John Locke's State of Nature and State of War

On September 10, 2016, I finished blogging my way through John Stuart Mill's On Liberty. I wrote close to one blog post per paragraph of On Liberty every two weeks for more than three years (beginning January 27, 2013). Links for those posts are collected inJohn Stuart Mill’s Defense of Freedom.

Since then, I have been blogging my way through another classic on the logic of freedom: John Locke's 2d Treatise on Government: “On Civil Government.” Having blogged my way through chapters 1—3, it is time to collect the links to those posts. There are many more John Locke posts to come, from Chapters 4—19. 

I have learned a lot from writing these posts. I hope you learn some interesting ideas from reading them.  

Chapter I. The Introduction

  1. John Locke Looks for a Better Way than Believing in the Divine Right of Kings or Power to the Strong

  2. John Locke on Legitimate Political Power

Chapter II. Of the State of Nature

  1. On Consent Beginning from a Free and Equal Condition

  2. John Locke on the Equality of Humans

  3. The Religious Dimension of the Lockean Law of Nature

  4. Vigilantes in the State of Nature

  5. John Locke on Punishment

  6. John Locke: The Right to Enforce the Law of Nature Does Not Depend on Any Social Contract

  7. Reparation and Deterrence

  8. John Locke: Theft as the Little Murder

  9. John Locke: Law Is Only Legitimate When It Is Founded on the Law of Nature

  10. John Locke: People Must Not Be Judges in Their Own Cases

  11. John Locke: Foreign Affairs Are Still in the State of Nature

  12. Human Beings as Social—and Trading—Animals

Chapter III. Of the State of War

  1. John Locke: Lions and Wolves and Enemies, Oh My

  2. Breaking the Chains

  3. On Theft

  4. John Locke: When the Police and Courts Can't or Won't Take Care of Things, People Have the Right to Take the Law Into Their Own Hands

  5. If the Justice System Does Not Try to Deliver Justice, We Are in a State of War

  6. John Locke on the Mandate of Heaven

In addition to the posts above traversing the Second Treatise in order, I have one earlier post based on John Locke's Second Treatise:

John Locke: Revolutions are Always Motivated by Misrule as Well as Procedural Violations

For links to other John Locke posts, see these other John Locke aggregator posts: 

FocusEconomics: How Will the Fed Reduce Its Balance Sheet & How Will the ECB End QE? - 18 Economic Experts Weigh In

Link to the article above

I was one of the economists asked by FocusEconomics about where the Fed and European Central Bank are headed with QE. Here are the answers I contributed:

1. How do you think the Fed will unwind its multi-trillion dollar balance sheet resulting from its stimulus program without severely upsetting the bond and equity markets?

I expect the Fed to reduce reinvestment in mortgage-backed securities more, and possibly earlier, than they reduce reinvestment in long-term US Treasury bonds. The reduction in reinvestment will probably happen gradually, not all at once. There will be a pause in rate increases after the first announcement of reduction in reinvestment, both to compensate and for assessment.  

2. How will the ECB, which is still stuck in a quantitative easing cycle, be able to bring it to an end without plunging Eurozone countries into yet another financial crisis?

I think the ECB will move very slowly to cut back on its stimulus.

The key for avoiding another financial crisis is to keep raising effective capital requirements. If Trump appointees want to weaken or slow down the tightening of capital requirements, the key thing to watch is if European officials distance themselves from the US, saying they want tighter requirements than the US wants, or if they simply go along with a lean towards less strict capital requirements by the US. 

 

A Blessing for Diana and Erik

Erik MIchaels-Ober Berlin and Diana Kimball Berlin, married June 24, 2017

Erik MIchaels-Ober Berlin and Diana Kimball Berlin, married June 24, 2017

A few hours ago, our daughter Diana and our new son-in-law Erik were married under a Chuppah on a bright sunny afternoon at Opus 40 in Saugerties, New York. With their permission, we share here the words of the blessing my wife Gail and I spoke to them during the ceremony:

Gail: Diana, the day you were born was one of the best days of our lives. The wonderful things we imagined for you as we held you in our arms were no match for the reality of the woman you have become. 

Miles: You have gone from amazing your parents to amazing your peers. The enthusiasm, creativity and determination we saw in you as a young girl continue today in a remarkable range of projects and challenges you have set yourself.

Gail: In Erik, you have found a partner who loves and appreciates you and is committed to seeing you reach your potential. You balance each other. Erik makes your life even more of an adventure, and reminds you to have fun.  

Miles:  Erik,we love your energy, keen wit and calm confidence. Thank you for loving our daughter. We look forward to all the times we will spend together in the coming years. 

Gail: As you continue to expand and enrich your life together, we wish many blessings for you. 

Miles: May you learn in the future to cherish aspects of each other you have no inkling of today—listening to one another as if you don't know what will come next. 

Gail: May your relationship grow ever deeper as you build something together beyond the capabilities of any one individual. 

Miles: May you always have a circle of friends around you as you do today, with whom you can share sorrows and joys. 

Quartz #68-->Economics Is Unemotional—And That's Why It Could Help Bridge America's Partisan Divide

Here is the full text of my 68th Quartz column, "Economics is unemotional—and that’s why it could help bridge America’s partisan divide," now brought home to supplysideliberal.com. It was first published on May 15, 2017. Links to all my other columns can be found here.

If you want to mirror the content of this post on another site, that is possible for a limited time if you read the legal notice at this link and include both a link to the original Quartz column and the following copyright notice:

© May 15, 2017: Miles Kimball, as first published on Quartz. Used by permission according to a temporary nonexclusive license expiring June 30, 2020. All rights reserved.

In order to keep things tight, my editor for this column, Sarah Todd, suggested cutting two passages that might interest you: my original introduction, which defines the concept of "politicism," and a passage about the politics of financial stability. You can see those passages after the text of the column as it appears on Quartz. 

As the 2016 US election showed, politics is dividing Americans more than ever before. How can we begin to bridge these ideological divides? A recent series of social psychology studies by Jarret Crawford, Mark Brandt, Yoel Inbar, John Chambers and Matt Motyl suggests one possible solution.

The studies, based on detailed surveys of 4,912 Americans, confirmed that liberals and conservatives look down on one another equally. But crucially, researchers also found that social issues were far more likely to spur conflict than economic issues. This is in part because—distressingly to an economist like me—a lot of people find economics boring. Academia even has an established rule of thumb regarding this point: “Inviting more than 25% of the guests for a univer­sity dinner party from the economics depart­ment ruins the conversation.” For the average person, it’s hard to get your hackles up about interest rates. And it’s precisely because economic policy is such an unemotional, esoteric subject that it could help narrow the gulf between the left and right.

When politicians do use economics to get a rise out of voters, the message is usually blunt and visceral: “You deserve more money, they deserve less.” Subtler dimensions of economic policies may not work in stump speeches—but they can be the kind of good governance that gets politicians reelected. Voters on both the left and right like policies that lead to healthier job markets and higher GDP. And so, for politicians who hope to garner bipartisan support, the key is to focus on economic policies that get results.

The stakes couldn’t be higher. For one thing, without serious reform to US monetary policy, the Fed will not be prepared to handle the next Great Recession. Meanwhile, aging Baby Boomers will soon put enormous strains on the federal budget, and the national debt is so large that it would take more than a year’s worth of everything our economy produces to pay it off. Since 2003, productivity growth has slowed down for reasons we don’t entirely understand. And in the midst of this critical situation, the Trump administration and Republican Congress are proposing policies that are not only untested, but have the potential to affect the economy in so many disparate ways that it’s impossible to predict what the overall impact would be.

For example, consider the plan proposed by Republican Congressional leaders to raise taxes on imports and cut taxes on exports—so-called “border adjustment.” They hope to kill two birds with one stone: (a) reduce the trade deficit and (b) raise revenue to make up for tax cuts they want to make elsewhere. But border adjustment could be largely self-defeating as a way to reduce the trade deficit because it would lead to a stronger dollar. The trouble is that border adjustment doesn’t do much to give the rest of the world access to the US dollars it would need to buy US goods. Border adjustment is like trying to sell cars by giving car buyers a discount but then failing to give them any financing.

Instead, as I discussed in another column here in Quartz, the best way to get more balanced trade is the much less obvious policy of raising the US saving rate so that Americans can lend to the rest of the world—and they can afford to buy our products—instead of Americans borrowing from the rest of the world. This could be achieved by requiring employers to automatically enroll their employees in 401(k)s. (In this plan, employees could opt out, but many wouldn’t.)

With Americans doing more saving, the US wouldn’t need to borrow as much from the rest of the world to build houses and factories—and the trade balance would improve. More exports and fewer imports would, in turn, lead to more of the types of jobs that many people want. In addition to lend abroad to finance US exports, extra saving would mean more funds for investments in the US that would also lead to better-paying jobs.

But instead of working to raise national saving, with all the good effects that would bring, Gary Cohn, head of Donald Trump’s National Economic Council, has been talking with members of the Senate Banking Committee about tinkering with retirement savings accounts in a way that’s actually likely to reduce national saving. Right now, a typical 401(k) allows people to contribute to their account with pre-tax dollars, with the understanding that people will pay taxes on those dollars when they withdraw money during retirement. Cohn’s idea is to tax people first, before the money goes into the retirement account. That means less tax revenue at some future date—but it would provide revenue now to make up for lost revenue from other big tax cuts the Republicans want to do.

This may help procedurally in ramming through a big tax cut. But the effect, while unpredictable, would be likely to reduce savings among middle- and upper-middle-class people (who would not want to pay the upfront taxes).

In this way, the danger of arcane economic policies becomes clear: they can often be used as a way to please the special interests who donate to political campaigns. But sooner or later, the chickens come home to roost. People may not know which policy led to a recession or to stagnant wages, but they do figure out that something is wrong.

The tricky thing about good economic policy is that, as things stand, it’s not so much something you talk about, but something you do. Nonetheless, it’s a worthy cause for politicians on both sides of the aisle to adopt. Given the number of highly politicized issues currently dividing Americans—from abortion to immigration to health care—the party that gets to stay in power the longest will be the one that does a good job handling economic policy when it gets its turn in the driver’s seat.

Meanwhile, it’s up to economists, teachers, and journalists to find more ways to awaken people’s curiosity about economics. It’s clear that American voters on both sides of the political divide are invested in topics like jobs, trade, retirement, and the plight of the working and middle classes. But often, hot-button issues such as immigration come to dominate the conversation about these subjects—perhaps because most people lack a solid grasp of the real forces that have created economic problems, or the mechanisms that might be able to address them.

So one of the best ways to turn the tide of the partisan US is to make economics a mainstay of the popular conversation—the better to enable Americans to elect officials capable of good governance, and reduce the intensity of the political divisions among us by making everyone happier with the circumstances of their lives.

Original Intro Defining 'Politicism':

Among friends considering where to live, I hear a concern these days I don’t remember hearing when I was younger: “I could never live there because people are too conservative there politically.” A series of social psychology studies by Jarret Crawford, Mark Brandt, Yoel Inbar, John Chambers and Matt Motyl back up the idea that this kind of distaste for those with different political beliefs is common. They have two main findings, based on detailed surveys of 4912 people. First, liberals look down on conservatives just as much as conservatives look down on liberals. Second, people look down on others more for discordant beliefs on social issues than they do for discordant beliefs on economic issues.

It is handy having a word for “looking down on a group of people because of their politics.” The word “politicism” seems available. The online Oxford Dictionary defines it as “A concern with or emphasis on the political,” which is close enough for me. The online Urban Dictionary defines it as “voting in a politic election simply based on religion, sex, or ethnicity.” In my definition I am turning that around: politics itself has become a quasi-ethnicity that many people have intense prejudices about. Using my definition of “politicism,” one can say liberals as well as conservatives show a great deal of politicism, and politicism is stronger for social issues than for economic issues.

Original Passage on the Politics of Financial Stability

For a political strategy in which rhetoric focuses on social issues and easy-to-understand economic issues, there is a role for hard-to-understand aspects of economic policy. Hard-to-understand aspects of economic policy are perfect for pleasing sophisticated special interests who understand—while others don’t—that some opaque bit of economic policy will enrich them at the expense of everyone else. A prime example is the hope of banks and other financial firms to get themselves in line for more bailouts in the future by gutting requirements that stockholders put up enough money for banks that stockholders take the hit in a crisis rather than taxpayers. Regular voters know they don’t like bailouts, but their eyes glaze over at discussions of the capital requirements needed to avoid bailouts. Even Elizabeth Warren, who is better at making this kind of thing interesting to the average voter than anyone else, often has to quickly shift the subject to the easier-to-understand issue of people being ripped off by deceptive consumer finance in order to keep her listeners awake.

Most Popular Posts So Far in 2017

The "Key Posts" link at the top of my blog lists all important posts through the end of 2016. This is intended as a complement to that list, in two categories: popular new posts and popular older posts. (You can see other recent posts by clicking on the Archive link at the top of my blog.) The numbers shown are pageviews from January 1, 2017 through June 18, 2017 according to Google Analytics. My blog homepage had 15,149 pageviews in that period. Total pageviews were 96, 610. 

New Posts in 2017 

  1. There Is No Such Thing as Decreasing Returns to Scale   2062
  2. Economics Needs to Tackle All of the Big Questions in the Social Sciences   1208
  3. Border Adjustment vs. Dollar Depreciation   1102
  4. Defining Economics   1049
  5. Why I Am Now a Bear   1020
  6. My Objective Function   805
  7. Peter Conti-Brown's Takedown of Danielle DiMartino Booth's Book Fed Up: An Insider's Take on Why the Federal Reserve is Bad for America   723
  8. Breaking the Chains   647
  9. In Praise of Partial Equilibrium   556
  10. Returns to Scale and Imperfect Competition in Market Equilibrium   544
  11. Restoring American Growth: The Video   443
  12. Next Generation Monetary Policy   367
  13. How Strong is the Economics Guild?   360
  14. You, Too, Are a Math Person; When Race Comes Into the Picture, That Has to Be Reiterated   322
  15. Marriage 102   311
  16. Sugar as a Slow Poison   307
  17. Leaving a Legacy   292
  18. Thomas Sowell on How to Succeed as an Ethnic Minority   277
  19. Deregulation of Social Science as a Free Speech Issue   249
  20. Markus Brunnermeier and Yann Koby's "Reversal Interest Rate"   231

Older Posts with Continuing Popularity

  1. John Stuart Mill's Brief for Freedom of Speech   4075
  2. William Graham Sumner, Social Darwinist   1785
  3. How and Why to Eliminate the Zero Lower Bound: A Reader’s Guide   1210
  4. How to Turn Every Child into a "Math Person"   1122
  5. John Stuart Mill’s Vigorous Advocacy of Education Vouchers   966
  6. The Complete Guide to Getting into an Economics PhD Program (with Noah Smith)   964
  7. Government Purchases vs. Government Spending   951
  8. The Medium-Run Natural Interest Rate and the Short-Run Natural Interest Rate   946
  9. Joshua Foer on Deliberate Practice   914
  10. Why I Write   877
  11. Why Taxes are Bad   868
  12. There's One Key Difference Between Kids Who Excel at Math and Those Who Don't  (with Noah Smith)   780
  13. The Logarithmic Harmony of Percent Changes and Growth Rates   667
  14. Daniel Coyle on Deliberate Practice   639
  15. Robert Shiller: Against the Efficient Markets Theory   621
  16. Shane Parrish on Deliberate Practice   592
  17. What is the Effective Lower Bound on Interest Rates Made Of?   480
  18. John Stuart Mill's Brief for Individuality   455
  19. Inequality Is About the Poor, Not About the Rich   435
  20. How and Why to Expand the Nonprofit Sector as a Partial Alternative to Government: A Reader’s Guide   433
  21. Higher Inflation Is Not the Answer   415
  22. John Stuart Mill’s Defense of Freedom   413
  23. Sticky Prices vs. Sticky Wages: A Debate Between Miles Kimball and Matthew Rognlie   407
  24. Monetary vs. Fiscal Policy: Expansionary Monetary Policy Does Not Raise the Budget Deficit   388
  25. John Stuart Mill on Freedom from Religion   371
  26. How Increasing Retirement Saving Could Give America More Balanced Trade   325
  27. What If Jesus Was Really Resurrected? Musings of a Non-Supernaturalist   320
  28. Silvio Gesell's Plan for Negative Nominal Interest Rates   319
  29. David Dreyer Lassen, Claus Thustrup Kreiner and Søren Leth-Petersen—Stimulus Policy: Why Not Let People Spend Their Own Money?   310
  30. Bruce Greenwald: The Death of Manufacturing & the Global Deflation   264
  31. On Master's Programs in Economics   257
  32. Even Central Bankers Need Lessons on the Transmission Mechanism for Negative Interest Rates   233
  33. Cognitive Economics   230
  34. On Having a Thesis   230
  35. How Subordinating Paper Currency to Electronic Money Can End Recessions and End Inflation   224

Many of the popular older posts are posts that turn up easily in Google searches. 

John Locke on the Mandate of Heaven

Section 21 of John Locke's 2d Treatise on Government: “On Civil Government” has remarkable resonances with the Chinese idea of the "Mandate of Heaven." This idea maintained that while the imperial Chinese government maintained the Mandate of Heaven by wise rule it was the legitimate judge over its subjects. But when the imperial Chinese government misbehaved, it lost the Mandate of Heaven; attempting to obtain justice then required war. the previous Section 20, which I discussed in "If the Justice System Does Not Try to Deliver Justice, We Are in a State of War," talks about a government misbehaving. Section 21 then contrasts society under a reasonably just government and a state of war in which one hopes for justice from military victory:

To avoid this state of war (wherein there is no appeal but to heaven, and wherein every the least difference is apt to end, where there is no authority to decide between the contenders) is one great reason of men’s putting themselves into society, and quitting the state of nature: for where there is an authority, a power on earth, from which relief can be had by appeal, there the continuance of the state of war is excluded, and the controversy is decided by that power. Had there been any such court, any superior jurisdiction on earth, to determine the right between Jephtha and the Ammonites, they had never come to a state of war: but we see he was forced to appeal to heaven. “The Lord the Judge (says he) be judge this day between the children of Israel and the children of Ammon,” Judg. xi. 27. and then prosecuting, and relying on his appeal, he leads out his army to battle: and therefore in such controversies, where the question is put, who shall be judge? It cannot be meant, who shall decide the controversy; every one knows what Jephtha here tells us, that the Lord the judge shall judge. Where there is no judge on earth, the appeal lies to God in heaven. That question then cannot mean, who shall judge, whether another hath put himself in a state of war with me, and whether I may, as Jephtha did, appeal to heaven in it? of that I myself can only be judge in my own conscience, as I will answer it, at the great day, to the supreme judge of all men. 

Does Good Win in the End?

But let's take a look at the idea that military victory is positively correlated with justice. If a benevolent God does not yet exist, then this requires an argument. 

Martin Luther King said, memorably, 

The arc of the moral universe is long, but it bends toward justice.

Quote Investigator identifies antecedents of this saying. Unitarian minister and Transcendentalist Theodore Parker published an 1853 volume of sermons with this passage:

Look at the facts of the world. You see a continual and progressive triumph of the right. I do not pretend to understand the moral universe, the arc is a long one, my eye reaches but little ways. I cannot calculate the curve and complete the figure by the experience of sight; I can divine it by conscience. But from what I see I am sure it bends towards justice.

Things refuse to be mismanaged long. Jefferson trembled when he thought of slavery and remembered that God is just. Ere long all America will tremble.

and Morals and Dogma of the Ancient and Accepted Scottish Rite of Freemasonry, copyright 1871 had this passage:

We cannot understand the moral Universe. The arc is a long one, and our eyes reach but a little way; we cannot calculate the curve and complete the figure by the experience of sight; but we can divine it by conscience, and we surely know that it bends toward justice. Justice will not fail, though wickedness appears strong, and has on its side the armies and thrones of power, the riches and the glory of the world, and though poor men crouch down in despair. Justice will not fail and perish out from the world of men, nor will what is really wrong and contrary to God’s real law of justice continually endure.

In the absence of the supernatural there is still one reason that history is tilted toward victory of good over evil. Those who can cooperate with others who are unlike them can form larger coalitions than those who can only cooperate with others similar to them. The strategy of cooperating with others who are similar can be pushed a long way: each of us is built around a collection of genetically near-identical cells, with reproduction monopolized by a few germ-line cells much as beehives are built around collections of genetically closely related individuals with reproduction monopolized by the queen bee and the drones. But assuming that strategy of cooperating with similar individuals is pushed to the limit on both sides of a conflict, the side that can also manage cooperation among unlike individuals or unlike groups of individuals will have a big advantage. While not all the way there, the ability to cooperate with unlike individuals or groups of individuals is one step toward agape, the kind of love the early disciples of Jesus talked about. 

But far short of reaching a high form of love, the victory of those with a greater ability to cooperate with unlike individuals can bring progress that merits being described as a victory of good against evil. I have in mind the decline in violence over the course of history that Steven Pinker writes about in The Better Angels of Our Nature—a book I highly recommend. 

In any individual battle, evil (however defined) may win, but the dice are loaded in favor of goodness that is associated with an ability to cooperate with those who are different.

Conversely, the dice are loaded against those who cannot cooperate with those who are different from them. Hitler provides a good example. Because Hitler was not willing to cooperate with Jews, Nazi Germany lost access to scientific talent important for the war effort. Because Hitler could not cooperate with Stalin, he had to fight a two-front war. Because Hitler could not cooperate with Slavs whom his troops liberated from Stalin, he could not consolidate his hold on the Ukraine as well. If Hitler had not let ideology get in the way of the war effort he led, he would have been more likely to win. But if he had not been motivated by ideology, things might not have gotten to that point in the first place. 

This may not be as much to hang one's hat on in hopes for the victory of good over evil as one might wish, but other than my unfounded native optimism, it is all I have.  

 

The International Trade System Should Be Designed to Foster More Balanced Trade

Link to the article above

Link to the article above

 

Other commentators get close to the views I expressed in "Alexander Trentin Interviews Miles Kimball about Establishing an International Capital Flow Framework." In the first article above, Greg Ip interviewed Mervyn King, Fred Bergsten and Joseph Gagnon, writing this:

Protectionism can change the patterns of a country’s exports and imports, but not the overall balance.

Rather, deeper economic forces are at work. A trade surplus means a country consumes less than it produces and thus saves a lot. A deficit means the opposite. ... the persistence and magnitude of Chinese and German surpluses and U.S. deficits suggest actual policy decisions are at work.

This comes by interfering with currency markets. As Mr. King notes, a country with a weak economy and a trade deficit would expect its currency to fall to boost exports and restrain imports. That can’t happen if exchange rates can’t move, as is the case with China and Germany, though for different reasons. ...

Messrs. Bergsten and Gagnon suggest a new approach to prevent China from reverting to its old ways: When a country buys dollars to hold down its currency for competitive advantage, the U.S. should respond proportionately by purchasing that country’s currency. They also recommend the U.S. go beyond current law, which requires the U.S. to discourage currency manipulation in new trade pacts, by prohibiting it outright.

Notice that currency manipulation is often a matter of keeping an exchange rate the same when it should appreciate, rather than always being a matter of making one's currency depreciate. So currency manipulation cannot be defined by exchange rates. It needs to be defined by official purchases of foreign assets or other active policy to hold down an exchange rate. 

The case of Germany is more complex:

Germany is a tougher challenge. Since adopting the euro in 1999, it hasn’t controlled its own currency. However, it did win competitive advantage over its neighbors in the currency union. Labor-market reforms restrained domestic wages. In 2007, a payroll tax cut, which made German labor more competitive, was financed with an increase in the value-added tax, which exempted exports.

I argued that Germany should in part return to having its own currency in "How the Electronic Deutsche Mark Can Save Europe." Short of that, Germany has a responsibility to manage its trade surpluses within the euro zone in other ways. As between the euro zone and the rest of the world, rules against purchase of non-euro-zone foreign assets without permission from other countries would go a long way.

I emphasize in "Alexander Trentin Interviews Miles Kimball about Establishing an International Capital Flow Framework" that monetary interest rate policy is not a problem and can be done by each currency area with only its own interests in mind since other countries can neutralize the main worrisome effects of other countries' interest rate policy with their own interest rate policy while leaving country that initially changed its interest rate policy with the stimulus or restraining effect it needs once all these interest rate movements have been scaled up appropriately. It is purchases of foreign assets that have big spillover effects for the rest of the world that cannot be neutralized without neutralizing the effect the initial purchaser of foreign assets desired.   

In the second article shown above, Justin Fox discusses options for how Germany could spend more to reduce its trade surplus. 

The last article above is about David Malpass, Trump's nominee for Treasury’s undersecretary for international affairs. David Malpass wants more stable exchange rates, but in many cases that would make things worse by perpetuating trade imbalances. As I mentioned above, currency manipulation often takes the form of countries' acting to keep their exchange rates the same when their currencies should move in order to better balance trade. Attacking official, unilaterally decided purchases of foreign assets is a more appropriate way to identify and combat currency manipulation.

Besides often perpetuating trade imbalances, a big problem with exchange rates that are too stable is that they make stabilization through monetary policy much more difficult. In effect, a country that maintains a fixed or nearly fixed exchange rate with some other country has used up many of its degrees of freedom stabilization policy to keep that exchange rate fixed. 

If every country (or currency zone that is not too big) has full freedom in interest rate policy, while needing permission to purchase foreign assets, then each country can stabilize its own economy without artificial trade surpluses or deficits. There would still be a need to try to address the consequences different saving rates in different countries, but that is the next level up in improving the international trade architecture from the first step of banning official foreign asset purchases without permission.