Sound Policy Is Based on Sound Principles

The discussion of Leif Wenar’s lead essay, “We All Own Stolen Goods,” and his follow-up comment, “Living Up to Our Principles,” have clearly exposed some problems with the principles (referred to regularly in both entries, and even in the title of one of them) used as the basis for his policy proposals. I think this is a good place and time to formulate (actually, to remind us of) some principles for public policy initiatives widely shared, accepted, and tested.

Follow the procedure. The aesthetic rejection of the disgusting behavior of a dictator is a natural starting point. Nevertheless it is still far from the final stage. To arrive at the successful implementation of an exciting new idea, one needs to pass through all the necessary stages of its analysis and testing.

Inclusiveness. If we decide to punish someone for something we consider to be a crime, it is important that other actions that fit the description of the crime will also be punished. Otherwise, instead of getting a positive result, we can easily be accused of a selective approach or personal vendetta. In other words, if proposing to punish Equatorial Guinea, we must be ready to face some of the other oil-rich nations who together produce two thirds and export about 90% of the world’s oil.

Deal with reality, not myths. The so-called “resource curse” is a myth, created without sufficient basis, so the portion of the argument based on it is destined to evaporate once the author realizes its questionable status.

Presumption of innocence. If we decide to mete out punishment for a crime, it is important to be sure that we are punishing the criminals, not the innocent.

Do no harm. Economics is to some extent similar to medicine. Whatever disease an economist wants to treat, it is important that the proposed treatment would not destroy other important elements of the already working and relatively healthy body. It is important also that the suggested treatment not turn out to be worse than the disease itself. The relatively free trade enjoyed by the modern world today is a precious treasure gained through long battle. We should be very wary of sacrificing it to measures that are probably noble in intention but of doubtful efficacy.

Do not mix too many principles at once. This is not easy, since life is complicated. Humanity has never produced a unified theological/philosophical/ideological explanation of everything. Nevertheless, it is worth trying to follow this rule. Leif Wenar’s essay and his comment are unusually rich in the number of principles offered as the basis for policy prescriptions. The author began with a property rights principle that can be described as economic liberalism. Then he continues with an emphatic defense of human rights that allows us to identify this principle as civil liberalism. Extensive use of the Freedom House data for political rights of a population forces us to take him as a staunch supporter of political liberalism or democracy. But his ode to the national ownership of resources leaves it clear to the reader that we are dealing with an example of nationalism, in this case resource nationalism. It seems it may be impossible to combine all four principles in a way that does not lead to some internal contradiction. But perhaps we should not waste too much time arguing that decisions based on the application of all these principles at the same time to a particular issue must be lead to some incompatibility.

Etatism. The only solution in similar circumstances is the application of the method famously used by Alexander the Great to the Gordian Knot in Phrygia. It means the application of unrestricted force to the solution of a problem without wasting time consulting any particular principle(s). In modern terminology this principle is usually called etatism. In Leif Wenar’s language it is called the “might makes right” principle. True, it is not the most likable rule for civilized, liberal-minded people, but it was definitely the most often used rule in history. The rejection of this rule by the author in the beginning of both texts is transformed into full support by the end of both texts, where exactly this rule is used in the author’s proposals to raise trade tariffs and create government-owned funds. Surprisingly enough, the careful testing of this proposal against reality will show that it would be contrary to almost all the above-mentioned principles — economic and civil liberalism, nationalism — as well as others.

Flexibility in principles. In the case of its actual implementation — or even in the case of efforts to popularize it — such a proposal could produce more harm than good for an international economic system based on imperfect but still rather liberal principles. As an inevitable consequence, it would bring a worldwide wave of well-funded accusations against an American attempt to create, strengthen, and enforce a “traditional, selective, double-standard, American-centered, ignore-the-rest-of-the-world” approach.

This raises one question: Why?

Also from this issue

Lead Essay

  • We All Own Stolen Goods — and How Defending Property Rights Can Help the World’s Most Oppressed People by Leif Wenar

    Developing countries with massive oil or mineral reserves are often wracked by corruption and strife as their would-be rulers jockey for control of the resources that can make them immensely wealthy. But these resources, argues political philosopher Leif Wenar in this month’s provocative lead essay, belong to the people of these countries — some of the poorest people in the world — not their rulers. So trade in these resources amounts to trade in stolen goods. Wenar argues that we must “enforce property rights directly” by taking “legal action in U.S. jurisdictions against the middlemen who trade Americans’ dollars to the worst regimes in exchange for stolen resources.” Because this cannot stop “resource cursed” countries from trading with less enlightened countries, such as China, Wenar additionally proposes a tariff on imports from China (or from whatever country is receiving “stolen” resources), the proceeds of which are to be held in trust for the rightful owners of the resources, and disbursed to those people in the event of their government’s reform. “The priority in reforming global trade,” Wenar argues, “must be to lock in the rights that define the market order. The first step in improving the prospects of poor people is to enforce the rights they already have.”

Response Essays

  • The Wenar Proposal vs. Realpolitik by John Ghazvinian

    While lauding the goal of Leif Wenar’s proposal for fighting the effects of the resource curse, John Ghazvinian, author of Untapped: The Scramble for Africa’s Oil, questions its practicability. When it comes to determining which governments meet the threshold of a “minimally decent and unified government,” Ghazvinian worries about the possibility that “this process will become deeply politicized” or “simply reduced to who has the best PR apparatus.” Ghazvinian suggests that requiring a government to be unified, though intended to stave off civil war, may “have the opposite effect” by providing “any aggrieved minority the power of an instant veto-risking destabilization in what are often already unstable countries.” Wenar’s “anti-theft” tariff, Ghazvinian argues, seems unlikely really to be seen as distinct from other tariffs and so will introduce just another complicating factor into the realpolitik of trade negotiation.

  • The Resource Curse and Leif Wenar’s “Clean Hands Trust” by Christopher Wellman

    Washington University political philosopher Christopher Wellman praises Wenar’s proposal for fighting the resource curse, but he criticizes the idea of a “Clean Hands Trust” on the ground that it “requires too LITTLE, not too much” of those of us involved in the market for natural resources “stolen” from their rightful owners. Wellman argues that the “Clean Hands Trust” is analogous to a slave-owner attempting to rectify his wrongdoing by offering the slave a large sum in compensation. “If the slave owner cannot clean her hands by paying the slave after the fact,” Wellman asks, “then why should we presume that the person who buys slave-produced cotton from a slave owner can clean her hands by paying the slave after the fact? And if the person who buys morally tainted cotton cannot clean her hands in this way, why think that those who buy inexpensive shirts constructed from slave-produced cotton can clean their hands by subsequently reimbursing the slaves?” Similarly, he argues a Clean Hands Trust would fail really to clean our hands.

  • To Punish the Guilty by Andrei Illarionov

    Cato senior fellow Andrei Illarionov, a former chief economic advisor to then-Russian President Vladimir Putin, argues that there is nothing special about the “resource curse,” which represents just one among many kinds of theft by corrupt political elites. According to Illarionov, Wenar fails to make a principled distinction between the actions of the political leaders of Equatorial Guinea and those of Russia that would motivate restricting trade in goods from the former but not the latter. Illarionov argues that the precedent of treating a country’s natural resources as belonging to its people is the problem, not the beginning of a solution. In practical political reality, the idea of collective national ownership of resources often translates directly into nationalization and control by political elites. Additionally, Illarionov argues that the trade sanctions Wenar proposes would punish innocent citizens who already suffer under corrupt rulers. The issue, he argues, is not a matter of what is stolen, but how we will treat those responsible for theft.

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