It is nothing of the kind, however. It is a simple case of self-defense. And who better to help you defend yourself than the people with whom you share space, be it a neighborhood, a city-state, a principality, or even a vast nation? As a member of one or the other, you may be targeted for harm by outsiders who wish to seize your land and control your wealth, or who simply dislike your way of life, even if it does them no harm.
The cause of Caplan's confusion is his adherence to a kind of libertarian idealism. In the anti-war argot of the 1960s, it was expressed as "Why can't we all just get along?" But hope is not reality, Caplan notwithstanding.
Not getting along, to Caplan, is a moral defect. He therefore considers the differential treatment of insiders and outsiders to be an unmitigated wrong. But group cohesion is a prudential social instinct that no amount of rationalism can obliterate. Differential treatment of insiders and outsiders is an inevitable aspect of that prudential social instinct. It is not, at bottom, a moral issue.
If Caplan were logically consistent, he would focus his moral lens on the animal kingdom. There is plenty of inter-group conflict to condemn there: shark vs. tuna, cheetah vs. antelope, spider vs. fly, and so on. In the case of man vs. cattle (hog, fish, fowl, or other living thing), I wonder if Caplan opts for veganism? It would be the proper choice — for him.
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