That nationalism is a kind of collectivism or modern-tribalism is illustrated by a current phenomenon: foreigners seem so disliked that, in some people’s views, “we” should neither import from, nor export to, “them.” On the import side, foreigners—foreign producers or their governments or the latter’s taxpayers—are disliked because they produce goods at such a low cost that “our” producers can’t compete. As for “our” greedy merchants who import things that “our” consumers want, all are greedy non-patriots. Since the 17th or 18th century, an important dimension of progress has been to economically and morally smother these emotions, or so one may have thought.
On the export side, consider tourism, where a new protectionism seems to be rising. Incoming tourism is an export to foreigners, whether from other countries or other regions (and is entered as such in the national accounts and the trade balance). Tourists, like foreign importers, use “our” resources (capital, labor, land) to satisfy their demands. Hence, the emerging claims for restricting tourism. Tourists intrude into “our” environment and, at least temporarily, undermine the amenities they have no right to—even if some of “us” want to welcome some of them into their homes or commercial venues.
The Financial Times reports (Eleni Varvitsioti and Barney Jopson, “Greece Cracks Down on Excessive Tourism,” September 8, 2024):
Greece has said it will crack down on short-term holiday rentals and cruise ship traffic as part of a set of measures to curb excessive tourism in the Mediterranean country. …
Following similar limits imposed in Spain, Greece is also taking steps to regulate short-term rentals on online platforms such as Airbnb. Mitsotakis announced a one-year ban on new short-term rentals in three areas of Athens. Tourists often start or finish their holiday in the historic Greek capital before moving on to an island destination.
Andreas Chiou, president of the Greek Property Managers Association, said the ban was driven by pressure from hotel owners.
It appears that “we” should not let “our” greedy shopkeepers, owners of restaurants, hotels, or Airbnb accommodations benefit from tourism. That these are citizens as much as the locals inconvenienced by travelers is ignored by many people, so accustomed are they to governments taking sides among their flock.
Imagine a government (local, state, or national) posting, around the territory under its jurisdiction, signs warning “We hate tourists” or “Here, we only sell local.” This would be a reversion to previous ages of mankind, of which the tribal or collective “we” is reminiscent. These emotions ignore the idea so well developed in John Hicks’s book A Theory of Economic History: the rise of the merchant, which started in the city-states of Ancient Greece, marked the first stage of the passage from the custom or command society to the market society.
Incidentally, note here an example of the symmetrical property of “externalities.” Tourists can be said to create externalities for certain locals, but locals also create externalities for certain tourists: if the locals were not there, many tourist amenities would be enhanced: unspoiled nature, less crowded beaches and Acropolis, and so forth. Private property is a powerful means of internalizing externalities but, in any liberal philosophy, the locals do not collectively own the shopkeepers nor any individual’s house, preferences, and liberty.
It is true that travelers come with costs, but they reimburse them by paying for the resources they use and what they consume in hotels, Airbnb rooms, restaurants, etc. Only in public places, in the sense of the commons, do they, as well as the locals, generally do not pay fees. This is a general problem of public property, and few would object to non-discriminatory fees or taxes being equally charged to tourists and locals who use the commons. Higher general port fees might be justifiable, as opposed to special taxes on cruise ships. Even in public museums, foreigners and locals alike generally pay fees, or should.
Note how on free markets, higher demand for private goods and services, whether by locals or tourists, will automatically lead to higher prices, lower quantity demanded, and thus rationing of the scarce amenities—assuming of course that the “benevolent” government does not cap these prices. In the case of protectionism as in dirigisme generally, discrimination substitutes for prices. A free-market society largely avoids such public discrimination by letting individuals and their voluntary associations or corporations solve any conflict through freedom of contract. Collectivism—whether rationalized by ideology, the greed of the rulers and their supporters, or through special interests capturing government—is a modern remnant of tribalism, as Friedrich Hayek argued.
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The ideal of protectionism in tourism
READER COMMENTS
MarkW
Oct 1 2024 at 9:25am
To be fair, hotel owners are among those demanding limits on short-term rental, and that’s obviously because they compete with hotels. Similarly, residents support such bans because they see them as reducing the supply available to locals and raising rents. Note that New York banned short-term rentals recently and, presumably, for the same reasons. And, in the case of New York, at least, the worry was not about short term rentals to foreign vs domestic tourists.
This is another case of needing to relax building restrictions so places that are in-demand for tourism can build enough to accommodate both locals and visitors, but in this instance, it doesn’t really seem to have a nationalist angle.
Roger McKinney
Oct 1 2024 at 9:32am
Envy may be the motive. A few people are getting rich from the tourists. Restrictions on tourism will hurt the whole country and make everyone poorer, but they see that as good as long as no one does better than others. A popular saying in one country is that no one is happier than when his neighbor’s house is on fire.
David Seltzer
Oct 2 2024 at 4:57pm
Roger: Interesting point. Some years ago, I had a summer rental in Westhampton, Long Island. I stopped to gas my Mercedes. I was met with hostility from a few of the locals there. I remember one yelling,, “WE HATE YOU PEOPLE!” Were they envious or were they angry at their desperate existence. Or the realization that they depended on summer renters for a part of their income(s).
Mactoul
Oct 1 2024 at 8:56pm
It need not be envy. I may prefer living in a stable environment with known neighbors and not having to reckon with unknown and varying neighbors.
In India, the condominiums (called housing societies) often prohibit renting to eg bachelors.
The existence of self-governing housing societies show that it is impossible to avoid public matters even in this smallest scale
Jon Murphy
Oct 2 2024 at 9:18am
The problem is not with governance (as you discuss) but rather government. Homeowner associations like you discuss are very common here in the US and are indeed one way to solve certain externalities.
But the problem arises when people wish to impose rules on others without their consent. That my HOA has rules for our neighborhood is no problem. It’s when they impose those same rules of other neighborhoods where the problem arises.
Mactoul
Oct 2 2024 at 10:39am
Consent? Don’t HOA operate with majority rule? They certainly do so here.
And doesn’t social contract theory tells us that citizens have agreed to a social contract, unanimously so in Buchanan’s theory, and thus have given consent. The consent is explicitly given when people participate in the democratic elections.
Pierre Lemieux
Oct 2 2024 at 2:15pm
Matoul: The first HOA or restrictive covenant was necessarily established by unanimous consent (otherwise, it’s a top-down zoning regulation). And any act of voluntary trade is unanimous, like when you buy-in into one. Now, a unanimous contractual party (like the first investors in a company or the founders of another association) can unanimously agree that, from now on, decisions will be reached by 50+1 or 70% of the members or shareholders or of their stakes (shares) in the venture (or by a guru reading tea lives). You will recall that this is how the theorists of constitutional political economy justify majority or qualified majority rules in democratic governments; see Buchanan and Tullock’s The Calculus of Consent.
Jose Pablo
Oct 2 2024 at 5:17pm
social contract theory tells us that citizens have agreed to a social contract,
In this regard, “social contract theory” exhibits, quoting Michael Huemer, “an impudent disregard for reality: no one has ever been presented with a contract describing how the government operates and asked for a signature”. (The Problem of Political Authority)
That should be evident to anyone using in an argument, a bedtime children’s tale of the size of the “social contract theory”.
The consent is explicitly given when people participate in the democratic elections.
This is just ridiculous. Quoting Huemer again, “An action can be taken as indicating agreement to some scheme, only if one can be assumed to believe that, if one did not take that action, the scheme would not be imposed upon one”
This is pure common sense. In the same way, participating in the plantation harvest festival doesn’t mean that you agree to be a slave.
Or enjoying a sunset doesn’t mean, in any way, that you agree with the extreme cruelty of being mortal.
Jon Murphy
Oct 2 2024 at 8:50pm
Mactoul-
Pierre answered the objection you raised well, but I want to pick up on something else you said. You said:
This is interesting. A good number of people do not participate in democratic elections. I, for example, do not vote. Nor do non-citizens, criminals (in many states), children, and so forth. If consent is given when one votes, then these groups cannot be said to have given consent. What are the consequences thereof? Are they not bound by the law nonetheless?
And what of those who reside in countries without democratic elections? Do they have no social contract?
Mactoul
Oct 3 2024 at 12:30am
All these objections to the social contract are answered by the liberal theorists, say Buchanan, to their satisfaction, if not to yours. Pierre Lemieux is better placed to answer these objections. I would merely note that the majority is politically passive and is always ruled by a minority that possesses the will to power. Indeed, it is this complementarity that gives rise to the state and is origin of political authority,
MarkW
Oct 3 2024 at 5:57am
Again, to be fair, HOAs and zoning are similar in consent in that consent is most commonly given by purchasing an affected property. Relatively few HOAs are established in existing neighborhoods — rather new subdivisions are created with HOAs from the get go and people buy in (or choose not to). Similarly, most SFH zoning regulations have been in place a long time — such that there are no homeowners left from when the regulations were first imposed 50-100 years ago. The one big difference is that the zoning regulations are subject to votes by a local government elected by all citizens of the municipality, not just an HOA board governing the particular zoned neighborhood. But HOAs are not impervious to outside, top-down regulations. My own state government recently passed a reform bill that prohibited HOAs from banning rooftop solar (which some had been doing). This is comparable to states doing things like banning single-family zoning near transit lines.
Jon Murphy
Oct 3 2024 at 8:39am
Mactoul, three things:
First: Given Pierre and I are saying you are misunderstanding Buchanan, I failed to see how you can say that Buchanan satisfactorally responds to that claim. I’m not really sure what you’re referring to when you say “All these objections to the social contract are answered by the liberal theorists, say Buchanan, to their satisfaction, if not to yours.”
Second: I do not know of any social contract theorist who claims that voting is the explicit form of consent. As far as I know, that claim is original to you, which is why I asked you to elaborate on it. If you know of someone who does discuss that point, I’d love to know it so I can read their argument.
Third: Since you say you are not SCT, and my comment had nothing to do with SCT, I fail to see why you brought it up here at all.
Mactoul
Oct 3 2024 at 12:24am
Let me clarify that I do not hold with the social contract theories myself. I merely noted that the existence of political authority is accepted by the liberal theorists of the social contract type.
However, the traditional liberal arguments are getting a short shift in favor of denial of political authority itself. This dismissal of the very subject matter by a theorist is odd as political authority is a most salient feature of the human existence whether or not Huemer can understand political authority to his satisfaction.
Isn’t it odd that the political theorists never focus on one true modern example of a state coming to be: Israel in 1948.
Robert EV
Oct 3 2024 at 2:24am
We’ve got East Timor as well. Do they focus on that?
Jon Murphy
Oct 3 2024 at 8:48am
I don’t understand what you are implying here. For one, many states have come about in the modern era (from 1500 to now). If you’re not using “modern” to mean modern era, then even since 1948, some 100 new states have come about. Political theorists focus on all of these. There are whole fields dedicated.
Jose Pablo
Oct 3 2024 at 2:52pm
political authority is a most salient feature of the human existence
Political authority is easy to understand. Precisely the same way that the slave master’s authority is easy to understand.
The “problem” of political authority is that, once you normatively assume methodological individualism (the only assumption that allows for individual dignity), it lacks legitimacy. And none of the increasingly ingenious ways of trying to get this legitimacy (ie “social contract” theories) supports any serious logical scrutiny.
Political authority is always and everywhere imposed by force on individuals. Maybe “we” don’t deserve any better (looking at Trump support I am sometimes convinced that this is the case).
Mactoul
Oct 4 2024 at 1:25am
Methodological individualism is a method used for theoretical convenience. It has no normative value at all.
Similarly Methodological naturalism is employed in physics but it by itself doesn’t prove that miracles do not exist.
Mactoul
Oct 4 2024 at 1:29am
The post-colonial states are new labels on the old bottles, continuing the entire colonial legacy of laws, institutions and administrations.
Only in the founding of Israel, there was a state formation ab initio
Jon Murphy
Oct 4 2024 at 5:53am
If you want to exclude the colonies, you must also exclude Israel. That was a British colony before 1948.
But let’s ignore that point. Even excluding colonies*, the number of new states since 1948 are well into the double digits.
*Which, to be clear, I think is wrong. Many of the states formed from colonies are wholly new creations, forming from where there was no historical state prior.
But again, the question remains: what’s your point?
Roger McKinney
Oct 1 2024 at 9:25am
The Greeks are shooting themselves in the foot with this. Greece desperately needs the foreign currency that comes with tourists. Could envy be a motive? Tourists tend to be wealthier. What else would cause Greeks to hurt themselves with little benefit?
Pierre Lemieux
Oct 1 2024 at 9:30am
Roger: The ones who ask for tourists restrictions don’t necessarily (and typically) hurt themselves: they hurt others, that is, those who make a living by serving tourists.
Roger McKinney
Oct 1 2024 at 9:35am
They hurt themselves in the long run by impoverishing the nation, though they think they are helping themselves.
Robert EV
Oct 1 2024 at 2:26pm
Foreign hotel ownership is starting to expand in Greece. https://www.ekathimerini.com/economy/1245974/big-hotel-chains-have-plans/
So there are a couple of counter-arguments to your point:
Current Greek hotel owners may want competition limits in order to increase their current market value to oversees buyers.
These foreign owners will want to keep the value of their hotels up by reducing competition from non-hotels.
Roger McKinney
Oct 1 2024 at 3:46pm
It makes sense for hotel owners to want to restrict non-hotels, but restrictions on all tourism will hurt the hotels as much or more. That doesn’t make sense.
Monte
Oct 1 2024 at 11:57am
The locals, with their impassioned pleas for government to intervene, will ultimately end up paying a dearer price in the long run by inviting this discrimination. Once government crosses that threshold, it becomes a point of no return. Speaking of which…
After reading through A point of no return: Why Europe has become an epicenter for anti-tourism protests this summer, my first impression was that it was American tourists the locals were protesting against. However, it turns out that it’s their European counterparts (primarily from France, Germany, and Italy) who are the main source of the problem. In addition to protests against overcrowding and high prices, locals have also become incensed over inappropriate behavior being exhibited by tourists:
Pierre Lemieux
Oct 1 2024 at 4:40pm
Monte: Thanks for the link. I do think that anti-tourist demonstrators should do a hunger strike. They might even consider this a moral duty. If they are numerous enough, they will push the price of food down for locals and tourists alike.
Thomas L Hutcheson
Oct 1 2024 at 1:37pm
While I agree that quantitively restricting Air B&B rentals is inefficient, the idea that in certain places as at certain times there could be congestion of unpriced or underpriced public assets that reduces the aggregate utility derived from those assets is not absurd (any more than recognizing the need for a tax on net emissions of CO2 is :)).
And it is quite reasonable to take account of who is and is not a net beneficiary of the externality. If Barcelona taxes tourist entry to reduce the costs to local sidewalk walkers, it might make sense to use some of the revenue to compensate shopkeepers.
As somebody said, TINSTAAFL.
Pierre Lemieux
Oct 1 2024 at 4:36pm
Thomas: Can you refer me to one theory demonstrating that we can, even just conceptually, calculate “aggregate utility” and give me one example of such calculation?
Thomas L Hutcheson
Oct 1 2024 at 7:13pm
You know very well that I mean welfare economics little triangles stuff. 🙂 The kind of thing that says the DW loss of uniform tax is less than a differentiated one.
The other commentators do not seem to have any trouble being pretty sure that the restrictions reduce total utility/welfare. I’m agnostic, seeing away it might be a net improvement although as I said it would be better if the discouragement of tourism coud be by taxes and not quantitively restrictions.
Pierre Lemieux
Oct 2 2024 at 8:10am
Thomas: With due respect, I believe this is a misconception. The problem is the “net improvement” in your last sentence.
What Harberger’s triangles deal with is not “aggregate utility” but total money or, to be more precise, total numéraire, which could be bubble-gum as well as gold or paper currency. Like many of our fellow economists, you are speaking of maximizing total bubble-gum equivalent. Utility is something else. It is an ordinal measure of the subjective individual ranking by an individual of situations that are more preferred or less preferred by him in terms of his welfare. So when you (and admittedly many knowledgeable economists like you) speak of “aggregate utility,” they refer to the sum total of (positive and negative) subjective-rankings-of-situations-that-are-more-preferred-or-less-preferred-by-each-and-every-individual-in-terms-of-their-respective-subjective-welfare. (It is purposedly that “subjective” appears twice in this definition.) I submit that to any economist who has seriously looked at that, it is clearly meaningless.
The best demonstration that I know is Paul Samuelson’s “Evaluation of Real National Income,” Oxford Economic Papers, January 1950. “Real national income” is or was also called “real social income” or (by those who dare say so after Samuelson!) “aggregate utility.”
The implications for “public policy” are so momentous that I often wonder why Samuelson’s article, as well as others along the same line, seems to have been forgotten. Or perhaps the policy implications explain indeed why they have been forgotten. It is barely an exaggeration to say that the mainstream approach to public policy follows the well-known theorem (I hope I am quoting it correctly):
Something must be done.
There is something.
So it must be done.
Pierre Lemieux
Oct 1 2024 at 4:50pm
Thomas: And can you give me one documented case where a government anywhere has issued a press release or made an official declaration of the sort: “Unfortunately, we had to cancel our pet project X. After refining our calculations, we discovered, and everybody agreed, that aggregate utility over the next 100 years would be lower if we go ahead with it than if we do nothing.” (If Tyler Cohen is right, we should go to at least a million years because future aggregate utility must not be discounted at any positive rate.) My apologies if I look sarcastic, I don’t want to minimize your contributions to our conversations here. But I am serious and this is an important matter.
Thomas L Hutcheson
Oct 2 2024 at 12:02pm
I think that some decisions ARE make on cost benfit-ish analyses such as when the “utility” of lives lost in traffic accidents are translated into dollars and that used to optimize the radius of curvature of a highway. A lot more decisions should be made
That’s what I’m talking about.
If a lot of people are feeling annoyed by all the other people around in the Uffizi why not try to reduce number of visitors to reduce the annoyance (disutility?) but not by so much that aggregate enjoyment (utility?) of the remaining visitors is increased?
Robert EV
Oct 2 2024 at 12:17pm
The closest I can find is Australia and its quasi-independent Infrastructure Australia authority. Though that took a change of administrations to cancel the projects, they were cancelled because they failed to meet (in the first place, in at least some cases) a cost-benefit analysis.
https://theconversation.com/the-government-just-killed-50-infrastructure-projects-what-matters-is-whether-it-will-fund-them-on-merit-from-now-on-217900
Pierre Lemieux
Oct 2 2024 at 2:39pm
Robert: Interesting, thanks. But, if I read that correctly, it was a new government that canceled, through an “independent authority,” the pet projects of its political adversary! That would tend to confirm my point, as well as Anthony de Jasay’s memorable passage (in The State):
For our readers not familiar with technical economics, cost-benefit analysis is based on attempts at interpersonal comparisons of utility to calculate if the benefits of some are larger than the costs imposed on others.
Robert EV
Oct 3 2024 at 2:30am
Yes indeed, as I noted as well. The quasi-independent authority did, however, rate the projects as not meeting the cost-benefit criteria even under the original government which approved them anyway.
Jose Pablo
Oct 2 2024 at 5:42pm
If congestion is “a problem”, then a “congestion tax” could be enacted.
The idea: “since we have a congestion problem let’s enact a tax on tourism” doesn’t have any Pigoviaun sense.
Craig
Oct 1 2024 at 3:48pm
“Following similar limits imposed in Spain, Greece is also taking steps to regulate short-term rentals on online platforms such as Airbnb. Mitsotakis announced a one-year ban on new short-term rentals in three areas of Athens. Tourists often start or finish their holiday in the historic Greek capital before moving on to an island destination.”
I don’t think FL does this but my HOA does. To be fair I absolutely knew buying my home in FL that I would not be able to AirBNB the place, but now that I spend much time in TN as well I naturally would like to. I have been to a few AirBNB ‘neighborhoods’ outside of Disney World and it feels weird, nobody there actually lives there so if you live in that neighborhood you’re effectively living in an AirBNB hotel community with an ever changing cast of characters and little sense of community.
Jose Pablo
Oct 2 2024 at 5:39pm
Tourists, despite being a few, “feel” aplenty because they concentrate in very specific areas. And they are easy to detect: they dress, speak, and behave differently from locals.
They are a “nuisance” to locals (to 50%+1 of locals at least). I don’t think this has anything to do with “envy”, it is just a reminiscence of the times in which we used to piss along the limits of our troop territory.
And locals have political power, tourists don’t.
It is just a matter of time before 50%+1 of locals use this political power against that easy-to-identify nuisance.
Of course, the arguments supporting these moves against tourism are intellectual rubbish. No surprise here (have you listened to any of Trump’s intellectual, so to speak, arguments?, what do you expect from politicians?)
It is not easy to see solutions to the “50%+1 with political power pursuing policies that don’t make any sense“. The good news is that you don’t even need that the policies have a significant effect. It is enough that they are announced on TV and pretend to have the right effect.
After all most Athens residents supporting these measures have never set foot on the Acropolis since they were forced to visit it in their schooldays. In the same way, most Madrid residents have never visited El Prado and, yet, they feel outraged by the fact that it is now overcrowded by tourists.
Mactoul
Oct 3 2024 at 1:13am
Jose Pablo,
The social contract is a political myth, with no pejorative connotation. However, theorists have somewhat spoiled the mythical aspects by overanalysing it.