Download Liberalism in a Post

Liberalism in a Post-9/11
World
Peter J. Boettke
Constitutional Economics
Econ 828/Fall 2005
12 December
After Communism, Then What?
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End of History Thesis
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Democracy and Free Market
Our Troubled Times
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Under-development and transitional political
economy
Illiberalism by democratic means
Critique of modernity and the terrorist threat
Social Philosophy, Economics, and
Political Economy
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Social Philosophical Discussions of Justice,
Equality, and Efficiency --- what ends should be
pursued?
Economic Science – ends as given, analysis limited
to the examination of the effectiveness of chosen
means with respect to achieving given ends
Political Economy --- Rules and Strategies; cannot
answer social philosophical discussions responsibly
without paying due diligence to the knowledge
available through economic science
Political Economy as a valuerelevant discipline is only possible to
the extent that economics is
understood as providing value-free
information.
• Economics and the Devil’s Test
• Rhetorical strategy for advancing
discourse
Islamic Economic Ideas and Structures
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Basic Ideas
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Ban on Interest
Wealth Tax
Expectation of Honesty and Altruism in Economic
Transactions
Modern Developments
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Why No Corporate Law development?
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Islamic nationalism and Islamic fundamentalism
Stunted development of economic organization
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Inheritance rules and partnership rules
Terrorism in Western Society
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Use of modern technology to
inflict harm – turn our
instruments of progress into
weapons of destruction
Use of civilians (e.g.,
passengers) and the targeting
of civilians and symbols of
modern society
Suicide missions by individuals
who blended easily within
modern society and who had
significant opportunity costs
Difficult to stop terrorism if
individuals are willing to pay
the ultimate price and can
strike anytime and anywhere
Purpose
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In the post-9/11 world, is there a role for
liberalism?
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At first glance it would appear that there is little role
for liberalism
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Increased government involvement in a wide range of
activities
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War on terror, Patriot Act, etc.
Explore the economics of the war on terror and
reconstruction efforts
The War on Terror:
Terrorism and Rational Deterrence
Price

PH
Becker, crime and punishment
model and the purpose of
negative sanctions
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Increase probability of detection
Increase penalty of being caught
PL
Demand
QH
QL
Quantity
What if the demand curve is inelastic?
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Price
Becker, Murphy and Grossman’s analysis of
the drug war
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PH
It is important to consider the price elasticity of
the good being analyzed
Terrorists willing to pay the ultimate price
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With an inelastic demand curve, raising the
“price” of terrorism will be relatively
ineffective.
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Implication: emphasis must be on shifting
the entire demand curve, not just moving
along the demand curve.
Demand
PL
QH
QL
Quantity
The Economics of Reconstruction
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Disconnect between the know what and the know
how.
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We explore the array of constraints – both
indigenous and exogenous – that prevent
governments from exporting democracy at
gunpoint.
What About Liberal Values?
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“The great rule of conduct for us, in regard to foreign
nations, is, in extending our commercial relations, to
have with them as little political connection as
possible. So far as we have already formed
engagements, let them be fulfilled with perfect good
faith. Here let us stop. It is our true policy to steer
clear of permanent alliances with any portion of the
foreign world.” --- George Washington
“They who would give up an essential liberty for
temporary security, deserve neither liberty or
security.”
--- Benjamin Franklin
Liberalism by Liberal Means
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Principled Non-Interventionism
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George Washington’s farewell address
Bastiat -- "When goods don't cross borders,
soldiers will.“
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Free trade as a way to explore peaceful interaction
Free trade as a way to bring an enemy into friendship
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Cowen’s idea of cultural gains from exchange
Robert Pape’s Dying to Win thesis