Julian Sanchez
responds
to my second whack at homeowner's associations vs. zoning boards. Here's my response to that.
I'll get back to homeowner's associations presently, but it seems best to first consider rights in
a laissez-faire society more generally, as Julian does when he
says that he does indeed prefer deciding things by contracts than by
votes:
- Actually, I prefer not to have any "votes" when it's at
all avoidable, not where rights are concerned. The characterization of
a preference for private contracts as "one dollar, one vote" is
grossly misleading. It's still, after all, one person deciding to
enter into the contract or not to.
Which is fair enough, as far as the rhetoric goes; "one dollar, one
vote" is, at the very least, far too glib. But it misses the point I
was getting at, which is that laissez-faire economic arrangements, the
rich tend to wind up skewing things to their own benefit, and the
general detriment of everyone else. As I've repeatedly observed, a
lot of our existing regulatory structures arose because big business
oligopolies really were cheating the little guy in the stock market,
overcharging him for transportation services (compared to, say,
Standard Oil's discount), cheating him in the stock market, and so
forth. This is hardly an original observation; it was quite some time
ago that one erstwhile critic of the bourgeosie noted:
-
People of the same trade seldom meet together, even for merriment and
diversion, but the conversation ends in a conspiracy against the
public, or in some contrivance to raise prices.
and
again:
-
We rarely hear, it has been said, of the combinations of masters,
though frequently of those of workmen. But whoever imagines, upon this
account, that masters rarely combine, is as ignorant of the world as
of the subject. Masters are always and everywhere in a sort of tacit,
but constant and uniform combination, not to raise the wages of labour
above their actual rate. To violate this combination is everywhere a
most unpopular action, and a sort of reproach to a master among his
neighbours and equals. We seldom, indeed, hear of this combination,
because it is the usual, and one may say, the natural state of things,
which nobody ever hears of. Masters, too, sometimes enter into
particular combinations to sink the wages of labour even below this
rate. These are always conducted with the utmost silence and secrecy,
till the moment of execution, and when the workmen yield, as they
sometimes do, without resistance, though severely felt by them, they
are never heard of by other people.
Both passages are from Adam Smith's treatise on The Wealth of
Nations; they only sound like Karl Marx.
The usual libertarian response to this sort of argument is that
cartels are unstable because the incentives to deviate are so great.
History proves these arguments half-right in the real world.
Rockefeller's Standard Oil, unquestionably a cartel, was economically
inefficient -- when it was finally split up, the parts proved in
aggregate to be quite a bit more profitable than the whole had ever
been. But government action was needed to break it up. In other
spheres, de Beers has been a stable, if monstrous,
cartel for most of its existence. And more recently in the United
States, in industry after industry, from airlines to telecom to
finance, the response to deregulation was a round of consolidation.
These oligopolies may forgo profits under some circumstances -- but
that's a price that their owners willingly pay to exert some measure
of control.
So what does that have to do with individual rights? Let's
consider the right to privacy, in the context of American national
credit bureaus, like Equifax. As I mentioned
some time back,
-
These are huge,
unaccountable bureaucracies, which keep tabs on just about everyone in
the United States. When they screw up, innocent people can find it
difficult, if not impossible, to buy a house or a car, to enroll at
schools, due to student loan difficulties, or even to get a
credit card (and have you tried to travel recently without one?).
Their databases are notoriously unreliable and insecure. Plain errors
can take months to
correct, even if the corrections don't get mysteriously undone
later when the source of the bogus data resubmits it. This sounds
like a libertarian horror story about intrusive government and
insensitive government bureaucracies, but it's entirely in the private
sector; government has nothing to do with it. And the finance
industry's lobbyists are paid princely sums to make sure that it stays
that way, and that the credit bureaus don't become subject to anything
like European privacy laws.
It's arguably unfair to call this "one dollar, one vote" because,
to the best of my knowledge, there haven't been many votes at all
about the choice of this particular structure for the issuance of
consumer credit. As for us,
it's "one person deciding to enter the contract or not to", but all the
available contracts are the same, and deciding not to enter into the
contract is deciding to forgo consumer credit, including auto loans
and mortgages, entirely. In short, this is an unambiguous case of credit
issuers banding together to get power over the rest of us.
One response to my Equifax post was an email exchange
with a libertarian blogger who proposed that
-
Of course, if sufficient numbers of consumers were to get totally fed
up with the tyranny of Equifax-type operations, then in a free market,
surely some smart entrepreneur would try to tap demand for privacy?
Hey Charlie, let's set up in business!
"Of course," neither I nor, to the best of my knowledge, my
correspondant had the financial expertise needed to run a functioning
credit card agency, a sound way to estimate the risks we'd incur by
forgoing credit reports, or a practical background into how to plug
into payment networks (which are effectively owned by the existing
credit agencies, who might not be entirely friendly to a project aimed
at reducing their hard-won social control) -- practical matters of the
sort that libertarians routinely ignore when glibly asserting like
this that the only thing that keeps "the market" from seeing to all
social needs is the eeeeevil government.
But putting all that aside, this exchange puts in a nutshell the
problem I have with the libertarian attitude toward individual rights:
You want privacy? Pay for it! And similar thinking can be seen in
Julian's arguments about zoning vs. homeowners' associations. Julian
concedes in his
first post on the subject that:
-
If you look at a narrow case, many years down the line, it may well be
that the choice faced by someone moving into a home bound by contract
to an association is the same as that of someone moving into a zoned
area. But this elides the very different processes by which the degree
of collective control over property was arrived at. The private
process should give us far greater confidence that the tradeoff is
efficient than the majoritarian one, whether or not it yields the same
outcome.
In other words, we should prefer homeowner's associations to zoning
boards not because they are necessarily better at protecting the
liberties of individual homeowners, but rather because the arrangement
is more economically "efficient", or in other words, we can be more
certain their liberties were sold off -- perhaps by someone else, in
the relatively distant past -- for the right price. Liberals like
myself believe that some rights ought to be held inalienable, but in
Libertaria, everything is up for grabs, and there is no right so
sacrosanct that it cannot be bargained away. That logic has to end
somewhere, or as I suggested
a while ago, libertarians wind up defending the "right" of
desperate people to sell themselves into slavery (dressed up, if you
like, in the debt bondage livery that modern slavers are happy to use
because it amounts to the same thing). But perhaps that's just my
personal view -- if there's a price at which that market will clear,
then who am I to judge?
One last point. Some of the more thoughtful libertarian commenters
on this exchange have admitted that they find the behavior of
homeowner's associations troubling. Well, guys, you're the ones who
want government replaced with private contractual arrangements.
Here's a worked example. If you don't like the way it's working out,
can you be so confident that other markets in government services would
work more to your tastes in the real world?
A few other, more carping points in response to
Julian's latest salvo. First off, I had earlier pointed out that some
homeowner's associations are not formed by the sort of extended
individual bargaining process which Julian imagined, but are instead
created by the developer and exist from the word go. To which Julian
now responds:
- When setting up the initial contract, the
price they're able to fetch (their ability to fill all the units) will
be a function of both the pervasiveness and intensity of different
levels of desire for control. So maybe 51 percent of prospective
owners have a mild preference for more control. Under a zoning regime,
they get their way. But those who want more latitude may care more
about it, with the result that the effect on the price at which the
housing market clears is nevertheless lower at higher levels of
initial control. And when the initial allocation is inefficient, it's
at least easier for people to buy their way out, either wholesale or
piecemeal. The horizons of control over each piece of property can at
least be clearly specified and altered.
Perhaps I'm just getting baffled by the jargon
here, but I'm not persuaded. At the beginning of the arrangement,
this seems to suppose that people who know about homeowner's
associations are able to rationally price their displeasure with them
in a way that people who know about zoning boards are not. And
as a practical matter, no you can't buy your way out of a
homeowner's association -- but if you stop paying the dues or break
the rules, they can buy you out of your house, whether you
want to leave or not.
Also, in response to my discussion of ownership as a socially
constructed relation, Julian responds:
- Just about all of our rights are
underdetermined at the edges by pure moral theory. From speech to
privacy, it's probably necessary to have the edges drawn either
legislatively or by common law evolution, or some other such
process. But this "constructed" nature doesn't vitiate the core of the
right. The fact that we need politics to deliniate the borders of
libel law or fair use under copyright doesn't entail that all of free
speech is up for grabs, that a majority may therefore decide to "draw
the boundaries" in a way that excludes all speech promoting a
disfavored religion. When politics is needed to specify boundaries,
best to do it far in advance, and as neutrally as possible: Use
politics to establish a framework that makes further politics
unnecessary.
Well, I've never seen a "pure moral theory" that
was fully satisfactory even on its own terms, so I'm a little
reluctant to trust them as a basis for practical politics.
Particularly not when we're talking about the balances of rights in
such purely artificial social arrangements as loans, bank accounts, ownership of stock in
joint stock companies, or ownership of patents (where what is "owned"
is the right to prevent other people from making, say, a crustless
peanut butter and jelly sandwich with crimped edges). But beyond
that, it seems surreal to suggest that the boundaries of rights can be
ever be drawn in such a way that new technologies and new social
arrangements cannot raise new questions. Answering those questions is
largely what politics is about, and I can see no answers yet which
make the old Roman's question, "cui bono?", obsolete...
