Liberalism in a Post911 World

1
Liberalism in a Post-9/11 World

• Peter J. Boettke
• Constitutional Economics
• Econ 828/Fall 2005
• 12 December

2
After Communism, Then What?

• End of History Thesis
• Democracy and Free Market
• Our Troubled Times
• Under-development and transitional political
  economy
• Illiberalism by democratic means
• Critique of modernity and the terrorist threat

3
Social Philosophy, Economics, and Political
Economy

• 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

4

• Political Economy as a value-relevant discipline
  is only possible to the extent that economics is
  understood as providing value-free information.
• Economics and the Devils Test
• Rhetorical strategy for advancing discourse

5
Islamic Economic Ideas and Structures

• Basic Ideas
• Ban on Interest
• Wealth Tax
• Expectation of Honesty and Altruism in Economic
  Transactions
• Modern Developments
• Why No Corporate Law development?
• Islamic nationalism and Islamic fundamentalism
• Stunted development of economic organization
• Inheritance rules and partnership rules

6
Terrorism in Western Society

• 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

7
Purpose

• In the post-9/11 world, is there a role for
  liberalism?
• At first glance it would appear that there is
  little role for liberalism
• Increased government involvement in a wide range
  of activities
• War on terror, Patriot Act, etc.
• Explore the economics of the war on terror and
  reconstruction efforts

8
The War on Terror Terrorism and Rational
Deterrence

• Becker, crime and punishment model and the
  purpose of negative sanctions
• Increase probability of detection
• Increase penalty of being caught

9
What if the demand curve is inelastic?

• Becker, Murphy and Grossmans analysis of the
  drug war
• It is important to consider the price elasticity
  of the good being analyzed
• Terrorists willing to pay the ultimate price
• With an inelastic demand curve, raising the
  price of terrorism will be relatively
  ineffective.
• Implication emphasis must be on shifting the
  entire demand curve, not just moving along the
  demand curve.

10
The Economics of Reconstruction

• Disconnect between the know what and the know
  how.
• We explore the array of constraints both
  indigenous and exogenous that prevent
  governments from exporting democracy at gunpoint.

11
What About Liberal Values?

• 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

12
Liberalism by Liberal Means

• Principled Non-Interventionism
• George Washingtons farewell address
• Bastiat -- "When goods don't cross borders,
  soldiers will.
• Free trade as a way to explore peaceful
  interaction
• Free trade as a way to bring an enemy into
  friendship
• Cowens idea of cultural gains from exchange
• Robert Papes Dying to Win thesis