Things Libertarianism Is Not, Part 1: Socially Liberal, Fiscally Conservative

The political climate being what it is in 2016, many Americans are casting about for alternatives to what the major two political parties offer. The media seems eager to investigate any alternative whatsoever to Donald Trump. As a result, the Libertarian Party is getting more attention than it has in a long time. The Party’s standard-bearer this year is once again Gary Johnson, a successful two-term governor of New Mexico with a history of shrinking government humanely, and a bee in his bonnet about legalizing marijuana. His running mate Bill Weld was a Republican governor of Massachusetts and his record is checkered from a libertarian point of view, but Gary seems to believe in him.

Johnson’s positions tack with the Libertarian Party platform more than they don’t, but I disagree with his approach to the message. From life experiences as an entrepreneur, adventurer and governor, he seems to have worked out some rules of thumb about leadership that he calls “principles of good government.” That’s fine, and it makes the Johnson/Weld ticket a rather respectable one according to traditional political wisdom, but I don’t think he’s going to make it terribly clear where the motivating ideas of his party come from.

For that reason, I am going to use this moment in which America’s ears are slightly more open, and discuss just what intellectual and moral background the Libertarian Party comes from by dispelling some popular stereotypes about libertarians. This post will be the first in a series.

Libertarianism is not “socially liberal, fiscally conservative.”

The Johnson campaign is probably going to keep using a line like this. One I’ve heard recently is “the best of both parties.” Maybe that line will get votes. Maybe it mostly describes the platform according to the tidy little boxes Americans already have for thinking about politics. But it’s technically wrong. We are not the “pot Republicans.” Thinking about libertarianism as if it were borrowing a little from column R and a little from column D misses the fact that libertarianism is cut from completely different cloth from either D or R. The major truth the LP was created to administer is the simple fact that the political spectrum is not one dimensional. The range of possible thought on these issues does not begin with Elizabeth Warren and end with Ted Cruz.

So if libertarianism isn’t a wishy-washy hodgepodge of beliefs some wonkish nerds threw together from their favorite bits of Democrats and Republicans, what is it?

In America we use the word “libertarian” because the word “liberal” has been associated with the Left, and a different term was needed in order to avoid confusion. As a result, it is not obvious what the pedigree of libertarianism is. To follow the ideas farther back you need to look for the “liberals.” Ideas from thinkers such as David Hume, John Locke, and Adam Smith all inform liberalism. There are many others. The American libertarian platform grows out of this heritage.

For example, a libertarian would advocate unfettered international trade and a heavily scaled-back military stance. One might be tempted to think such a platform is just borrowing from the anti-war left and the pro-business right because both of those elements seem fashionable to those respective constituencies. In reality you are hearing ideas drawn directly from the likes of Frederic Bastiat, Adam Smith, Montesquieu and Richard Cobden. These men postulated that as the intensity of trade goes up, the likelihood of war goes down. This view is often expressed in the witticism: “Either goods will cross borders, or soldiers will.” Some of the classical liberals even went so far as to predict world peace brought about by free exchange among nations.

This pattern can be seen across the libertarian platform. Libertarians are in favor of lowering taxes on businesses of all size, yet also against subsidies to those very businesses. These ideas that sound on the surface like a commingling of left (end corporate welfare!) and right (low taxes!) flow naturally from the classical liberal view that government is at best a necessary evil which should exist only to protect life, liberty, and property.

Another example: What should be done about “gay rights?” The libertarian answer to this question — government should not be defining marriage in the first place — leaves the social conservatives unsatisfied because it takes the guardianship of traditional marriage out of their hands, and infuriates the social liberals because it deprives them of the weapon they need to universally impose new norms. There is a crucial difference here. Both our social liberals and social conservatives view the state as an appropriate tool for reshaping society, and the libertarians do not.

The libertarians are not the ones borrowing platform planks. Classical liberalism has a coherent argument to make about the role of government, the nature of rights, of property, and how to think about both. Rather, the Democrats and Republicans routinely pirate Liberal (libertarian) language and arguments in order to buttress their own.

On Risk, Time, and Living: Niven’s Ringworld

I know economics isn’t the first thing to spring to mind for most people when reading a science fiction classic, but bear with me anyway. Something stood out to me in the light of Austrian economics while reading Ringworld. Something that I consider a huge credit to Larry Niven for believable world-building. It has to do with the Pierson’s Puppeteers and how they handle their immortality.

If you haven’t read the book, I’ll try to explain the Puppeteers without spoiling the story. In the Ringworld universe, the Pierson’s Puppeteers are one of the older space-faring species. They are bizarre, three-legged, two-headed creatures with very high intelligence. Once upon a time they governed a gigantic commercial empire, but at the time of the novel, they are confined to their own home world, too averse to danger to risk leaving it. The one Puppeteer in the cast of the story, Nessus, is considered insane by his people because he has not only dared to leave home, but is taking a group of aliens (two humans and a Kzin) on a dangerous expedition.

So why do they act this way? The book explains this behavior as a consequence of the Puppeteer’s development of immortality. If they’re careful and can avoid being killed, they never die. So naturally, they’re careful to a fault. This intuitively makes sense when you’re given all the information, but thanks to economics we can roughly anticipate the Puppeteers’ preference for caution just by knowing about their longevity.

In the Austrian view of economics, there is a concept called time preference. Someone with a high time preference is willing to discount the future in order to have something sooner. Someone with a low time preference is willing to delay gratification, to discount the present in order to get something later. You see this all the time when people work for wages (high time preference), loan money or start an entrepreneurial venture (low time preference). Our time preference is also very much influenced by the length of our lives. None of us live forever, so every choice you make with your future self in mind has the end of your life (usually before age 100) as a furthest boundary. This is why people try to save during the early part of their adulthood, and switch to mostly spending during the twilight years of their lives. It’s not so common for an 86-year-old man to work twelve hour days and save like a miser the way an unmarried 20-something running a startup might. When your future is likely to be short, you tend to favor the present.

But what if your future was effectively infinite? Two things: First, you might not mind taking the long view and making plans that take a long time to develop because hey, you’ve got plenty of future in which to reap the rewards. Second, think of what kind of loss death represents. How many years are lost when a human dies? Probably somewhere less than 100. An effectively immortal creature stands to lose trillions. For a Pierson’s Puppeteer, virtually all of life always lies well into the future, and deserves a level of protection bordering on the paranoid.

Perhaps most importantly, this piece of Ringworld is a lesson in the value of our mortality. The Puppeteers manage to make very clever plans, but by and large they are selfish and cowardly. Their own lives loom so large in their futures, there’s no room for anyone else. We mere mortals can only spend so long thinking that way. Eventually we have more of our life behind us than we have before us, and if we want to touch the future, it will be through other people: your children, extended family, and friends.

My great uncle lived only about 77 years, cut short by disease earlier than I would have liked. Even though he is no longer with us, the dent he made in the world is going to last for generations. The old dairy farmer was gruff and sometimes short-tempered, but he lived his life by giving generously to anyone who had need. He didn’t die rich as far as I know, but over 700 people attended his funeral in a small country church, each of them profoundly touched by him at some stage of their lives. And not just family. Some were friends that hadn’t been seen for years, some were the type who were afraid to even set foot in a church, but they showed up all the same to say thank you one last time. To put it in Austrian terms, living like he did is a matter of keeping a low time preference for the sake of other people’s futures, in spite of your own dwindling time on earth. A creature who never dies never even has the opportunity to make that sacrifice.

Where Should Bitcoin’s Default Decimal Be?

Around the time the price of a bitcoin rose into the high 900s late last year, some exchanges and bitcoin websites chose to offer the option to display bitcoins in terms of “milli” bitcoins. Bitcoinity, for example, made it their default display mode for the price, which persists today and has seen a great deal of adoption among bitcoin wallet applications. Bitcoin-qt, and Electrum all offer mBTC as a display option for your bitcoin balance. This list isn’t exhaustive, but you get the idea. Bitcoin-qt does offer microbitcoins (uBTC) as a display option, but the others do not.

With the exchange rate of one standard BTC in the triple digits in most Western currencies, and higher still in Yen, Rubles or Yuan, hardly anyone disagrees that bitcoin’s ergonomics would be well-served by a move of the decimal. Based on implementations seen so far, it would appear the community’s consensus is to use mBTC for the time being. That may be, but the move to mBTC appears to be a move of expediency made somewhat in haste. As Jeff Garzik said today on the bitcoin development mailing list:

Shipping with mBTC defaults was decidedly unwise, considering that — like BTC — it fails to solve existing, known problems that uBTC can solve, and considering the inevitable mBTC to uBTC switch.

In other words, mBTC may temporarily solve the problem of appearances, but leaves other existing issues unresolved. Issues that can interfere with adoption, and the standardization the world expects from a currency. For example, currency formats in commonly-used software are almost always two decimal places. Neither the traditional BTC denomination nor millibitcoins fit this restriction. Microbitcoins do. Attempting to fit mBTC or BTC into systems not designed for more than two decimal places in currency could result in incorrect calculations. If the bitcoin software’s numbers do not exactly match those of the financial software, it will make audits very difficult. The reality of legacy financial software being what it is, a final move to uBTC seems inevitable.

The best argument in favor of sticking to millibitcoins for now is that it appears everyone is already doing it anyway. Further, microbitcoin balances would look very high compared to the numbers most people see every day, while the same number expressed in mBTC fits our day-to-day much better. In the words of Mike Hearn:

If you have to export to financial packages that can’t handle fractional pennies, then by all means represent prices in whatever units you like for that purpose, but in software designed for ordinary people in everyday life mBTC is a pretty good fit.

Besides, fractional pennies crop up in existing currencies too (the famous Verizon Math episode showed this), so if a financial package insists on rounding to 2dp then I guess it may sometimes do the wrong thing in some business cases already.

In one sense, the products we are talking about are software, so there is no technical reason we can’t do uBTC in one context and mBTC in another. It just might confuse people. We do see fractional cents from time to time in fiat currencies so it’s possible going all the way down to microbitcoins is unnecessary at the moment.

Regardless, with Wall Street knocking on bitcoin’s door more intently by the day, the decisions that go into the development of client software are only going to get more important. This is open source software, so the decisions will be made by those who choose to act and implement a solution.