Economics talk with Kilian Tep : Rent-seeking, Keynes, Hayek and markets

Kilian Tep is a friend of mine who is a data scientist on top of having studied economics. We share several interests and decided to have a conversation about them. We discuss how Keynesian policies often backfire and create inequality, compare markets to centrally planned economies while delving into how all of these elements relate to corruption and rent seeking. You can listen to the podcast below. Enjoy.

Political bias in social science

About a month ago I wrote an article about the replication crisis that plagues academic research in a variety of fields, which you can find here. Today I am writing about another problem that is an idiosyncrasy of the social sciences, that is, political bias.

Most people know that social scientists tend to lean towards the political left. I remember from my time in France that the social science faculty, Universite Toulouse II Jean Jaures, had the reputation of being the headquarters of Toulousain leftists of all kinds. However I do feel like people only have this vague cliche and are incapable of actually quantifying the ideological bent of universities. I will thus in a moment try to accomplish just that.

The situation is not limited to France in its scope. The same is true of most social science faculties in the West and even beyond. I believe this phenomenon has extremely serious consequences that needs to be addressed.

One of these consequences is the fueling of the political polarization of our societies and rising tensions that could result in conflict. Another one, perhaps more direct, is the negative impact on the quality of the academic literature.

To be clear, I take no issue whatsoever with people being on the political left, nor with the right for that matter. I do however have a big problem with my tax dollars being used to fund activism disguised as scholarship. And that would also hold true if the universities leaned to the right instead of the left.

To dissect this topic, I will first discuss the extent of the political bent of western universities, then diving into the subject of ideological motivations behind research before concluding with the harmful effects these phenomena have on society.

Political affiliations in academia

According to Gross & Simmons (2007) 43% of academics in the social sciences and humanities are either Marxists, radical leftists or left-wing activists. That fact alone should be a massive red flag. It roughly means that at least 43% of academics in those fields are part of the far-left. The proportion of academics that self identified as conservatives is 3-5%.

Close to 18% of social scientists were marxists, which is something I still have trouble grasping knowing the atrocities committed in the name of that ideology during the 20th century. Imagine if 18% of social scientist were fascists.

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In the chart above, from Micthell Langbert (2018), we can see that in every discipline in elite colleges, even hard sciences, democrats outnumber republicans. Note that these data have been gathered from elite colleges which tend to be further on the left than non-elite ones. However, I do not believe this undermines the point at all because it is the elite colleges and universities that usually control the prestigious academic journals and who define the zeitgeist.

One might argue that this is nothing to worry about because conservatives tend to be more interested in material success and therefore pursue studies in more lucrative fields than social science. I disagree. While the latter part is true, it was also true in the sixties, yet the political bias in academia has worsened since that epoch.

Publishing their findings in their 1975 book The Divided Academy (the study was performed in 1969), Ladd and Lipset found that about 46% of professors described themselves as liberal, 27% described themselves as moderates, and 28% described themselves as conservative. That is a far cry from the 3-5% conservatives we observe today.

One possible explanation is that the moderate bias towards progressivism reinforced itself, generating a positive feedback loop. If conservatives feel slightly uncomfortable in social science faculties and start slowly leaving, they will make room for more progressives. The ratio of conservatives to progressives will thus be even weaker, making remaining conservatives feel even more uncomfortable and causing them to leave as well.

There is some evidence supporting that hypothesis. Indeed, surveys of different academic faculties found that large proportions of academics were willing to discriminate against conservative job applications, research with a conservative perspective or grant applications by conservatives (Inbar & Lammers (2012)). These findings have been replicated in America and Europe.

Ideologically motivated research

One might argue that it does not matter what the political affiliations of academics are, as long as they produce high quality objective research. But they don’t. As we’ve seen in my previous piece, most academic research is rubbish, even in some of the hard sciences.

However, the situation is particularity dire in the social sciences, because they suffer from the double jeopardy of the publish or perish system and of the political bias on top of that. Let us look at a few examples.

Indigenous American research

We have proof that some anthropologists selectively report research findings in order to construct a rationale for their political narratives, especially regarding native Americans. Disingenuous academics have created a myth around these people, portraying them as peaceful and ecologically conscious unlike the war mongering and ecologically destructive Europeans. This is a continuation of the Rousseauist myth of the noble savage.

Indeed, the anthropologists Chacon and Mendoza have studied this phenomenon of misreporting in anthropology and have documented it in their book Ethics of Native American indigenous research. They take the example of Means and Wolf (1995) whose take on indigenous warfare was this :

“Before the whites came, our conflicts were brief and almost bloodless, resembling far more a professional football game than the lethal annihilation of European conquest”

This has supposedly been written by grown adults with a straight face and sent to a grown adult reviewer who read it and decided to publish it in a journal. One of the huge downfalls of social scientific research is that a big chunk of it is qualitative, and in qualitative research you can get away with a lot of nonsense.

Anthropologist McNickle, cited in Allen (1986), contends that 70% of Amerindian tribes were pacifist. On top of pulling that figure out of the wazoo, this is completely false. In fact, Chacon and Mendoza (2007) and Chacon and Dye (2007) found that “evidence indicating the presence of Amerindian warfare and/or violence has been recovered archaeologically and/or documented historically from virtually every culture area within the American Hemisphere”.

In their book, they also assert that there is a very large body of evidence that Native Americans were perfectly capable of over-harvesting natural resources.

Nonetheless, some anthropology academics reject these findings. Their rationale behind this is that the authors of this research are part of a large and longstanding conspiracy to give power to the white man. To quote Goduka (2006) :

“These scholars are aware that their approach serves to channel us [indigenous peoples] into levels of inferiority and weakness that devour the strength and eventually break the power of our [indigenous] stories and voices so grounded in oral tradition”

Portraying Indigenous Americans as harmless little puppies instead of fellow humans is profoundly racist and dehumanizing. Humans of all ethnicities engage in war, that’s just part of who we are. These academics playing savior of the helpless First Nations want to be seen as the new Martin Luther King and Rosa Parks. They want glory and fame and engage in virtue signalling to reach that end.

Political bias in quantitative research

In social psychology, it seems like there is a bias against research showing bias against men in STEM and a bias in favor of research showing bias against women in STEM. Indeed, although the literature on the subject is mitigated and inconclusive, Lee Jussim found that studies showing bias against women tend to be reported more often.

Moreover, Smaldino and McElreath (2016) found that the mean statistical power in the social and behavioral sciences was 0.24, the recommended power being 0.80. Statistical power is the probability that a statistical test will correctly reject the null hypothesis when it is false, given information about sample size, effect size and likely rates of false positives.

Economics, which is often considered the most rigorous social science, was found to have a median statistical power of 18%, with 90% of research being under powered (Ioannidis, Stanley, Doucouliagos (2017)).

In a nutshell, low power in a field means more false discoveries. The social and behavioral sciences are not doing well. Researchers conduct low power studies until they obtain results that suit their agenda or that can advance their careers.

Clark university allegedly dismissed a graduate student who pushed back against questionable research practices, also known as p-hacking. To quote the article linked above :

The first time they ran the data, Nissenbaum says, she and Stewart considered one to be heterosexual, two to four to be bisexual, and five to be homosexual. But that analysis found no significant connection between sexual orientation and harassment, Nissenbaum says. So Stewart allegedly told her to re-run the analysis, with one to two being heterosexual, three being bisexual and four to five being homosexual. And this time, Nissenbaum says, the results were significant.

Her adviser asked her to manipulate data to try and evidence the existence of bias against some sexual orientations. That research would’ve fit into the status quo in academia and therefore earned recognition.

It is often believed that qualitative research is inferior to quantitative research as forms of evidence. And although I would tend to agree with that statement, these were examples of how even quantitative research can be used to push an agenda. As the saying, often attributed to writer Mark Twain, goes :

“There are three kinds of lies: lies, damned lies, and statistics.”

Anti-scientific methodologies

As we have seen both qualitative and quantitative research in the social sciences are severely flawed. Nonetheless, there are a few strands of qualitative research that I would like to address more thoroughly. One of them is critical theory.

Critical Theory is “an approach to social philosophy that focuses on reflective assessment and critique of society and culture in order to reveal and challenge power structures” according to Wikipedia. It emerged from the Marxist Frankfurt school in the 1930’s. From this description alone we can know that critical theory is unscientific.

Indeed, it assumes a priori that some power structures exist in society and that we just have to reveal their consequences through analysis. They never provide proof for the existence of these power structures and expect us to trust their word and accept the existence of these structures without the need for such a triviality as evidence.

But the critical theorists themselves admit they are anti-scientific anyway, they refuse to use the scientific method unless it fits in a framework of human emancipation. This is because it is according to them a potential tool of oppression of marginalized groups of people.

They effectively advocate in favor of confining scientific research within an axiological framework. The obvious issue with this is that people would never agree on what framework science should be restricted to because this an issue not of science, but of ethics. Critical theory is therein deeply antithetical to the principles of freedom of inquiry.

This propaganda is being taught to our youth in social science faculties as you read this. In fact, entire fields of “research” are based on this pseudo-methodology.

These fields include post-colonial theory, queer theory, critical race theory, intersectionality, fourth-wave feminism, gender studies, fat studies, and ableism. Critical theory is also being taught in sociology, anthropology and political science.

Ideological similarities are found between critical theory, post-modernism and post-structuralism. All these streams of thought roughly claim that their epistemology is superior to the scientific method which is considered an oppressive force.

Although, in their strongest form, I believe post-modernism and critical theory are contradictory, many thinkers were at the intersection between them, such as french philosopher Baudrillard or even Michel Foucault. This fusion between the two is called postmodern critical theory.

Among the proponents of post-modernism we can find among others Michel Foucault, Gilles Deleuze, Jacques Derrida. The post-modernists, along with other far-left thinkers such as Simone de Beauvoir and Jean-Paul Sartre, were driven by their ideology to sign a petition to legalize pedophilia in the late seventies.

These are also people who continued to support the USSR even after the existence of concentration camps was exposed, that endorsed the Islamic revolution in Iran that enslaved the country, that collaborated with the Vichy regime and that abused underage girls.

What Yolande Cohen, History professor at UQAM, had to say about De Beauvoir and Sartre’s nauseating behavior towards underage girls is “Question, don’t judge”. That’s a feminist professor’s advice to victims of sexual abuse, question your aggressor, but don’t judge him. Even today, professors endorse and defend these deranged intellectuals.

As we can see, a certain number of post-modern thinkers were, and some still are, extreme moral relativists. They were ready to endorse any opposing force to the Western hegemon and its values, not matter how cruel that opposing force was. And these are authors that are part of social science and humanities curricula in the West today. I believe it can be said that these thinkers did not love the weak, but simply hated the powerful.

If you’re still not convinced of the un-seriousness of critical theory and post-modernism, let me tell you about the grievance studies hoax.

A couple of academics, all somewhat left leaning, wrote 20 fake papers and sent them for publication to famous and prestigious journals known for endorsing critical theory and/or post-modernism. Of the 20 papers submitted, 7 got accepted, 7 were in the process of being reviewed and 6 were rejected when the hoax was revealed. Had it not been for the twitter account New real peer review that detected the hoax, a handful more would probably have been accepted.

Some of the published papers were a re-writing of an excerpt of Mein Kampf with feminist language, a paper claiming that rape culture in human society was responsible for dogs humping each other in parks and another one claiming that heterosexual males should start using gay adult toys to purify themselves from homophobia.

Indoctrination on campus and beyond

You might think that all of this does not matter because these are problems of ivory tower academics who are completely disconnected from the real world. That most people with a real job don’t adhere to these theories anyway. But I believe you would be wrong.

These academics, especially the ones in prestigious schools, are close to political parties. They influence politicians, they influence journalists. Journalists who also tend to lean to the left, report the low quality research of social scientists and also cherry pick what suits their agenda among that research, which already leans to the left. Most people do not have the tools to distinguish good from bad research, so they think sociology findings are true like Newton’s gravity is true (Newton’s gravity is an approximation of reality but that’s a subject for another day).

Amerindians are portrayed as “noble savages” in movies, Netflix sitcoms talk about white privilege, and also this :

During an online training by now famous critical race theory peddler Robin Di Angelo, she told Coca-Cola employees to be “less white”. Scandalous. That woman sold thousands of books, taking advantage of the BLM protests.

These theories are also being taught to kids in primary school in some cases. They are dangerous ideas that fuel the climate of political polarization in the West.

The corruption of social science leads conservative individuals to distrust science as a whole and turn to ridiculous conspiracy theories, which in turn lead to catastrophes such as the invasion of the Capitol building by trumpists.

If conservative voices and opinions were properly represented on campus they could be criticized, sharpened and improved. Instead, pseudo-intellectuals on the internet try to fill that role and have a free pass to propagate lies since they are not subject to any scrutiny.

I, for example, found a severe misreporting of data, or a lie, by white nationalist Sean Last on his blog. To know more about it you can read the above thread.

Universities are guilty of taking advantage of gullible young people, using advertising strategies consisting of promising them that they can be heroes of social justice.

It shall be mentioned that, in my understanding, civil debate and dialogue are impossible under marxian, critical theoretic or post-modern paradigms. Indeed, these philosophies contend that the individual is a mere mouthpiece for an array of group interests.

Therefore, according to them, if you are in favor of capitalism it is because you benefit from its system or have been indoctrinated by it. If you think the movie Peter Pan’s depiction of indigenous Americans is not racist that’s because you’re of European descent and benefit from a racist system and you have been indoctrinated by it.

The reason Marx called for revolution of the proletariat and civil war instead of debate is because he believed that your ideology was largely determined by your material conditions, and therefore unchanging. This idea is called dialectical materialism. Marx’s thought is in that aspect self negating. If we accept that idea as true, then we can dismiss his thought as the sole expression of the feelings of a 19th century lower middle class rebellious German, which would be irrelevant to us today.

My last wish is for any country to descend into civil war. We have to reestablish dialogue before it’s too late, and have constructive debates about our society. Don’t let resentful academics drive us into large scale conflict.

Post-publication modifications :

  • Added parts on evidence for over-harvesting by Native Americans, the rejection of evidence of warfare and ecological by post-colonial academics
  • Added the part on statistical power in economics, added the report on the Clark University incident, Mark Twain quote
  • Added a small intro to the “anti scientific methodologies” part, lengthened the paragraph on the relationship between critical theory and science, added additional comments on post-modernism and its relationship to critical theory
  • Changed the title of the last part from “cancel culture on campus and beyond” to “Indoctrination on campus and beyond”, added a paragraph about dialog under marxism, post modernism and critical theory, discussed dialectical materialism

We don’t live in a free market economy : Case studies in rent seeking

Last week Bernie Sanders made a tweet that has marked my mind because of how perfectly fitting it was of our current economy. This is the tweet :

I didn’t know Martin Luther King had said that, and it only made me respect him more. However, I am not a Bernie bro. I do not subscribe to his economic prescriptions, neither do I to those of the late MLK.

Although we agree that our global economy, and particularly in the US, is a two tier system, and that the working class have to compete for a living when some rich crooks are completely insulated from risk thanks to the help of friends in the public sector, I believe the solution is to submit everyone to competition. Sanders and King on the other hand favor extending “socialism” to the poor.

In this piece, I will argue that some of the worst inequalities we observe today are not outcomes of the free market, but of the misuse of the sovereign. In fact, I believe that embracing a genuine market economy would be great for the destitute. To underpin my position, I will inquire into different mechanisms of rent-seeking that kleptocrats take part in to capture wealth, namely, restriction of competition by professionals, the perversion of our banking system and the patent system and how it is exploited by big pharma.

I will then provide my thoughts on what can be done about the situation, in an a attempt to kindle anew the public debate on corruption. In the mean time, enjoy the read. Or don’t, if you are a rent seeker.

Restricting competition among professionals

If you’ve ever taken an introductory class in economics, you know that scarcity affects the price of goods and services. The greater the supply, the more affordable a commodity will be, provided equal demand. The opposite is also true, the lower the supply the more expensive it will be.

Knowing that, you know that one way for you to earn more money is for you to limit the amount of people who offer the same service as you. Drug dealers do it all the time, trough violence. If you sell on a dealer’s territory, you get taken out.

Well what if I told you that several professions use this exact strategy to improve their wages, albeit using a more subtle form of violence ? They use the monopoly of legal violence, the state, to prevent people from competing with them.

Lawyers in the United States use the bar exam to restrict competition in their profession. The exam has been severely criticized for it’s alleged inability to test the skills lawyers actually need.

In civil Law countries, notaries use a state monopoly on their profession to earn their rent. The average pre-tax income for a notary in France is almost 20 000 per month, as opposed to 2000 per month in common law United Kingdom.

Notaries are not the only rentiers in the civil law system, commerce tribunal greffiers earn on average 30 000 euros per month in France, also operating a public service for private gain. Other examples are huissiers, justice administrators and legal representatives.

Amercian Medical doctors are also guilty. Seeing that retail clinics and pharmacies were able to provide routine care at a faster pace than them, they lobbied congress to restrict their activity.

The american Licensing board does not recognize physicians’ credentials if they come from abroad, even when it’s from a rich country. Moreover, Free trade deals with developing countries import low wage workers but they never import doctors. A partnership with Brazil, India or China could allow their universities to teach the american medical curriculum. Students would have to pass a standardized test to be sure they have the appropriate level to practice in the US.

This problem is extremely severe in the US, with US general practitioners earning on average twice as much as their Australian counterparts.

Other examples of this mechanism would include journalists and academics who also use licensing requirements to their advantage. The logical conclusion is that working class individuals are losing purchasing power for the services offered by these high earning professionals. Meanwhile, these high income professions can afford rising quantities of the labor of the working class.

The banking system

In the United states, the central bank is the federal reserve. Its mission is to ease inflation and ensure high employment.

Its decisions are made by the fed’s open market committee which is comprised of 18 members including the chair of the Federal Reserve. Among these 18, 12 are voting members. And among these 12, 7 are members of the fed’s board of governors, appointed by the president for 14 year terms and approved by the senate.

The other 5 voting members come from the district banks. All 12 district banks sit at the open market committee, but only 5 vote. And therein lies one of our biggest issues, The district banks committees are elected by a process largely controlled by banks in the district.

As of 2016, one-third of the 12 Federal Reserve Banks were led by someone with strong ties to Goldman Sachs. That doesn’t mean the other ones are exempt of conflicting interests, Goldman Sachs is only one of many finance industry Leviathans that lobby the Fed and other public institutions.

One of the first things that the Biden administration has done once it got to power was to meet asset manager titan Blackrock representatives. Kamala Harris’s top economic adviser is a Blackrock executive.

The corporation also met with French president Macron at the beginning of his term to argue in favor of letting them take over the French pension system.

Other that that, Blackrock has previously advised the European Central Bank against a compensation of 8 million euros, or bread crumbs for the finance group. Nonetheless, it also got something way more precious; information. The fact that this does not constitute a case of insider trading is beyond me.

These big finance groups also drive climate change by funding the fossil fuel industry. Aforementioned Blackrock is notably the largest investor in fossil fuel companies. Naturally, the European Union decided to appoint the group as their climate change policy advisor. So we have a situation where the state protects banks and asset management firms from risk, which in turn provide liquidity to fossil fuel behemots which might otherwise have gone bankrupt and been replaced by competing energy sources like nuclear, solar, wind…

The important involvement of bankers in the public decision making inevitably leads to policies that make life easier for them. It can be raising the target interest rate to make hiring cheaper for corporations in which these banks have investments, or lowering it in order to allow private banks to create more money trough credit.

As you can see in the tweet above, the average citizen’s purchasing power regarding stocks has plummeted. The exact same goes for real estate. This is due to the fact that most new money creation takes place in financial markets and never flows in the “real” economy. This phenomenon is called the Cantillon effect and entails that the people closest to the source of new money are the ones who disproportionately benefit from it.

Bankers use the argument that inflation indexes do not show any inflation, but that’s only because economists exclude real estate and financial assets when calculating inflation, only including consumer goods.

This situation seriously hampers social mobility for poor families, and therefore disproportionally hurts African Americans, Latinos and other minorities in the United States. To acquire property or to generally own assets is a good way to put your foot trough the door of the middle class, but that door is now locked thanks to our banker friends.

Private banks are institutions allowed to create money ex nihilo, or from nothing. When you go to the bank and ask for a loan of 10 000 dollars, the bank pulls that money out of thin air and gives it to you. You now have a debt and the bank a credit. When you pay it back, that money, the debt and the credit, disappear. But you also pay interest. The interests you payed on the loan are new money, that is how money is created in our current system (central banks can also create money, but they don’t “print” it like many people think).

The total amount of credit a bank can offer is a ratio of its current reserves, this is called fractional reserve banking. These reserve requirements were of 50% in the 19th century (a bank that has 100 dollars in its reserve it can loan 200 dollars) , 20% in the beginning of the 20th and were around 2-3% in the beginning of the 21st.

The reason for this is that the formula for the ratio has changed. It used to be total credit/total reserves but now it is total credit*estimated risk/total reserves. The smart readers will now ask : but who estimates that risk ?

You guessed it, banks do. The formulas used in order to calculate those risks are so complex that banking inspectors don’t even bother checking. In order words, it’s a free pass.

Oh and by the way, to offer all of that credit, banks give out your money. The risk is on you. If a bank goes bankrupt you will lose your money but the bank will get bailed out by the central bank. That is because banks have become so big that if one fails it will take down the whole system with it. This is known as the too-big-to-fail problem.

Big pharma and the patent system

In a pure market economy, patents and copyrights don’t exist. They are monopolies bestowed by the state in order to promote the sciences and useful arts.

There is a case to be made that patents do contribute to driving innovation. However, there is no evidence whatsoever that we could not innovate without them or that they are the best alternative.

The patent system is constantly left out of the public debate in spite of the humongous effects it has on our economy.

Big Pharma is a prime example of how patents can be perverted to earn a rent. Let us take a look at the case of insulin, here is a quote from t1international :

Why aren’t we seeing more companies making insulin? There are many reasons for this, but patent evergreening is a big one. Patents give a person or organization a monopoly on a particular invention for a specific period of time. In the USA, it is generally 20 years. Humalog, Lantus and other previous generation insulins are now off patent, as are even older animal based insulins. So what’s going on? Pharmaceutical companies take advantage of loopholes in the U.S. patent system to build thickets of patents around their drugs which will make them last much longer (evergreening). This prevents competition and can keep prices high for decades. Our friends at I-MAK recently showed that Sanofi, the maker of Lantus, is no exception. Sanofi has filed 74 patent applications on Lantus alone, that means Sanofi has created the potential for a competition-free monopoly for 37 years.

Patent evergreening, or exploitng loopholes to make your patent last longer than it should, is not the only trick Big Pharma has up its sleeve.

In 2007, Mylan bought the rights to the EpiPen and proceeded to jack up the prices 500%. This problem is particularly severe in the US, but also present in most other rich nations. Healthcare costs are rising faster than GDP growth, capturing a growing part of the resources we create, and the pharmaceutical lobby should take a big chunk of the blame for that.

One of the reasons why Obamacare failed is because it does not solve the problem of rising healthcare prices. Whether the burden rests on citizens or the state does not change the fact that costs are rising. In fact Singapore has tremendous health outcomes with a mostly private healthcare system.

Another serious outcome of the patent system is the “copycat research” phenomenon. When a new drug is patented by a company, other companies will spend billions trying to create another drug with similar effects because of the patent preventing them from just making the same drug. Instead of investing money to create breakthrough drugs, companies spend money creating solutions to a problem that has already been solved. Perhaps if we removed patents drug companies would actually spend that money creating new drugs, not copycat ones.

Crowdfunding could be an interesting alternative to patents. Platforms like Patreon enable content creators and artists to earn funding from their community to keep creating. Perhaps a similar model could be used for drug development ?

Additional commentary and closing thoughts

Murphy’s law states that “Anything that can go wrong will go wrong”. We also know that anything with a non zero chance of happening will eventually happen given enough time.

Well there goes Younes Kamel’s corrolary to Murphy’s law :

Any institution that can be corrupted will eventually become corrupt.

Any intervention of the state in the economy that can benefit private interests will, given enough time, be embezzled for private gain.

The manipulation of the target rate of interest by the central banks, the patent system, licence requirements for certain professionals were all tools created initially with our best interests in mind, yet as you read this piece they are being used to hurt you. Institutions rot.

To quote none other than stock trading and probability virtuoso Nassim Taleb :

No public institution or agency should be created without an expiration date.

When submitted to competition, there is always a chance of a competitor suddenly innovating a better product that yours and seizing your market shares. To earn a rent, a steady, stable income that does not require you to provide new value, you have to insulate yourself from competition. And the only institution capable of distorting the market in order to give someone that protection is the state.

The rent-seeking problem is far from new. Frederic Bastiat, perhaps the greatest liberal philosopher that ever walked the soil of France, expresses his frustration at the plunder of the people trough the power of the sovereign in his sublime essay La loi :

This fact, combined with the fatal tendency that exists in the heart of man to satisfy his wants with the least possible effort, explains the almost universal perversion of the law. Thus it is easy to understand how law, instead of checking injustice, becomes the invincible weapon of injustice.

Bastiat, to my greatest regret, has been forgotten by his compatriots. Economics curricula in France scarcely, if not never, mention the Bayonne, southern France, native. Yet they, and so would we, gain so much by embracing his core tenets.

Bastiat was a magistrate, therefore heavily involved in public life, with unwavering integrity. He opposed colonialism, rousseauism and its romanticization of ancient societies, and proudhonian anrahcism. He firmly supported welfare, but only private welfare. He was a pious catholic, yet was fiercely against state religion. He voted sometimes for the right, sometimes for the left. And that brings us to my ultimate argument.

Our societites are currently divided along a right-left cleavage. That cleavage is to me profoundly obsolete, and Bastiat seems to have thought the same 200 years before me. I staunchly believe that we should take our Swiss friends as an example and articulate the public debate on the axis of government intervention, with libertarians of the right and the left opposing statists of the right and the left.

Indeed, it is the state that committed the holocaust and the Armenian genocide, that enabled the famines of USSR, that killed tens of millions in Mao’s China and that still to this day persecutes Uighurs and orchestrates mass surveillance. It is also the state, as we have seen, that constitutes the main driver of inequality worldwide.

The examples discussed in this piece are far from being an exhaustive list and are not limited to a handful of countries. I have also mainly focused on western rich societies, where state corruption drives inequality. But in poorer countries, the hoarding of resources by dictators armed with the powers of the state is what causes hundreds of thousands to suffer from starvation. Hunger is a political choice.

In this fight against Goliath, David will not triumph without his dearest weapon. In the traditional myth, that weapon was the sling, but in our epoch, it will be decentralization and information technology. Crypto-messaging and cryptocurrencies shall be our best allies. The latter represent an insurance against keynesians, fascists, socialists and other authoritarians. May we overcome our divisions.

Appendix :

I added a few paragraphs to the article after publishing it. These are the parts on the US/Australia doctors comparison, fossil fuels and banks, copycat drug research and the crowdfunding conjecture and the paragraph at the end mentioning poor countries.

Further reading on rent-seeking :

The conservative nanny state – Dean Baker

Skin in the game – Nassim Taleb

Illusions financieres – Gael Giraud (french)