are racist!) and for their refusal to discuss in good faith.

Do you watch Parks and Rec? If so, how do you feel about Ron Swanson's portrayal of Libertarianism?

I don't. I should. So I can't answer this one. Sorry.

Is there a better term than "invisible hand" which is often mocked, to describe the invisible hand?

Great question. It shouldn't get the bad press it does, as Smith was a genius who people outside economics should be reading and taking way more seriously than they do. I tend to use "spontaneous order" which is usually associated with Hayek, though he got it from the philosopher-chemist Michael Polanyi. The idea is that the order of the market is the product of human action, but not human design. You can talk of "emergent order" as well, as "emergence" in that sense is hot in complexity theory and the sciences.

But I think the best way to do this, especially with lefitsts, is to make the analogies to evolution by natural selection. If people believe that the natural world is orderly but without a designer, then they should be open to the argument that the social world is too. If you think "Intelligent Design" is a joke in biology, then you should think "Intelligent Economic Planning" is the equivalent joke in economics. HEre's an old and short blog post of mine on this issue: http://www.coordinationproblem.org/2009/12/of-social-snowflakes-repost.html

What is one thing you believe that most libertarians do not? Or: What is one thing you disagree with most libertarians about?

I love this question. I think the answer to both is the same: I am much more sympathetic to feminism, even of the non-libertarian sort, than are most libertarians. The result is a lot of arguments. I think that libertarians have done to feminism exactly what libertarians accuse others of doing to us: taking the most extreme and silly people as representative of what's typical. My experience of 25 years in academia with lots of left feminists is that the libertarian caricature of them is simply unrecognizable. Yes, that caricature exists, but those are the Alex Jones's of feminism - they are not the typical one, even among academics.

On election day, there are a lot of libertarians making a point of the fact they don't vote. Do you vote? How do libertarians expect to change government if you don't vote?

I do not vote. I don't think it's immoral/wrong to vote. I just think that's largely ineffective.

Social change comes from changing the climate of ideas, like doing an AMA, or teaching economics, or doing a program on House of Cards, or writing a letter to the editor, or dozens of other acts of engaged, concerned citizenship we might choose to engage in. Voting, to me, is just not an effective path to social change.

Why free markets are both the most efficient and most resilient systems?

Because they are best at discovering and making use of dispersed, contextual, and often inarticulate human knowledge. They are social learning processes with very powerful feedback processes that help us know when we've made mistakes and provide incentives to correct them.

Markets aren't better because people make fewer mistakes in the market than in government (think about all the restaurants that fail). They are better because those failures take place in an institutional structure that provides knowledge and signals for everyone else to correct them in ways that political institutions do not.

What's the state of libertarianism in other parts of the world? Not only in Europe, but perhaps in Asia, Africa and Latin America? How's it'views in Austria? :-) What do you think happens in Malaysia, Hong Kong and Cayman Islands, is libertarian philosophy used to justify part of the status quo there? Are you in contact with any intellectual from there? Where is libertarianism, as an offical party, is stronger and where has it won elections, finally if so, how did it go?

TKS!

I have never been more optimistic about the growth and influence of libertarian ideas globally than I am now. In particulary, the growth of STudents for Liberty across the world as well as the ways in which technology has made ideas and resources available, along with the development of dozens of think tanks, are good evidence that these ideas are developing a presence and being heard globally

How do you suggest transitioning from government to private enterprise? To pick an example, it's all very good saying, "Let's get rid of Medicare/Medicaid." But many of those people would be unable to afford private insurance, especially given they are less healthy than the average population. Likewise, getting rid of other social welfare programs would leave people without housing, food, etc. I can understand if these programs were not in place, arguing that they are not necessary. But you can't just pull the rug out from under them.

Agreed. I think you have to help people walk before you take away their crutches. So let's work on generating better economic growth. Let's get rid of laws that hurt the poor's ability to earn an income: minimum wage laws, licensure laws, etc. Let's open up the public schools to competition, especially in poorer areas. All of those things would enable folks to afford things the state now provides as well as not need welfare etc.

Then... we work on reforming those programs by moving them over to voucher programs or a guaranteed income program. Then we work on phasing them out.

The key, though, is that you can't take away the crutches and still keep hitting people's legs with a bat. Open up markets then work on the programs.

Hey Steve. Should they legalize pot, or what?

They should legalize pot... and "what", as well. :)

If you could debate any intellectual and/or public figure who would it be?

Rachel Maddow. I want to wipe that smug smile right off her face. :)

I would love to see that! Mostly because you're the one who's coming off smug right now.

Nicely played.

How do you feel about the state helping those who can't help themselves? For example, should the state step in for cases of child/elder abuse?

These are IMO some of the hardest issues for libertarians. Let me stay with child abuse. I think first we have to distinguish abuse and neglect. I think with neglect, there are ways that non-state institutions can work with families to improve outcomes. And, importantly, we have to ask "compared to what?" Perhaps the child is in less than optimal circumstances, but will that be improved upon if the state moves them somewhere else?

In general, I think that there are Hayekian reasons to think that parents have the best knowledge and incentives to do what's right for their kids, so the bar for state intervention should always be quite high - and the state should bear the burden of proof.

If we are talking abuse, then different story. If the state has the responsibility for protecting the rights of adults against violence from others, then it has that same right with respect to children and violence form their parents. I am a strong defender of parental rights, but those do not extend to clear cases of abuse (as opposed to mild forms of corporal punishment). But even here, the state should be working with extended family, friends, and organizations like synagogues or churches or the like to find solutions that minimize the impact on kids.

As to how an anarchist society would handle these situations, my honest answer is that I do not know.

Where is the brightline between neglect and abuse?
Punishment to some people is much harsher than others. A girl recently died of hypothermia near where I live because staying outside in a barn was used as punishment.

THere's not a brightline. We shouldn't expect one either. That's why these issues are so hard.

Any good books about economy for a high schooler?

You can always start with "Economics in One Lesson". Also a new book by Howard Baetjer "Free Our Markets."

What are your thoughts on the arguments that market anarchists like Michael Huemer and Roderick Long put forward? Specifically in regards to markets in law and defense.

I consider myself to be a market anarchist (at least most days). While I'm not sure I can provide an answer to how markets and civil society might solve every problem, I have yet to be convinced by an explanation for how the state could. The burden of proof is on the state and it hasn't met it yet, but that doesn't mean we "know" markets/voluntary social cooperation have the answers to the tough questions like those.

I am much more persuaded by arguments for polycentric legal systems than for privatized defense. But here too - does anyone really believe that gov't does a good job defending us, especially when we consider the rent-seeking involved and the ways in which the tools the state adopts to "defend" us quickly oppress us - think the NSA/war on terror.

I"ll take my chances with the unknown over the known evil.

Do you worry that a free market is too concerned with the present and not suited to deal with long term problems, like climate change? Hypothetically, if we could see that the free market was bringing about a catastrophe, should we intervene with our best idea of what suitable regulation would be?

Do you think a system in which the participants are almost exclusively concerned with what will happen in the next 2, 4, or 6 years is MORE capable of thinking in the long term than the owners of capital who can pass its value to others over an indefinite time frame? I think that markets are far better able to think about the long run than is the political system, assuming that the right institutional structure is in place in the market.

How would we even know the market was bringing about a catastrophe? What's the sort of scenario you have in mind? (It probably shouldn't be climate change because that has to account for gov't)

What are you having for dinner?

Mediocre Mexican is the plan. That's as good as Mexican gets up here in the hinterlands.

Do you think our lack of growth comes from a deficiency of inflation like the Federal Reserve suggests? Do you think we are experiencing deflation/stagflation that is being papered over by monetary easing/competitive devaluation or do you believe the FED is 'exporting' inflation to EM currencies through carry trades given the inflation rates of the EM markets?

We are not suffering from too little inflation. We are suffering from too much regulation, too much uncertainty, too much anti-business rhetoric, and a central bank that won't adhere to the rule of law. (And it's the Fed not the FED - sorry, pet peeve :) ).

What is the biggest failure of the Libertarian party, to date?

I could be wrong, but I don't think he cares much for the Libertarian Party.

Oh, good. Then I expect a good answer, even more.

I am not a big fan of the LP or electoral politics in general. I think the LP gets too bogged down in deep principle. If you're going to play electoral politics, then be wiser about creating a platform that is full of policies that move us clearly in the direction of freedom, even if they don't get us all the way there. I think Gary Johnson could do this better than he did last time.

Do you deny the positive effects of the 2009 American Recovery Act (ARA) on the U.S. economy?

China has used both a market-based and state-based approach in concert to create a strong economy. Does this indicate to you that the state should have some economic control?

Yes I deny them. Where was the "market-based" approach? And where is the strong economy? Millions have left the labor force. Unemployment remains notably higher than was predicted if we passed the ARRA. Private investment is still very low. The recovery in employment is the slowest since the Great Depression.

Tonight is TV night with my GF. House of Cards or True Detective? Which show should I start tonight?

I haven't watched TD, but man do I love House of Cards.

Do you feel the Austrian School was strengthened or discredited internationally as a result of the Great Recession?

Only reason I've asked is that I've heard both and you seem to be a more credible source on the issue then some other media sources I could name.

Strengthened. Austrians have had more positive attention, and deservedly so, because I do think that Austrian theory provides a very powerful lens with which to understand the boom, bust, and crisis. http://www.fee.org/files/doclib/HouseUncleSamBuiltBooklet.pdf

Favorite rush song/album?

"Natural Science" and "Moving Pictures" http://myslu.stlawu.edu/~shorwitz/Rush/JARS.pdf

Say you're coaching in the NHL. It's Game 7 of the Finals. Sudden death shoot-out. Who are you tapping to take the shot with Lord Stanley's Cup is on the line?

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Datsyuk. The Barry Sanders of hockey.

What's your response to more Rothbardian readings of Human Action that take more radical claims about the supremacy of a priorism?

Also, would you mind coming to Hillsdale College sometimes soon to give a lecture if I say pretty please and promise a brownie?

I would LOVE to come to Hillsdale. I've talked with folks there about doing so, but we can't seem to find a time that works.

I think those Rothbardian readings are mistaken. Here's some thoughts on Mises and methodology that might explain why: http://www.cato-unbound.org/2012/09/05/steven-horwitz/empirics-austrian-economics

What do you say to bringing back Glass-Steagal

I say bad idea. It was bad law based on a wrong interpretation of events in the Great Depression.

How many Bitcoins did you lose in this "Magic the Gathering Online Exchange" silliness?

Zero. I own none. I have never owned any.

Are you relating the free-market to House of Cards? How is the online class going to be structured and what will it be about?

Also, can you pinpoint an event in history where a free-market system has prevailed?

It's about how HoC shows the failures of the political system through the lens of Public Cholce Theory. You will get to see some video lectures by me as well as other videos on line, plus participate in online discussions on Facebook and real-time chats.

Prof. Horwitz, what books (either by Hayek or about him) do you consider the best for a student to start learning about F.A.?

Individualism and Economic Order Constitution of Liberty

Are you a feminist?

I'd like to think so, but others might disagree.

I've never listened to Rush. What song should I start with?

Wow. THat depends. What's your taste in music and how much of a libertarian are you? :)

What's your favorite part of northern ny?

Ps. I don't miss the cold

The people.