Tuesday, November 3, 2020

Holmes and Sunstein: the fallacy about The Cost of Rights

     There is an argument that appears in almost all of the many books and articles that academics churn out in support of an enlargement of the welfare state. They tell you that the new entitlements they would like to see established by government and afforded by your taxes aren't really different from traditional individual rights like freedom of speech and private property.

     The argument goes this way: all rights have costs, right? Freedom of speech, for instance, must be protected from attacks by terrorists, and that costs money, right? So happens with public housing, food stamps and the like, right? So you opposition to those entitlements or even new ones is based on prejudice, on the false idea that “traditional” rights cost nothing or are somewhat different from welfare. You are wrong, they all have costs and all require taxes. In fact, all rights are welfare rights. Don't you feel ashamed of sustaining nonsensical prejudices that academics have debunked so many times?

     The issue is no longer merely academic. In the last decade it has percolated into politics and already many leaders in the US Democratic party call for an enlargement of the New Deal of the 1930s. Professor Cass Sunstein, who was appointed Regulation Tzar by Barack Obama in 2009, had five years before published his book “The Second Bill of Rights. FDR's Unfinished Revolution and Why We Need it More than Ever” in which he praised Franklin D. Roosevelt for the introduction of social and economic rights. Nevertheless, as the title of the book itself declares, Sunstein thinks that the welfare revolution must be pushed forward. He had prepared the way to such proposal in a previous book “The Cost of Rights. Why Liberty Depends on Taxes” which he published in 2000 together with professor Stephen Holmes.

     These ideas have their echoes all around the world. Where I live, Argentina, Carlos Nino, a law professor and an adviser to former President Raúl Alfonsin, has tried to counter the opposition to economic and social rights with arguments similar to those of Sunstein and Holmes, to which he added some of his own (link to my two articles on Nino). The new star among Argentine left-wing academics, law professor Roberto Gargarella, is a disciple of both Nino and Sunstein. Gargarella seems to think that, after the prejudice in favor of traditional rights has been debunked so thoroughly, it is enough to point out that “as we all know” all rights have costs.

     To my knowledge, the most extensive exposition of the argument is to be found in two books: Murphy and Nagel's “The Myth of Ownership”, and the already mentioned “The Cost of Rights”. I have dealt with the former in a series of articles (link to the first) and now I intend to do the same with the second. This time it is easier because, although the book includes some secondary arguments, it rests almost entirely on the one about costs. I will do the same, although there are many other objections against a larger welfare system, I will concentrate on the one the authors chose to rest their case.

Opposition to more welfare rights is based on prejudice (is it really?)

     “The Cost of Rights” starts with a description of a fire in Long Island, New York. In august 1995 thousands of firefighters, volunteers, police and even the military fought to extinguish it. Fortunately nobody died and there was little damage to properties. Holmes and Sunstein write that although volunteers helped, public resources made those efforts possible. They assert that the costs were estimated at $ 1.1 million but that they may have been as high as $ 2.9 million.

     Using this case they counter the criticism of those who warn that government has become too big. Here we meet an auxiliary fallacy (soon we will tackle the main one) which is very common in promoters of a larger welfare state. They implicitly assume that those on the other side reject all government services and all taxes. Moreover, professors Holmes and Sunstein are not arguing for the status quo, they want to enlarge the already enormous federal government. So pointing out to the services provided by firefighters does not answer the criticism of the welfare state, nor does it provide a reason for making it bigger.

     The authors themselves must have had some misgivings about that argument so they go to the main one: asserting that all rights are welfare rights. Then, if you oppose government handouts you must oppose firefighters.

     Through the book, the professors declare again and again that all rights are welfare rights. Even traditional rights like freedom of speech are not really that different from food stamps and other government handouts. Why is it so? Well, all of them cost money. Governments have to spend money protecting free speech against those who might try to violently suppress it. Without such protection and that spending, the right to free speech has little value. They add that the same applies to any other right, traditional or new, negative of positive, all cost government's money.

     Stretching things a bit, the authors claim that “A legal right exists, in reality, only when and if it has budgetary costs” (The Cost of Rights, 21, all further references made to it -Google Books version- unless otherwise stated). Then they blame conservatives for being oblivious about “the way that taxes of the whole community are used to protect the property rights of wealthy individuals”. On the same vein, they add that it is plain that “the right to reasonable compensation for property confiscated under the power of eminent domain has substantial budgetary costs” (27).

     Corollary of all that is that “public savings can be achieved just as effectively by tightening standing requirements for civil actions (by curtailing classical rights), as by tightening eligibility requirements for food stamps (by curtailing welfare rights)” (28). These are just two ways of allocating public resources. Then, in an analysis not blurred by prejudice, in a hard-nosed examination of the issue from the angle of costs, the reader of the book should understand that there is not much difference between welfare and classical rights.

The main fallacy

     The main trick in the book is performed in two steps: first by speaking loosely about rights and their protection as if they were the same thing. Secondly: by sweeping under the carpet that money or housing provided as welfare rights are protected by firefighters, police and the courts as any other property but that on top of that, the money or the houses are provided by government by taxing other people.

     Loose reasoning is then essential for the purpose. Holmes and Sunstein won't deny that firefighters would try to save any property, no matter whether it was bought by the owner or received as welfare. But they keep dropping sentences here and there that point to the shocking fact that the property of wealthy individuals is protected by resources that come from taxes paid by the whole community (and the rich have the gall to complain about welfare!).

     Sunstein repeated that strategy in his book “The Second Bill of Rights”. There he first silently assumes that those who complain about welfare ask for a return to a state of nature, and then he points out, for the benefit of those who ignore it, that rich people are protected by policemen and judges. He asks: “In the state of nature ‒freed from the protection of law and government‒ how well would wealthy people fare? (The Second Bill of Rights, 206).

     The trouble with that line of argument is that poor people would fare as badly, or worse. They would be forced by powerful chieftains to pay in kind, to give up part of their harvests no matter how meager they are, they would be killed or enslaved. None of that is speculation, it is a large part of history. Even today, poor people are the first victims of crime, robbed, abused, and -as in Argentina- forced to pay protection money merely to enter and leave the shanty towns where they live. The notion held by some elites, that only rich people are interested and benefited by the rule of law, or ‒as Marx put it‒ that poor people have nothing to lose but their chains, ignores the past as well as the present.

     Once you start thinking that it is wise to view things that way, you may be convinced that it is only fair that if the rich have their pockets protected by police, then the poor must have their pockets supplied with money by government. The fact that welfare implies two different costs -first the handout and then its protection- is then easily forgotten.

     Criticism of entitlements is, and has always been, criticism of that first thing: the handout. It has never been directed against protecting the property rights of anyone, rich or poor.

Was government always such big?

     In his pursuit of enlightening people about their prejudices, Sunstein writes that “it is a huge blunder to suggest, as many do, that for the old-style rights, the government apparatus required is relatively small...To protect the first bill [traditional rights], government must do far more than provide a military. Its apparatus must be very large indeed” (The Second Bill of Rights, 200-201).

     The trouble with Sunstein argument is that government was indeed far smaller before welfare and entitlements started to grow. There is no need to speculate whether government would be smaller, it was smaller. At the beginning of the XXth century the US government spent about 0.2 % of GDP on welfare. To reach the present spending on welfare you will have to multiply that figure more than ten times (US Welfare Spending History).

     Again, for those like Holmes and Sunstein who push to expand welfare even beyond its present level, it is not enough to point out that government spends on courts, the police, etc. That would be enough if they were debating people bent on disbanding all government. Certainly, there are half a dozen scholars in a couple of think tanks that dream of anarcho-capitalism but that is not the point Holmes and Sunstein are trying to counter. Nor are they just suggesting that welfare spending is kept at the present level. They think that the New Deal is an unfinished revolution, that its welfare programs ‒and there was much added since‒ must be expanded.

     One of the many stumbling blocks on the way of such proposal is the usual distinction between negative and positive rights. Traditional rights like free speech are seen as negative not requiring much from government besides respect for freedom while public housing and food stamps are seen as positive i.e. they are provided by government. As we have seen, the professors' main strategy to blur those concepts is to claim that both demand expenditures and to hide that welfare demands two: one to provide housing, money, etc., and another to protect them. The only thing that earned money and government handouts share is the protection, not the provision.

     Certainly, the word “negative” is inaccurate if one thinks about the protection of property, but not if one thinks about the provision of property. Traditional rights are negative in the sense that they are only protected by government action, but not provided by government as entitlements are. One may try a play with words and claim that both food stamps and policing must be called provision, or that both must be called protection. But using only one word does not remove the difference, it only hides it.

     Nevertheless, Holmes and Sunstein try hard to show that the distinction has no basis. They write that “It does not appear anywhere in the Constitution, for one thing. It was wholly unknown to American framers” (39). Any schoolboy should be able to see that the distinction cannot be found in the Constitution because its Bill of Rights acknowledges only traditional negative rights. As the distinction between dogs and cats is nowhere to see in a dog show, the professors would be able to prove that such distinction must arise only from prejudice.

Misconstruing history

     Holmes and Sunstein fight the distinction further by saying that “Private property is not only protected by government agencies, such as the fire department. It is, more generally, a creation of state action. Legislators and judges define the rules of ownership, just as they establish and interpret the regulations governing all of our basic rights” (68)

     That assertion, namely that private property is a creation of the state, goes against the fundamental understanding of individual rights in US history. Even today, in spite of the strenuous efforts of so many academics, most Americans would think that property is a right recognized in the Constitution, and that interpretation and regulation cannot be stretched to the point where rights become just the creation of legislators and judges. Even the Constitution didn't create property, it simply acknowledged a right that existed well before it was enacted. There is no need to enter into a debate about natural law; as a matter of fact and history there were property rights in the US before the Constitution was enacted.

     Perhaps Holmes and Sunstein themselves sense that their view is alien to American history and traditions so they must go far away and long ago for support. The professors go to medieval England, where the feudal order might provide a better basis for their understanding of property rights. They write “To simplify a complex story, William the Conqueror created property rights when he distributed plots of seized lands to the Norman noblemen who had helped him overrun England. Common-law property rights, as enforceable in court, did not descend from high principle but rather rough-hewn in a process of social give-and-take. This historical curiosity fits well with the fact that, as a matter of current legal reality property rights, far from being rigidly fixed, remain subject to considerable renegotiation” (196).

     A simplification may not be necessarily misleading, but the one above points to the exception and silences the rule. William the Conqueror treated the Saxons as a vanquished people with no right to their land. That never became the leading principle of the common law. Soon that force was restrained by rules and judges. When another king tried to play tricks with his people's property he was forced to admit that he had violated his subjects' rights and promised to respect them in Magna Charta.

     Moreover, if the description is wrong about the beginning of common law in medieval England, it is absurd to suggest that a government that takes property from some people and gives it to its followers offers a pattern that is relevant to modern United States ‒or so I hope.

Danegeld theory

     In many parts of “The Cost of Rights” the authors argue as if only the rich were interested in law and order and even in defense against foreign invasion. They write “When those with little or no property are reluctant to fight fiercely against foreign looters and conquerors, the property rights of the rich are of little worth. For prudential reasons alone, property owners have an incentive to prevent the impoverished from feeling alienated from the polity” (199). So we learn that, before welfare, poor people didn't fight foreign invaders. French peasants didn't follow Jean d'Arc and American farmers refused to follow Washington. The professors' mistaken assumption is the same that Vladimir Lenin made when he decided to invade Poland in 1920, that the Polish poor had no interest in defending a country that gave them no public housing and higher education for free. Certainly, the Polish poor didn't agree with that assumption.

     Besides, it is not true that only, or mostly, the rich suffer when their country is invaded. From time immemorial poor people have seen their huts burnt, their wives and daughters raped, and whole villages sent into slavery. Nor is it right to assume that only the rich suffer the attacks of criminals. If anything, poor people need protection against them even more than the rich. I remember a case I saw when I worked for one of the courts in Argentina. A man started a small grocery in a shanty town. He prospered a bit and decided to buy a second-hand saw so as to be able to cut and sell meat. A gang of youngsters learned that the man was about to make a payment in cash and planned a hit. It happened that the shopkeeper's son was a member of the gang, so he told his father, who managed to avoid the attack. The gang killed his son as a traitor. It wasn't only a tragedy for the father, but it deprived the people of the shanty town from the services of a man who had deared to provide them.

     Never mind, Holmes and Sunstein tell us that law determines who must lack resources because it doesn't allow the poor to remedy their situation by violent means (200). As with national defense, welfare must bee seen as a way to gain poor people's cooperation in the fight against crime, from which they might otherwise have taken advantage. To avoid being plundered, the rich then pay the poor through government. That is more or less what in ancient times English people ‒rich and poor‒ paid to vikings to gain peace. Not to be robbed, they paid what was known as “danegeld”, the money paid to pirates to gain their forbearance.

If you protect rights, you favor the rich

     In words that would have made Karl Marx very proud, Holmes and Sunstein tell us that “Like wealth, poverty in America is in important ways a product of political and legal choices. Our law of property which includes rules governing inheritance determines who 'lacks resources'. Without government and law, some of the propertyless would quickly be able to procure considerable resources by private violence or stealth” (200).

     With the help of the authors we discover that law does not treat people equally. The law “determines” that some lack resources. Moreover, the professors add that those who have more resources can take better advantage of the protection and services provided by the state. On that basis they conclude that “This partiality of supposedly impartial rights to those endowed, for whatever reasons, with private resources is troubling” (203).

     But then one wonders why do Holmes and Sunstein apply that reasoning only to the protection of property rights. They might as well point out that laws do not allow a man to satisfy his sexual appetite by raping a woman. Is that equal treatment? Is it not clear that the man should be compensated in some form so has to gain his cooperation, to make him feel that he is “included” by the system, so that his good will is not dependent only on coercion?

     And what about free speech? Laws restrict people from silencing by force those who publish newspaper articles that they don't like. But then, according to the above reasoning, they are not treated equally. The law favors the infidel against the offended follower of the Prophet. At the very least the cooperation of the latter must be paid by taxes collected from the infidels. Otherwise the glaring inequality would remain as a mockery of our laws solemn declarations.

     Of course Holmes and Sunstein wouldn't argue that way when it comes to the laws that forbid rape and the suppression of free speech. But then, it seems that it is done with the laws that forbid robbery and looting because of the underlying assumption that property rights are less satisfactory in moral terms. Nevertheless, that is an assumption that Holmes and Sunstein never make explicit and never attempt to prove. In other words, it is a prejudice against property rights under the guise of a hard-nosed examination of our legal system and its costs.

     Indeed, there is a definite effort of academics and judges to make property a lesser right. American law scholar James W. Ely Jr. has accurately described the push that, starting in the New Deal, tried to make property rights more vague and less protected against government intervention. Early on there were many who fought against that trend. Ely writes “Even during the heyday of post-New Deal liberalism, some jurists criticized the subordination of property rights. In 1958 Learned Hand, a prominent federal circuit court judge, questioned whether there was a principled distinction between personal and property rights. He observed that 'it would have seemed a strange anomaly' to framers of the Fifth Amendment 'to learn that they constituted severer restrictions as to Liberty than Property'. Hand added that here was 'no constitutional basis' for asserting greater judicial supervision over personal freedom than over economic liberty.”

     “Speaking for the Supreme Court, Justice Potter Stewart amplified this view in Lynch v. Household Finance Corp. (1972). Stewart declared 'that the dichotomy between personal liberties and property rights is a false one. Property does not have rights, People have rights'. In language evoking the attitudes of the framers, he further stated, 'In fact, a fundamental interdependence exists between the personal right to liberty and the personal right in property. Neither could have meaning without the other. That rights in property are basic civil rights has long been recognized.' Stewart's linkage of property rights with individual liberty contradicted a major tenet of New Deal constitutionalism...” (Ely, James W. Jr.: The Guardian of Every Other Right. A Constitutional History of Property Rights, Oxford University Press 3rd edition, 150-151).

     It is no surprise that Cass Sunstein, who has proclaimed himself an admirer of the New Deal and even wants to expand its program, thinks that it is permissible to reason about the safeguard of property rights in ways that would be preposterous if applied to other personal rights.

     That property rights are second rank rights is simply taken for granted by too many academics and judges. And it is revealing that when Argentina's Federal Supreme Court published two online books with what the Court itself sees as its landmark decisions, the judges didn't feel necessary to include cases concerning the safeguard of property ‒which were always included in older listings used when I studied law. In the sections about “Fundamental Rights” we see decisions concerning discrimination, right to information, privacy, right to die, etc. Then we find sections about political rights, labor rights, social rights, cultural rights, right to housing, rights of unions, collective rights, etc. Property is nowhere ‒which is perhaps the best summary of the Court's performance (link1, link2).

Two kinds of welfare, and the perils of clientelism

     As we have seen, Holmes and Sunstein set forth arguments to justify government provided welfare, and ‒in a second step‒ Sunstein has written a book dedicated to arguing for its expansion. I have tried to show that their reasoning is fallacious and that their references to history are inaccurate. Nevertheless one of the oddest things about their arguments is that they omit to take into account one of the most obvious motives why governments expand welfare and entitlements: to get votes.

     And this shows that it is vital to distinguish two kinds of welfare,

1 Public services open to everyone and paid by the whole population

2 Goods given only to some people, and paid mostly by other people

     Everywhere there is a mixture of the two kinds of welfare, certainly, but it is relevant to distinguish them because they have different political effects. Both pose dangers, both tend to increase the power of government over people, but the second form of welfare creates a system of dependency that already engulfs a considerable part of the world. That system has degraded Argentina, my country, from being one of the most prosperous nations on Earth at the beginning of the XXth century, to a failed country a century later, where half of the population live in poverty. From a nation that attracted immigrants from all over the world, to a place that youngsters leave in search of a better future. A people that used to learn from the misakes of other nations is now a disillutioned crawd led by fools who embrace every progressive fad they can find. That decline was eased in no small measure by the clever use of vague words, intellectual confusion, and the distortion of the past. One should never assume that they have no consequences.

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