Unpredictable elections

Elections create a big public choice problem. People contribute money or other favors to candidates in exchange for political favors. This is economically indistinguishable from bribery. The problem with bribery is not that people can buy votes -- one can buy votes in corporations, and there's nothing corrupt about it -- but that there is a wasteful lobbying, a spending of both money and time, to purchase not votes but particular political outcomes. Arthur contributes to Bob's election, or flies Bob around in his corporate jet, or runs some "independent" ads or news stories favorable to Bob, and Bob sends some special pork barrel goodies Arthur's way, or gives him a special dispensation from a regulation that will hurt his competitors, or gets him a government job. Some of the more overt forms of this election-phase bribery can be banned or minimized by law, but for every overt form there are a dozen or more subtle or novel forms that cannot effectively be regulated.

Here in the U.S. the notorious McCain-Feingold law is an attempt to curb this problem. It is notorious because it does so by restricting free speech. In particular, it restricts who can spend how much on what kinds of speech running up to an election. Inevitably, it and similar laws are both full of loopholes and contrary to the spirit, if not the letter, of our First Amendment.

There is a far better solution that does not have significant loopholes and does not regulate any speech: make elections unpredictable. If would-be purchasers of political favors cannot predict who will win, or even who might win with substantial probability, they cannot purchase any favors prior to an election. A perfectly unpredictable election would be bribe-free.

The Grand Council Chamber in Venice

We can't make elections perfectly unpredictable, but we can get pretty close. There are historical and even contemporary precedents. For example, we choose jurors by lot from a pool much larger than the twelve jurors selected. This prevents wealthy plaintiffs, defendants, or governments from buying jurors through the selection process. (After selection, there are a number of legal and physical sequestering mechanisms that can be used to isolate a jury from contact with favor purchasers. As for political office, this article deals only with bribery during the selection process).

In ancient Athens, not only juries but many office-holders were selected by lot. But the most intriguing unpredictable election process was probably that of the medieval Venetian Republic. This republic helped turn a secure island into Europe's wealthiest trading empire. In Venice, many political offices were selected by a repeated cycle of lottery, vote, .... lottery, vote. The final lottery and vote, at least, were held one after the other in the same room, giving favor purchasers no time or privacy to do their business. The leading office in Venice, the Doge, was selected by a Great Council of about 2,000 members from those members, through a process that can be diagrammed as follows:

2,000 --> L30 --> L9 --> E40 --> L12 --> E25 --> L9 --> E45 --> 11L --> E41 --> ED

Scott Gordon describes this process as follows:

L refers here to selection by lot; E to selection by election [voting]. In the Great Council, by the drawing of balls from an urn, 30 members of the Council were selected; a further drawing reduced these to 9 who met to elect 40 men. This 40 was reduced by lot to 12 who proceeded to elect 25, and so on until the final election selected 41 nominators, who submitted their choice to the Great Council [i.e. made the final vote for Doge].

The process is loosely similar to the confusion/defusion cycles of encryption or the repeated mixing phases used for securely anonymous Internet communications. The Venetians alternated a randomizing step with a debate-and-voting step. It's not clear what, if any, function was served by the particular number choices or some of the other detailed structure. Each elector presumably had a substantial but fixed number of votes, so that there would exist a top 40, 25, 45, or 41 of vote getters despite being only 9, 12, 9, or 11 electors respectively.

I suggest the following leaner structure. A modern congressional election, for example, might look like this:

600,000 voters / 100 candidates --> E23 --> L7 --> E19 --> L11 --> E17 --> L7 --> E19 --> EM

Thus the top 23 vote-getters (by the 600,000 voters) are selected, from whom 7 are chosen by lot. These lucky candidates, who now serve as electors, then elect from among all the candidates except themselves 19 electors, who are whittled down by lot to 11. These elect 17 electors from the candidates except themselves, who are whittled down by lot to 7. These final seven then elect 19 final electors except themselves, who proceed to elect the Representative from among all the candidates except themselves.

This should probably be done online at a scheduled time, if an online election can be made secure, rather than trying to get all the elector/candidates to meet physically at one or more scheduled times. The last two steps at least need to proceed quickly enough that no deals can be done between or during them. With reliable connections and good user interface design it should go quite fast. The preceeding election steps should usually include time and communications channels for debate and research, but not enough time to forge the social relationships often necessary for reliable favor purchase.

I've used prime numbers based on a possibly superstitious analogy to the use of prime numbers in cryptography or by cicadas, i.e. on the hunch that prime numbers will make each step less predictable than with factorable numbers. The process of signing up to be a candidate must be very easy, so that we can get large numbers of people signing up to run in even small elections. The fact that they double as both electors and candidates who might get elected to office increases the motivation to become an elector/candidate. A further benefit is that electors, themselves elected, can prevent a demagogue from being chosen, while the election cycles make it less likely than in a pure lottery for a whacko or incompetent to be chosen.

Comments on the United States Constitution (iii)

Our Constitution, while admirable in many respects, has some deep flaws, especially the federal court structure. But given the flawed court structure, it has developed one very redeeming feature: the Incorporation Doctrine. Under this doctrine, said by the Supreme Court to be implied from the 14th Amendment clause requiring States to respect due process, the federal Bill of Rights is applied as a limitation on States. This doctrine has allowed federal courts to enforce many individual rights against state governments, which state courts have far less incentive to do, even though similar or the same rights are written into most state constitutions. Combined with the doctrine that the Bill of Rights means the same thing when applied to States as they do when applied against the federal government, (the Same-Scope Doctrine -- an assumption that on original meaning grounds is perhaps flawed), it has also given the federal courts far more incentive to enforce the Bill of Rights against the federal government itself.

A brief further explanation of the basic flaws in both federal and state courts are in order. These courts are selected by the legislatures and executive whose power they interpret. This gives a strong selection bias (similar to adverse selection in economics, but involving the choices of third parties). When on the bench, operational bias (analogous to moral hazard in economics) biases verdicts towards increasing both federal power and the rights of other parties as narrow exceptions to those powers in order to increase the number and importance of disputes, and thereby increase the importance of the federal courts. The same logic applies to state courts interpreting the powers of state legislatures and executives under state constitutions.

An example of selection bias at work: you will almost always see Senators ask judicial nominees their opinion on the Commerce Clause. To be approved, the nominee cannot declare an intention to overturn preposterous interpretation by which "commerce among the States" includes growing marijuana or wheat in your own backyard for your own consumption. If a nominee does not declare allegience to this legal monstrosity, which has vastly increased the power of the President and Senate, most Presidents and Senates will not allow him on the federal bench. (The occassional joker, like Justice Thomas, does slip past both the President and Senate, but it's very rare).

Before the Incorporation Doctrine and the same-scope assumption, federal courts rarely enforced the Bill of Rights against the federal government. They enforced the small handful of limitations on the States in the original Constitution far more zealously. The combination of selection and operational biases produces this result -- the federal courts want to inrease their influence by enforcing rights, but have to commit to Senators (and often the President) who select them to not enforce them strongly against federal legislative or executive acts. They don't need to commit to States -- the States are not a source of selection bias -- so they can exercise their power freely by enforcing rights against the States.

Thus the federal courts have always been eager to enforce individual rights against the States, but very reticent to do so against the federal government. The Incorporation Doctrine and the same-scope assumption cause the federal courts to enforce the Bill of Rights against the federal government, going against their selection bias, as a price they are willing to pay to enforce a larger set of rights against the States.

A much better solution for keeping governmental powers in check and rights protected would be to have federal courts interpret state constitutions, and set up a new super-federal court, selected completely independently of federal politicians, to interpret the U.S. Constitution. Until such radical modification, the Incorporation and Same-Scope doctrines are crucial to incentivizing federal courts to enforce the Bill of Rights today.

Logic and Legal Drafting 101

In common English, "or" and "and" are often ambiguous. "Or" can mean either inclusive or exclusive or, among other things. "And" often means set union, which might correspond to either inclusive or exclusive "or" or logical "and." For example, "choose from a box containing X and Y" might mean "choose X or Y" (inclusive), "choose X or Y" (exclusive), or "choose X and Y" -- depending on whether you get to choose once, once or twice, or you must make two choices. There are any number of other ambiguities that arise when trying to deduce the logic, if any, behind many plain English uses of "and" and "or."

Nevertheless, it's not hard for a legal drafter to make the logic of a legal document clear. This should be Legal Drafting 101, a class which should be required in all law schools: use "X or Y, but not both" for exclusive or, "X or Y, or both" for inclusive or, "both X and Y" for logical and. It would probably save billions of dollars and many erroneous decisions per year if lawyers followed these three simple drafting tips. For that matter, technical writers and any other writers trying to make logical relationships clear might benefit from this advice.

Link here for a hilarious thread of some of America's smartest lawyers trying to decipher a Supreme Court opinion and decide whether it breaks one of De Morgan's Laws -- not (A or B) = not A and not B (where the "or" is inclusive). It may depend on what the meaning of "or" is.

Comments on the United States Constitution (ii)

The United States Constitution is often lauded as the epitome of freedom. And indeed, the U.S. has for most of its history sat far towards the "more free" end of the spectrum of actual governments. The original Colonies, Articles of Confederation, and the first hundred years of the United States Constitution were, with some glaring exceptions, among the most libertarian of governments in human history, and far more libertarian than the modern United States. The actual text of our Constitution, read straightfowardly under standard English definitions, or read as most lawyers read it when enacted, is (with the exception of the Sixteenth Amendment, the income tax) a fringe libertarian document. Of all the 2008 Presidential primary candidates only the libertarian Ron Paul could credibly base his platform on the actual text and original meaning of the Constitution. The positions of all the other major candidates, as well as the interpretations of most of our Supreme Court justices, depart very far from the actual text in its original meaning.

But our Constitution is nevertheless deeply flawed. In a number of ways it facilitates our slow slide into socialism and tyranny. It is rather easy for Congressmen, Presidents, and federal justices who wish to interpret it as granting broad powers and narrow rights to do so, and they have been doing so ever since the Constitution was enacted. A wide variety of other constitutional mechanisms and institutions would do a far better job at slowing and reversing the death of liberty in the modern world.

Much of the early liberty of the American Colonies and the early United States was, as Adam Smith observed, due to low exit costs. Farming was the dominant economic activity, and the availability of free land out West made it relatively easy for a farmer to move if the local conditions got too oppressive. Officials had to preserve liberty to keep their populations. Nevertheless, our Constitution among other factors kept the U.S. more libertarian than Russia, which also had a large frontier. Our Constitution slowed, but did not stop, the aggrandizement of power into effectively unaccountable and increasingly oppresive forms. While there are many more ways to make it worse than to make it better, and this author does not recommend constitutional convention or military coup, those trying to set up new constitutions, or amend their old ones, should observe that there are a number of crucially important ways in which the U.S. Constitution can be improved upon.

Speaking very broadly, the general problem with our Constitution is that it allows the rise of a fully sovereign and monolithic federal power. Such an entity inevitably aggrandizes its power and ultimately cannot make credible commitments to protect property or any other rights or powers that it covets for itself. This is a common flaw of modern constitutions, but there are a number of protective mechanisms which these constitutions do not employ, or employ incorrectly, that could be brought to bear to correct this general problem.

A bit more specifically, here are most of the major flaws in the U.S. Constitution:

(1) The legislative branch is too powerful: several of the grants of power in Article I are too broadly worded and the rules for interpreting them are insufficiently strict. Once legislatures have achieved broad powers, they can hardly be expected to vote to give those powers up. It's a one-way ratchet towards socialism and tyranny.

(2) The executive branch is too powerful: executive duties are not well defined and the non-delegation doctrine is not enforced, allowing the rise of permanent unelected lawmaking bureaucracies. (In many practical ways the real constitution the post-New Deal U.S. operates under is the Administrative Procedures Act, augmented by things like Chevron deference).

(3) There is far too much use of elections and far too little use of lotteries. A number of officials should be chosen by lottery (as in ancient Athens) or by a sequential election/lottery cycle (as in the Venetian Republic). Lotteries can be very good at solving public choice problems, such as the problem of concentrated lobbying during elections which trump widely distributed preference.

(4) One of the two gravest defects lies in how courts are structured with respect to the constitutions they interpret. A basic design pattern for good government is that officials should not be interpreters of their own power. Allowing federal courts to interpret federal powers and state courts to interpret state powers has led to inevitable aggrandizement of the powers of both: to broad interpretations of power-granting clauses. Vague constitutional language, which is practically inevitable, would not lead to tyranny if the judiciaries who have final say interpreting these clauses did not have incentives to expand these powers. This effect is exacerbated by allowing the legislature and executive to choose the judges. I am afraid that, for example, Professor Barnett's proposal for convincing federal courts to (in many ways return to) libertarian interpretations of our Constitution, desirable as such interpretions are, is nevertheless futile. Incentives operate to select judges who profess broad interpretations of power, and while sitting on the court for judges to further aggrandize governmental power. Our judicial structure is another one-way ratchet towards tyranny.

A much better (but hardly the only better) proposal for selecting judges: select judges for lower courts by lottery from among lawyers who have scored in the upper percentile on the state bar exam and have been practicing for at least 5 years. Select judges for higher courts by a lottery over the judges of lower courts who have at least five years experience on the bench. Judges can still be impeached and removed for by legislatures or independent tribunals for egregious illegal behavior, but the executive and legislature play no role in selecting judges in the first place. This makes the judiciary far more independent of the executive and legislative branches.

The basic structure of courts in the American colonies was far better than our structure under the Constitution. There, the Privy Council, not colonial courts, had the final say in interpreting colonial charters. Being more dependent on Parliament and the Crown than on the colonial legislature, it had no incentive to aggrandize the power of the colonial legislatures. There were also a number of flaws in colonial government, including deep flaws in the British constitution that allowed the rise of Parliamentary sovereignty, which both compromised the independence of the Privy Council and trespassed on colonial legislative powers. There was also the practical problem of distance that made appeals to the Privy Council in London far too infrequent. But the basic appeals structure was far superior to that of our current Constitution. The colonial court structure will work far better now without the delay problem and if the highest court is not itself tied to a legislature.

(5) The other of the two gravest defects is the lack of unbundled political property rights. Federalism and separation of functions are two very good, indeed crucial, features of the Constitution, but they are insufficient for protecting liberty. Unbundled rights to engage in narrow forms of coercive legal procedure are often a far better way to distribute power than hierarchical federalism and separation of powers in an entity that is supposed to be in totality sovereign. The gothi of medieval Iceland, often cited by anarcho-capitalists, were an example of a political property right. Medieval and Renaissance England was a world full of polycentric, or highly distributed, political property rights, but these were swallowed up by legislative powers in colonial America. We must revive this very important and legally mature method of distributing political powers. Many legislative, executive, and judicial functions should be granted to private entities as political property rights, with the jurisdictional boundaries and procedural standards defined in those rights to be enforced by an extraordinary court independent of all other governmental entities.

(6) Insufficient protection is given to, and scope allowed for, choice-of-forum and choice-of-law clauses. Much, though by no means all, law could be entered into by contractual agreement, allowing for healthy forms of legal competition in certain areas, such as contract and family law.

Logical emergence of money from barter

The ever entertaining and informative Mencius Moldbug presents a useful but flawed account of the logical origins of money. By "logical origins" he means the following:

The basic problem with Menger's approach, from my perspective, is that he's concerned with the historical origin of money, whereas I am concerned with its logical origin. What Menger wanted to know is how money actually happened. What I want to know is how it can happen.

Whatever his intentions, Menger's account today has much more value as a logical than a historical account of the origins of money. Thanks to modern archaeology we now know that money (or at least goods that before the rise of coinage were valued primarily as intermediate goods, which I call "collectibles", the main example being bead jewelry) emerged long before the efficient markets that Menger assumes. Humankind thus did not, with the exception of certain short and exceptional situations during the colonial era, ever pass through a stage of efficient barter markets that is Menger's setup. Indeed so long ago (more than 100,000 years ago) did collectibles start being used that they probably played an important role in the evolution of human cooperation, as I describe here.

But let's get back to the logic of whether and how money will emerge in a voluntary and efficient barter market. Moldbug first gives a great description of why money is not like a normal commodity:

...since buying and selling any good cannot fail to affect its price - ie, its exchange rate against other goods - we have a feedback loop. The herd selects an intermediate good based on its predicted exchange rate. But the exchange rate cannot be predicted without knowing the herd's selection. Problem!

Moldbug describes his setup world of Nitropia, in which the storage and transport costs on which Menger based his analysis are eliminated:

anyone can trade with anyone, anywhere, by teleporting goods. In addition, we'll assume that all goods can be stored perfectly without any overhead.

Moldbug calls this an equilibrium where there is no money, just barter. I don't agree -- given the mental transaction cost assumption (see below), money could emerge even here, in the complete absence of storage and transport costs. I'll explain why below.

Moldbug then breaks this barter equilibrium by introducing a good with a storage cost, fish, which rots if not soon eaten. Sven the fisherman wants to fish, sell the fish, save the income, and when he's saved up enough buy a Cadillac.

Moldbug claims that this eliminates the coincidence-of-wants problem from his scenario, but I don't buy it. A coincidence of wants problem is just what we have here: customers want to eat the fish while it's still fresh but Sven does not want to purchase the Cadillac until he has saved up enough income for it (he apparently prefers delaying gratification to incurring the interest costs of credit).

Since the storage and transport costs of intermediate commodities are still zero, these provide no reason for Sven to choose one particular such commodity over another as a currency. But because as Moldbug says, "[t]ranslating between standards is a pain in the butt," out of these intermediate commodities a single monetary standard will emerge. In other words, Nitropia assumes transaction costs that create an incentive to converge on one currency. Since Nitropia has costless storage and transport, this is just what I have called mental transaction costs -- the costs involved in making buying and selling decisions. These include the costs of keeping books and otherwise tracking and comparing prices, and the costs of mentally mapping preferences to budgets via prices.

But mental transaction costs are a problem even if there are no commodities like fish with storage costs. A world of pure barter has O(N^2) prices for N commodities, and the mental transaction costs in such a world are correspondingly much higher than a world with a single currency and O(N) prices. So even a market with no transport or storage costs for any commodity whatsoever, but with sufficiently high mental transaction costs, will converge on a single currency.

Not even the elimination of all storage and transport costs eliminates all coincidence of wants problems. If Sven's customers want the fish Sven caught today because they are hungrier today than they expect to be ten years from now, they will prefer to buy it today even if Sven could costlessly store the fish to be sold with equal freshness ten years from now. Even with zero storage and transport costs, time preferences for production and consumption create noncoincidences of wants, and these mismatches combined with mental transaction costs give rise to a currency standard.

Menger's analysis does not and cannot show that the coincidence-of-wants effect is the only force that can result in standardized money. Perhaps there is another? Indeed there is.

I disagree. What Moldbug's argument, properly corrected, shows is that some of the costs that arise from the noncoincidence of wants occur even if there are no transport or storage costs, but only mental transaction costs. This contrasts with Menger's analysis, which defined the costs caused by the coincidence wants in terms of transport and storage costs.

Suppose Sven is choosing between only two possible intermediate goods - Ia or Ib. Say Ia is palladium, and Ib is rhodium. What is Sven's algorithm? It's actually quite simple. All Sven cares about is the change in the exchange rate between palladium and rhodium, across the time window T1 - T0 of the transaction. If (Ia/Ib)@T1 is greater than (Ia/Ib)@T0, he prefers palladium. If it is smaller, he prefers rhodium. In other words, he will prefer the I which will appreciate more across his monetary time window...

[Now consider a population of Svens, each choosing an intermediate commodity]. Let's separate this herd into two strategies, by eye color. If Svens have blue eyes, they follow their proper MBA reflexes and diversify, buying equally priced lots of palladium and rhodium. But if they have brown eyes, they buy only rhodium.

Who does better? The brown-eyed Svens. Why? Because [the introduction of a commodity that can't be costlessly stored [but as I observed above this is not really necessary; what we need to introduce are coincidences of wants and mental transaction costs -- NS]] has created new demand for both palladium and rhodium. There was no monetary demand before we broke the equilibrium - now there is. Ceteris paribus, the price must go up.

Rhodium emerges as our standard, its price reflects its value as money on top of its value as an industrial commodity, and the price of palladium goes back to its mere value as an industrial commodity. Given the vagaries of markets, our blue-eyed MBAs would have bought palladium too high (anticipating the possible increase in its value as money if it would have become a monetary standard) and sold too low (as glut and bust will follow this monetary bubble), while the brown-eyed colluders reap the full benefits of investing early in the money standard that actual emerged.

But if we take this analysis further, our blue-eyed MBAs don't come off nearly as bad as Moldbug's scenario suggests. If mental transaction costs, in addition to storage and transport costs, are sufficiently low there is no convergence on a single currency, because in a world of sufficiently unpredictable and volatile prices and risk aversion a party indeed benefits from stockpiling multiple currencies, just as they teach MBAs about investments.

In Moldbug's competition of blue eyes versus brown, the dice were loaded: the agreement between brown-eyed Svens to standardize on rhodium, and the lack of any attempt to set up a competing standard, allowed parties who knew about the agreement to predict ahead of time which standard would win. If the outcome is significantly predictable, it pays to invest completely in the most likely winner. But let's add a third group: green-eyed Svens that use just palladium as their intermediate commodity. Green and brown eyes being of the same expected financial size (or of a completely unpredictable financial size), there is a 50% chance that palladium and green eyes will win, while brown eyes lose everything (except the original non-monetary value of the commodity, presumably negligible), and 50% chance of the reverse. For the blue eyes, if they diversified evenly it's basically a wash. The risk-neutral expected value of all three groups is the same, but if our players are risk-averse our blue-eyed MBAs have the strategy of highest expected value. 50/50 diversity is thus the optimal initial position when it cannot be predicted which of two commodities will gain value as money. But since it's impossible to discover a perfect 50/50 diversification, and mental transaction costs are sufficiently high, the equilibrium is unstable and will coverge to a single currency. Once one commodity starts to be favored, the optimal strategy is to move to that currency. So we have shown that sufficiently high mental transaction costs are sufficient to cause the emergence of a currency standard, even in the absence of storage and transport costs.

Reminder: we are neglectling coercive means such as legal tender laws and operating in a completely voluntary market. But Moldbug's scenario also explains why larger governments usually end up controlling the currency, even in the absence of legal tender laws. Markets will tend to standardize on whatever the dominant transactor, the party that controls the largest plurality of cash flow, standardizes on, and in most historical societies the dominant transactions were tax collection and the payment of those taxes to soldiers. More recently government bonds and even more recently welfare payments have joined the fray, biasing the outcome still further. By standardizing on its own currency, a large government can gain revenue from an "inflation tax." This process is far easier for the government with a fiat currency than a currency based on natural unforgeable costliness (such as a precious metal). Before the advent of modern currencies, inflation and the resulting revenue could only be obtained tediously via the slow substitution of less scarce for more scarce metals in the government coinage. With paper the physical process is trivial, and only the matter of how the new money enters the economy is at issue.

All the foregoing assumed sufficiently high mental transaction costs. This has been the historical norm, because trying to shop or otherwise do business in a world of multiple currencies, much less of pure barter, has always led to confusion, error, and overly complex accounting, and would do so even given the costless teleportation of Nitropia. But with sufficiently low mental transaction costs and sufficiently unpredictable exchange rates, it pays to hang on to multiple currencies, and a world of multiple currencies is the equilibrium. At the extreme of zero mental transaction costs, zero storage costs, and zero transport costs, we have a pure barter market, with no need for money at all.

Now for a more radical claim: in some cases, computers can drastically reduce the mental transaction costs of comparing prices in multiple currencies, which along with the "costless teleportation" of online markets allows multiple currencies or in some cases even barter to become the equilibrium. I'm quite a bit more fuzzy on just what those circumstances are, or just what software with what user interfaces said computers must be running, but you can see some of my ideas here and here. The general idea is that most of the mental costs of mapping of preferences to budgets via prices, in order to make buying or selling decisions, are offloaded onto a software agent, via a user interferface and a complier that translates high-level preferences to detailed "binary" contracts.

Comments on the United States Constitution (i)

This is the first of a series of comments on the United States Constitution, with some riffs thrown in about U.S. history generally.

We start on the eve of the American Revolution. England had colonized a wide variety of places on the globe under three general models: proprietary, corporate, and royal. All three occured on the East Coast of North America in the original thirteen colonies that became the United States.

Royal colonies were technically part of the royal administrative hierarchy, but they were the least common type. The most common type was the corporate. Corporations ranged from Church organizations (like abbeys) to municipalities ("boroughs") to, most important for our purposes, the colonial corporations. The East India Company, one of the first joint stock companies, is the most famous and powerful example of a colonial corporation, but most other English colonies and a number of the American colonies were also granted in this form. Proprietary colonies were modelled after Counties Palatine: counties that were, except for a handful of narrow "extraordinary writs", immune from the jurisdiction of King and Parliament.

Unlike modern economic corporations, both corporate and proprietary colonies were granted political property rights. These are rights to exercise coercive police powers: to collect taxes, to make and enforce certain kinds of laws. Traditional political property rights, called franchises, were narrow grants to exercise very particular kinds of police powers. The grants to colonial corporations were often much broader and vaguer, granting rights of "government" or "internal police" while reserving "the rights of Englishmen" to colonists. Furthermore, the distance of their operation from the Crown and Parliament, and absentee colonial governors often lent colonists a free hand in governing, which they tended to do through legislatures elected by owners of real property. Although under long English legal precedent corporate charters, and especially charterted political powers, are to be interpreted narrowly, the broad wording of many of the colonial charters made this hard to do.

Some colonies (such as Virginia and the Carolinas) lost their corporate or proprietary status through quo warranto forfeiture proceedings and became royal colonies. Others through quo warranto had their charters reissued in new forms. In both cases, governors usually came to be appointed by the Crown and local legislatures gained broad powers of lawmaking on the subject of the "internal police." But, as long as the charters were considered political property rights, no entity was sovereign -- neither the Crown, nor Parliament, nor the legislatures could exercise political power at will, but had to respect the political property rights; i.e. had to operate according to the colonial charter.

The Romanist worldview is an ancient and pernicious one, and its reassertion in the 18th century in English politics led among many other things to the American Revolution. The Romanist view dates back to the Roman Empire, and came to the modern world via the Code of the Empereror Justinian. This Code was revived in the West by the new law schools (later universities) of the 12th century and became the standard law taught at Continental medieval universities. England's universities, by contrast, did not teach the standard English law (common law) until the middle of the 18th century. Instead, the standard English legal education occurred at the Inns of Court, and taught a legal and political structure radically different to Justinian's, one unintelligible to the typical university legal scholar or political philosopher. Even though real law by that time differed widely from the Justinian Code, the Code has exerted an influence that slowly caused, first Continental, and then worldwide, political philosophy and then law to coverge on its model. The Napoleonic Code and most other modern European codes are modelled after Justinian's.

From the Justinian Code we get two totalitarian superstitions: first, that there must be a locus of power, a "sovereign", somewhere in any political system. In Justinian's Empire, this locus was the emperor himself, whose word was law. From this philosophy came the view of the sovereign king or dictator espoused by Bodin and Hobbes. In this model the king is the "head" and the rest of the "body politic" is controlled by the king, just as our brains control our bodies. Under Rosseau and Bentham, this locus was switched to "the people" or to, in practice, a parliament that supposedly represented "the people." Under the extreme sovereigntist view, separation of powers, federalism, and political property rights are all an illusion -- all power is just a revocable delegation from a supreme locus of sovereignty.

Actual English law and political structure were very different. Under this law, royal power was actually divided among the King, the King's counselors, Parliament, and justices. None of these entities was the "locus" of power but all played crucial roles. Furthermore, much of this power had been granted to other entities -- nobles, lords proprietor, municipal and colonial and church corporations, guilds, and so on -- in the form of largely irrevocable political property rights. Under the sovereigntist view, taught in universities, all such property grants were merely revocable delegations. But under the actual common law, taught to the actual lawyers and judges of the time in the Inns of Court (institutions completely independent of universities, and thus largely uninfected by Roman Law), these delegations were property rights forfeitable back to the grantor -- and the original grantor was the Crown -- only under extreme breach of grant conditions under a quo warranto proceeding.

The substantive law of Justinian's Code is quite valuable, containing a purely economic view of property championed by, among others, Adam Smith, and giving rise to our efficient modern capitalist economies. But its procedural law is utterly totalitarian and helped give rise, first to the totalitarian Kings and Czars, then to Napoleon, and then to the communist and fascist dictators of the 20th century. The English legal world largely avoided this fate, but the freedoms of its peoples have been undermined by its own creeping Romanism in the form of legislative sovereignty. The political philosophies and "political science" of universities have always been dominated by the sovereigntist paradigm, which pits sovereign government versus "anarchy" as our only political alternatives. When the Inns of Court gave way to universities in teaching English law, English legal philosophy and political structure too became increasingly Romanist.

Of the legal claims made by the American Revolutionists, the strongest and most credible was their argument that the novel assertions of parliamentary sovereignty under Lord North violated the colonial charters. But by that time American colonists, too, were under the spell of Rosseau's doctrine of legislative sovereignty. Samuel Adams reported on the eve of the Revolution, trying to square the circle, that is to reconcile the supposed "supreme power" (sovereignty) of Parliament with the political property rights granted by the charters:

[Governor Hutchinson arguing on behalf of Parliament] although ... there must be one supreme authority [Parliament] ... , this constitution [Massachusett's colonial charter] will admit of subordinate powers, with legislative and executive authority, greater or less, according to local and other circumstances." "This is very true," the council [per Samuel Adams] replied, "and implies that the legislative and executive authority granted to the subordinate powers, should extend and operate, as far as the grant allows; and that, if it does not exceed the limits prescribed to it, and no forfeiture be incurred, the supreme power has no rightful authority to take away or diminish it, or to substitute its own acts, in cases wherein the acts of the subordinate power can, according to its constitution, operate. To suppose the contrary, is to suppose, that it has no property in the privileges granted to it; for, if it holds them at the will of the supreme power, ... it can have no property in them.... But, as in fact, the two powers are not incompatible, and do subsist together, each restraining its acts to their constitutional objects, can we not from hence, see how the supreme power may supervise, regulate, and make general laws for the kingdom, without interfering with the privileges of the subordinate powers within it? [emphasis added]

Since the sovereignty of Parliament was unacceptable to the colonists ("no taxation without representation"), and centuries of Romanist propaganda had by then extinguished almost all knowledge and recognition of political property rights beyond the Inns of Court, distribution of powers survived in the United States in only two forms: federalism (the nesting of larger and smaller territories, each with separate jurisdictions) and separation of powers (per Montisque, the separation between executive, judicial, and legislative powers). "Sovereignty" still had to be located somewhere. At first, during the Articles of Confederation period, colonies were dubbed "States" and declared by many to be sovereign. But even under the Articles of Confederation this was a fiction -- the Congress, not the States, sent diplomats abroad, and the "States" had delegated military authority to a confederate army led General Washington. As we shall see, the United States Constitution would render any talk of state sovereignty completely a matter of fiction, and it rivalled another fiction that would dominate in the long run -- that it was not any real entity, but a romantic fiction called "The People" that were sovereign. Using this fiction, the nature of the United States Constitution as a fictional grant of political property rights can be elucidated. Here is the preface to the Constitution, not legally binding, but illuminating of its nature:

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

The Constitution proceeds to list a number of legally binding Articles, just as in a corporate charter. "We the People" was in fact a small cabal of delegates sent from state legislatures, who had only authority to amend the Articles of Confederation, not to unilaterally rewrite the rules under which said Articles could be amended such that they effectively scrapped them and started over. But with concepts like "We the People" blazing across the mental sky, who needs legal propriety?

Nevertheless, this nice fiction allowed the United States to avoid creating a real locus of sovereignty by creating a fictional sovereignty to satisfy the Romanists. Sovereignty, under this doctrine, is vested in "We The People." Some of this political power is granted, charter-like, to the United States federal government. The rest is granted (per the 10th Amendment) "to the States, or to the people, respectively" -- that is to each State and to individuals. In reality, political power is distributed amongst the federal government, states, counties, and munipalities, with a variety of enumerated and unenumerated rights that these governments may not infringe being retained by private persons. Meanwhile, though, political property rights, which had been central to the colonial charters on which the United States Constitution was modelled, had been forgotten here, and indeed in England outside of the Inns of Court and the now-obscure passage on franchises in Blackstone's Commentaries. The three main safeguards against totalitarianism in the United States would be federalism, separation of powers, and the Bill of Rights.

The discovery of law

Justice John Paul Stevens has riled up law professors everywhere by reiterating the traditional doctrine of the common law, namely that the case-by-case decisionmaking that has given rise to the common law, as well as other precedent-based law such as interpretation of the United States Constitution, is a process of discovering something that already, in a Platonic sense, exists:

[T]he source of a "new rule" is the Constitution itself, not any judicial power to create new rules of law. Accordingly, the underlying right necessarily pre-exists our articulation of the new rule.

This contradicts the modern academic dogma of "positivism" in which the common law is made, not discovered, and therefore cannot be said to exist in any sense until the decision comes down. This is associated with another dogma, "realism", in which judicial decisions are largely just, as with legislation, exercises in political power.

Legal academics make far too much out of the "made" vs. "discovered" dichotomy. We can see that by looking at the supposed distinction between "discovering" a law of science and "inventing" a new piece of technology. If it's possible to make a strong and important distinction between "discovering" and "making", we should be able to do so here. Yet our patent system would not have been able to transition so smoothly to being able to patent new breeds of plant or new strands of DNA if this distinction were so clear. In patent law the distinction between a "discovered" law and a "made" invention can be as trivial as the distinction between a "discovery" that a high level of a certain hormone correlates with a high risk of a certain disease and the "invention" of a test that allows one to detect the high hormone level and algorithmically (or perhaps even mentally -- it's unresolved law) conclude that one is at serious risk of the disease. In other words, no serious difference at all -- the test apparatus and the mental or algorithmic step was how the discovery was made. To make the discovery is to make the invention, and vice versa, and the idea that there is an strong and important distinction between the two here is risible.

There are thus cases in which the distinction between making and discovering is trivial. But we can readily and fruitfully think of all invention as discovery. What was more important to inventing the first automobile: the physical making and combining of its parts, or the discoveries of ways make and combine them (in this case, discovering what are the better and worse ways to combine an internal combustion engine with a carriage)? One can discover better and worse ways of making things just as one can discover new continents or planets. That, and not whether the physical machine has actually been built, and thus can be said to now physically "exist", lies at the heart of invention. Furthermore, there is a Platonic sense in which these better or worse designs already exist, because the basic laws by which they operate already exist: the designs be deduced from the laws of physics and the history of the part of the universe in which it is desired that they operate. In practice, it this process of discovery requires its own empirical tests: build the machine, try it in the various desired environments, tweak the machine to make it work better. As with discovery those laws themselves, inventors hypothesize which designs are better or worse and test them against reality. They don't exercise their will and arbitrarily decide which machines will work better and which will not.

So too, common law is a painstaking way of discovering and making better law, case by case, dispute by dispute, piece of evidence by piece of evidence. For machines there is a Platonic "environment space", the set of environments we desire those machines to work in. As we explore new environments we discover new ways to make machines work better in them. In common law, there is a "facts space", a Platonic space of possible unique disputes, each with its own unique set of facts. It is not possible to explore more than a miniscule fraction of the facts space.

Instead of the hubristic exercise of waving one's hands calling for "Change" and then drafting broad legislation, the ultimate consequences of which are usually unknown, common law judges tweak the common law. In each case they are discovering a better way in which the law can be made. Just as there are empirically better and worse machines, so there are empirically better and worse laws. If the law applied to the facts of this case is unjust, it needs to be tweaked. Not repealed or overruled, as the absolutist minds of positivists would have -- but tweaked -- by a shade of meaning or an exception for a new situation. To repeal a rule of common law insults the combined wisdom of several previous courts and a variety of cases with their own large bodies of evidence not before the current court. It's like an octopus declaring that, based on his discovery that wheeled vehicles don't work on the ocean, that they won't work on land either, despite many landlubbers who've reported that wheeled vehicles work on land just fine. The principles of precedent or stare decisis allow the law to evolve towards worker better in an ever wider variety of disputes, even though only the facts of one case can be observed at a time.

So there is no dichotomy -- judges both make law and discover law. By not doing so in broad brushstrokes, they can avoid doing the broad unintended harms that legislation usually causes. Legislation purposefully disrupts previously existing legal rights and duties wholesale. Proper common law precedent -- any precedent that should be respected -- never should do this. Instead it should be clarifying the nature of previously unexplored territories of the facts space, the space of possible disputes, and tweak the law so that it works better in the newly explored part of the facts sapce. Incremental discovery of better law justifies the prohibition against ex post facto laws applying to legislation in a way that it does not apply to common law making.

N.B.: the fact that scientific discoveries are called "laws", by metaphor to human laws, should clue us in as to what people generally thought about the nature of law at the time of the scientific revolution, i.e. from the Renaissance through the Enlightenment, and including the drafting and ratification of the U.S. Constitution.

Unbundled jurisdictions and exit costs

Standard political "science", on which both academic and popular modern views of politics are now based, has beat into our heads a false dichotomy: "government" vs. "anarchy." The first, it is assumed, is sovereign government: it has a "monopoly of force." The second is often viewed as either an imaginary world of violent lawlessness or an imaginary world of purely voluntary relationships.

But this excludes what much of the politics and law of England and its colonial offshoots, among many other examples, were for most of their history: divided, non-sovereign governments. Law enforcement with no monopoly of force. There are a number of kinds of such division -- the most familar being federalism and the separation of powers. But the most interesting of all is the unbundling of political property rights.

I have explained why law generally cannot be enforced by purely voluntary relationships. Sure, most rules, formal and informal, of society can be and are followed in a largely voluntary fashion. Reputation and other factors can provide incentives to follow many kinds of rules. But when either the threat or the response become violent or overly fraudulent real law, i.e. law based on local initiations of force, is generally required. Murray Rothbard's fallacy was to try to extend a general principle that succinctly summarizes the substantitve common law -- non-initiation of force -- to the procedural law, which it does not properly summarize and where it mostly does not belong.

Defining "government" as any relationship that is not purely voluntary, what forms of such "government" maximize liberty by minimizing exit costs? Unbundled political property rights put the lie to the "monopoly of force" by unbundling the use of force into a wide variety of specialized forms -- each owned by a particular organization or individual. Here, for example, are some examples of political property rights from medieval and Renaissance England:

There were dozens of standard jurisdictional franchises. For example, "infangthief" enabled the franchise owner to hang any thief caught red-handed in the franchise territory, whereas "outfangthief" enabled the owner to chase the thief down outside the franchise territory, catch him red-handed, and then hang him. "Gallows" enabled the owner to try and punish any capital crime, and there were a variety of jurisdictions correponding to several classes of lesser offenses. "View of frankpledge" allowed the owner to control a local militia to enforce the law. "The sheriff's pleas" allowed the owner to hear any case that would normally be heard in a county court. There were also franchises that allowed the collection of various tolls and taxes.

Modern remnants of such jurisdictions include the shopkeeper's privilege to arrest and imprison shoplifters, "stand your ground" statutes which recapitulate the traditional political property right, liberty of house, citizen's arrest, and so on. Even such a behemoth as the United States has nothing resembling a "monopoly of force."

Political property rights are narrowly defined rights to initiate force -- in very specific ways and in response to specific events and no others. Their legal exercise generally requires the owner to scrupulously follow specific procedures. Unbundled political property rights can reduce exit costs far more than sovereign governments, because they don't come bundled with the power to exclude normally associated with sovereignty and real property (much let the power to prevent people from leaving exercised by the more tyrranous sovereigns). It is thus possible to have a wide variety of jurisdictions enforcing law without any restrictions on the freedom of travel of those acting within the law. But unbundled political property rights do radically violate the nonsensical poli-sci dichotomy of sovereign government vs. anarchy that is taught in schools. Unbundled political property rights are neither sovereign government nor purely voluntary. But they are a crucial part of a world that maximizes liberty.

(This post is expanded from comments I made at Unqualified Reservations).

Political arguments from extreme examples are extremely bad

In our recent years of paranoia, which we slowly seem to be recovering from, one has often heard arguments that political policies or laws should be changed based on the failure of current policies or laws to address extreme cases. Here's a recent example:

Suppose you knew for a fact that your family was in imminent danger of being murdered in a plot masterminded by bin Laden or some other homicidal psycho? Suppose, further, that you knew a confession from him would save the lives of your family. Would you be willing to have the authorities use torture to obtain it?

or, if that doesn't make you sufficiently afraid,

Picture this: There's a guy in police custody who knows the location of a bomb that's set to explode in an elementary school building that holds 500 children. Threats and intimidation have failed to make him reveal the address of the school and the location of the device. You suspect that torture would loosen his tongue and save all those innocent lives. What would you do?

There are several flaws in this argument, one being that we rarely "know for a fact" events that have not happened yet, another being the dubious missing link in the logic here, that the information extracted would be reliable and thus help law enforcement prevent the danger rather than provide them with misinformation that distracts them from the real target. But there is a more basic problem with these kinds of arguments when applied to any argument over what any law should be.

The use of extreme examples preys upon the widespread ignorance in modern societies of how our legal systems work. It assumes that our legal system executes laws as if it were a robot: law goes in, facts go in, defendant goes in, from the legal code and the facts the robot logically concludes that the defendant violated law, defendant goes to jail, period. But that's not how our legal system works. Rather it is set up to assume, properly, that no language can describe just outcomes in all cases. It is set up so that when legal rules cause obvious injustices, those injustices can be avoided. In the United States and Commonwealth countries, at least three different groups can exercise discretion to prevent obvious injustice to technical lawbreakers: prosecutors, grand juries, and trial juries.

In the case of the torturer of an obvious terrorist who in fact saves many lives, it's highly likely that prosecutors would exercise their discretion to not prosecute. They'd get overwhelming political support in doing so. Even if they prosecuted, they would be unlikely to get a grand jury to indict. And even if a grand jury indicted the life-saving torturer, it's extremely unlikely that a trial jury would convict. Thus, despite violating the words of the law, our life-saving torturer would be hailed as a hero, get millions of dollars worth of book contracts, and face no serious risk of jail time. Strong anti-torture laws, with no exceptions written in to the language of the law, would prevent the gross injustice and inhumanity of torture in the vast majority of cases where officials would be tempted to torture -- cases where the dangers posed by the torture victim or his pals are more pedestrian or less clear than the extreme scenarios put forth by proponents of legalizing torture. In such cases the importance of not stooping to the barbarity of torture, and the extremely horrific possibility that torture might become standard law enforcement and military practice, should trump uncertain or everyday security considerations. Strong and absolutely worded anti-torture laws would not punish a torturer who clearly saved many lives in the extremely rare circumstances so often portrayed by these proponents.

Borders in the franchise system

Under the franchise philosophy, jurisdictions and other organs of government large and small are property. In a monarchic franchise system ownership of jurisdictional properties tends to be by individuals, whereas in a republican franchise system ownership of such properties tends to be by corporations. There is no such thing as sovereignty or "the" government, but instead a wide variety of property rights to exercise specific political powers that may be bundled, or not, in a wide variety of ways. The rights, duties, powers, and so on of persons in franchise systems are defined in property deeds, often called charters.

In a franchise system, it follows that jurisdictional boundaries are a kind of property boundary. This does not, however, mean that these boundaries should be treated in the same was as the popularly understand generic property in land is treated today. For example, it does not automatically follow that one of their features should be a strict right of exclusion.

Popularly we treat property in land as if it all came in one generic variety, but in fact properties (called in law "estates") can come in a wide variety of forms. There can be estates, sub-estates, and so on. There's no contradiction between having boundaries of larger properties and also having boundaries of smaller properties contained within them. And these boundaries can mean different things depending on the kind of estate involved. A jurisdictional estate can encompass a number of economic estates, for example, and the borders of each have different legal consequences.

There is nothing more important to liberty than reducing exit costs. As Daniel Nagy points out in the debate at this link, this also argues towards reducing entrance costs -- although I do draw a distinction between the two. Restrictions on their residents or guests leaving the property should be highly discouraged, and indeed generally constitute kidnapping. This should apply at any scale. Thus all forms of serfdom and national citizenship with restrictions on emigration that tie people to a territory, whether economic or jurisdictional, are highly destructive of liberty.

The right of an owner to exclude people, on the other hand, should be very high for smaller properties and less so far larger (jurisdictional) properties. A jurisdictional property that restricts entrance also restricts the freedom of association of the jurisdiction's inhabitants. If a family desires to live and raise their children among "their own kind", whatever kind that is, the property policies or deeds that implement these associational preferences should be implement far more at a local level (for example with restrictive property deeds) than at a national level. Thus for example I favor the right to enforce discriminatory covenants on single lots and neighborhoods that the U.S. Supreme Court has struck down under the fraudulent theory that these constitute "government action" and thus violate the Equal Protection Clause. But on the scale of a large "nation" such as the United States, I am for open borders, unless the border restriction is due to a compelling reason of security that cannot be handled on a local scale.

(This text is based on a comment I made in a prior post).

Some Ron Paul bits

"Super Tuesday" here in the United States is coming up next week and the primaries are still undecided and exciting. My favorite candidate, Ron Paul, finished second in the Nevada caucus, has picked up at least 6 convention delegates so far, and is now one of four major candidates remaining in the Republican race, albeit trailing the other three in most states. He has outlasted Tom Tancredo, Duncan Hunter, Fred Thompson, and Rudy Guliani. He will likely continue his pattern of doing better in most caucus states than in primary states, reflecting the higher energy of his supporters. Here are some video highlights of Paul at the recent debate at the Ronald Reagan Library. Here is a chart comparing his major positions to the other candidates.

Dr. Paul has recently picked up a wide variety of endorsements: contrast Arlo Guthrie with American Conservative magazine, for example. His new book, The Revolution: A Manifesto, is now near the top of the Amazon best-seller list.

Paul has introduced many more people to the ideas of liberty than we could have hoped for even a few months ago. Go Ron Go!

[Update 2/2/08 -- here is video of a good speech Paul just gave in Colorado, and Paul is currently tied for second with John McCain in today's Maine caucus.]

[Update 2/7/08 -- On "Super Tuesday" Paul did much better in caucuses than in primaries, as I predicted. He did particularly well in northern state caucuses. In Montana he placed 2nd with 25% of the vote. In North Dakota he got 21%, in Alaska 17%, and Minnesota 16%. Paul won well over a dozen counties outright, including (ironically) Lincoln and Roosevelt counties and (fittingly) Madison county in Montana. His campaign reports that he now has at least 42 delegates to the Republican national convention. This corresponds to hundreds of delegates at the local level who will influence Republican party politics for years into the future. Even Mitt Romney has now dropped out of the race, but Ron Paul keeps plugging away. Here [1,2,3] is video of Ron Paul's excellent speech at CPAC, wonderfully introduced by Bob Barr.