Mike
Huben has an excellent website that points out many of the faults of popular
libertarianism which was critiqued by the ever thought-provoking David
Friedman. This is my long-in-coming
reply. Since September 11, the stock
bubble deflation, and corporate scandals like Enron, I feel like there is much
less need to point out the fallacies of popular libertarianism. People are much less taken in by market
fundamentalism than they were a year ago, but it is still an important
issue.
I
have continued David Friedman’s practice of color coding:
Mike's original comments
My rebuttals
David Friedman’s re-rebuttals.
1. David Friedman: It is useful, before criticizing ideas, to know at least a
little about them. Iceland wasn't a village
society…
If
it wasn't a village society, then how would David Friedman describe it? Hunter-gatherer (i.e. fishing)? Agrarian?
Rural? Who cares? This is a trivial thing to nit pick. My intent was to distinguish it from modern
economies that are sometimes described as "urban" or
"industrialized" although David Friedman may freely disagree with
these descriptions too. I do not need
to know the specifics of saga-period Iceland to know that it is useless to use
it as an example when discussing options for post-industrial societies
today. There are numerous remote
primitive societies that have evolved complex social organization without
government. Even ants do it. Ants are relatively dumb, but they manage to
engage in ruthless organized warfare, agricultural cultivation, mass
communication, and climate control without any government telling them what to
do. There is no autocratic government,
but their individual lives are not exactly free because they are bound by
instinct. In an analogous way using
culture rather than instinct, stable traditional societies have evolved methods
for extremely efficient social control that often do not involve a government,
and the social control is usually much tighter and liberties more restricted
than in modern democracies. Anyone who
has lived in a stable small town will understand a small degree of what that is
like. I would warrant that saga-period
Iceland, like many other pre-modern societies, was culturally homogenous, had
little disparity between rich and poor, had little social surplus for people to
fight over (subsistence societies have practically nothing to steal and so
there is little theft). Furthermore
Iceland was unusual because it had no need for national defense because nobody
would want to invade such a poor, remote place. It had little need for roads
because it was more practical to use boats around the island. It had little need for irrigation or water
projects. There were relatively few
public goods that a government could have provided in that environment until
technology improved and wealth and/or population increased.
And my analysis of its legal institutions first appeared, not as
"romantic versions," but as an article
published in a peer reviewed academic journal.
And
just because David Friedman can feel proud to have published an article doesn’t
mean that it is free from bias, romantic or otherwise. Surely David Friedman has better defense
than that. Some people do not believe
everything they read merely because it is in print.
David
Friedman: As I pointed out in my initial response to Mike,
"utopian" doesn't mean "unrealistic" it means "ideally
perfect." Consider the example I offered of modern mass franchise
democracy. Was that a "utopian" idea in 1700, when no such society
had ever existed?
Actually
there was already a model for mass democracy in 1700. I apologize in advance for nit-picking, but the shift of power
from monarchy to parliament in Britain was already well under way. The Bloodless Revolution ended in 1689 and
the settlement that resulted was perhaps the single most important milestone in
that shift. The ascendancy of Parliament has never been successfully challenged
since then.
To
answer David Friedman's question, perhaps advocates of mass democracy in 1700
were utopian. I don't know and I don't
care. I see no insult in the word
utopian. As Anatole France said,
“Without the Utopians of other times, men would still live in caves, miserable
and naked. It was the Utopians who traced the lines of the first city.” I admire groups of people who voluntarily
experiment with organizing themselves into new forms of society. However, it is irresponsible to advocate for
other people to take large risks (like living in anarchy) without taking some
simple steps towards living that way for one’s self in one’s family, workplace,
or local community. Why can’t
libertarians show any examples of successful libertarian social organization at
any scale? As I said before, there are
no realistic examples that demonstrate the desirability of anarcho-capitalist
libertarian society. Perhaps some
libertarians could experiment on a smaller scale and demonstrate the advantages
of how an internally anarcho-capitalist family or corporation functions to
maximize internal markets and freedom.
Furthermore,
it is instructive to note how models of mass democracy came to be. Democracy evolved over centuries and over
half the population (such as women) still did not start to get the right to
vote until about a century ago (and only a few years ago in Switzerland). When libertarians advocate for peaceful
evolutionary change, then I have no problem with it. The problem is that much libertarian rhetoric is
revolutionary. Some of it reminds me of
early communist rhetoric. They too
thought that if we could get rid of government we would all be a lot better
off. However, when they finally
overthrew a government and got power, the result was Stalinism. There are usually many unintended
consequences whenever one engages in the sort of revolutionary social
engineering that libertarians espouse.
Additionally,
before mass democracy evolved, there have always been very many examples of
small democratic institutions and democratic local governments on which to
model. Many tribal groups have formed
democratic governments and there were many democratic city states such as some
of the northern Italian city-states where the Renaissance began. A big problem with democratic government was
that it was inherently small-scale until the invention of the printing press
and mass literacy. Democratic
governments could not get large without becoming unwieldy whereas neighboring
authoritarian governments could grow larger and reap military economies of
scale and then take over the small democracies. Technological changes explain why there was no example of mass
democracy before the Bloodless Revolution.
Unlike
libertarianism, democracy works at many different scales and there have always
been many models to observe. By 1700,
there had been a technological revolution in the printing press (and the
attendant mass literacy) that enabled mass democracy for the first time in
history. Today there is no similar
technological change that will suddenly make libertarian anarchy possible when
it has not been possible in the past.
2. David Friedman:…you have
implied, as Mike probably intended to imply, that libertarians are to be
identified with elites, super rich, the wealthy, etc. You have, in other words,
first defined your class broadly, so as to be able to claim that most
libertarians are in it, and then switched to a much narrower (and more easily
demonized) subgroup… You, like Mike, are trying to imply that libertarians are
evil people who make dishonest arguments for selfish reasons…
Sorry
if I offended someone by calling (or even “implying”) them wealthy. I obviously
do not have hard statistics on the wealth demographics of libertarians, only
personal experience and anecdotal evidence.
But then David Friedman did not dispute my impression that the vast
majority are well above the median income.
I was not "demonizing" libertarian tendencies any more than I
was demonizing African-Americans when I pointed out their tendency to vote
Democrat. My read of MH's original
point in regards to this issue is that self-interest helps shape people's
beliefs and in talking to libertarians (or others) it is worth noting their
economic class and thinking about how their income level influences their
belief system. Many libertarians
celebrate self-interest as an excellent source of motivation, so it is only
natural that these people would also tend to form their beliefs based on that
more so than people who celebrate public interest as a motivation.
Me: Naturally, wealthy people who expect to pay above the median lifetime taxes would find it in their short-term self-interest to abolish them and find libertarianism an attractive ideology to justify dodging taxes.
David Friedman: Nonsense.
If, as you and Mike believe, taxes produce benefits much larger
than their costs, then people who expect to pay above the median would still
want to keep taxes.
True,
and as I pointed out, most wealthy people do see that taxes benefit them by way
of government services. I also pointed
out that David Friedman demonstrates that he is one of these people because he
freely chooses to live in a high-tax state (in 2000 California had the 6th
highest total per capita tax) and in a high-tax nation. However, even people who believe in the
benefits of public goods have an incentive to shirk (get others to pay for
them) and even if they didn't, people who are already wealthy would not
necessarily find it in their self-interest to pay further taxes because they
have already benefited from the system.
I am NOT implying ("demonizing"?) that this is characteristic
of most libertarians, but the attractiveness of the ideology to wealthy people
could help explain some of the momentum of the movement. If libertarianism is disproportionately
attractive to wealthy people it would help to explain why there seems to be a
disproportionately large number of well-funded libertarian organizations and
think tanks compared with the small number of libertarians. Some of the organizations that promote
libertarianism were single-handedly created by individual rich old guys.
Some
libertarians' ideology is especially attractive to the wealthy because they
espouse the view that a businessperson's income is somehow proportional to
their contribution to society. In that
view, Bill Gates created his
billions of dollars which is, in turn, a trickle-down benefit to us all and
because he is wealthier than anyone else, therefore he has made a larger
contribution to society than anyone else.
Naturally, this sort of ideology is less attractive to nannies,
teachers, biologists, and pastors than to high-income business consultants and
law-school professors.
David Friedman: You, like Mike, are
trying to imply that libertarians are evil people who make dishonest arguments
for selfish reasons--but you are less ashamed of making that claim than he is
and so make it more explicitly.
I am
not implying that they are “evil” or “dishonest”, but merely selfish. Everyone is selfish, although most people
see is as a negative quality to be restrained.
In contrast, many libertarians see nothing wrong with selfishness, but
most prefer to call it “self-interest.”
Some actually go so far as to actually say that greed is good.
So far as dodging taxes, that is a profitable activity for those
who can get away with it whether or not they are above the median.
And
it is obviously much more profitable to dodge taxes if you are wealthy than if
you are not. Therefore the wealthy have
incentive to put much more effort into tax evasion and naturally find
libertarianism ideology attractive in order to justify it. Poor people find it much less profitable to
dodge taxes and the poorest people don’t pay taxes at all.
5. David Friedman: If a society decides that torturing dissenters to death is
legal, do they have a right to do so?
Not
in my book. However, I do not find any
definitive answer to this question in libertarianism. Different cultures have different opinions about what torture is
(is death penalty or solitary confinement torture?), and what a dissenter is. Many people in the world say that the World
Trade Center bombers were dissenters and many say that they were
terrorists. Suppose we re-word David
Friedman's question and ask David Friedman this: If a society decides that it
is legal to make terrorists pay a fine for damaging the WTC, do they have a
right to do so? It is the same
question, but with different emphasis.
Rights are social constructs.
Some rights may be more popular than others, but rights evolve through
social and political bargaining processes.
David
Friedman goes on to once again compare his estimates of the global private
murder rate with the government murder rate and once again I will explain how
this is a meaningless comparison in the debate about libertarianism. It would be similar to say that all flying
insects should be destroyed because they kill people by transmitting malaria
and yellow fever. However, most food
plants would die without pollination by flying insects and flying insects do
not transmit diseases in most of the area of the planet. As I said before, it would be slightly more
meaningful to know if democratic governments murder more people than private
murderers. Nobody has provided evidence
that they do. The only meaningful
comparisons are between the total murder rates (gov’t plus private) in actual
societies. That would tend to indicate
that democratic societies with gun control have the lowest rates. Unfortunately, there are no examples of
libertarian criminal justice systems nor libertarian national defense that
David Friedman can point to that would indicate that libertarianism would
provide less total murder than America's current democratic system of
government.
I
earlier interpreted David Friedman's position on private law enforcement by
making this statement:
Me: David Friedman is
disingenuous to compare the crime rates of England in the 1700's to that of
today and say that it worked better then because of private law enforcement.
David
Friedman disagrees with my above sentence on three counts. However, if he doesn't think society worked
better in 18th century England than today because of private law
enforcement, then why did he use this example?
Perhaps David Friedman agrees with me that his comparison is of no
relevance today in determining whether or not to abolish public law
enforcement.
Me: David Friedman also gives the example of
Saga period Iceland (going back 1000 years or more) as a model for government
and law enforcement today. This is ludicrous.
David Friedman: It might
have been if I had, but I didn't.
Once
again, I apologize for misinterpreting David Friedman's use of another example
from a “village” (or whatever he wants to call it) society. It looks like David Friedman and I agree
again! Of course it is ludicrous for us
to use this as an example for today. I
don't know why he brought it up.
Me:
institutions
that worked in hyper-religious pre-industrial village society probably would
not work in today's gun infested urbanized society.
David
Friedman: …it was not hyper-religious…
In
comparison with today, 18th century England was
hyper-religious. The preceding century
had seen religious civil war in England (perhaps it would have been called
“jihad” in another part of the globe?) and you don't get much more
hyper-religious than that. Regardless
of how you label it, my intended point was that people in 18th
century England were guided by religious principle much more than current
Britons and that religious ideology affects human behavior. Church attendance, bible reading, etc. are
at historic lows in Britain today.
David Friedman: You might want to look at Anderson, T. and Hill, P. J.
"An
American Experiment in Anarcho-Capitalism: The Not So Wild, Wild West,"
Journal of libertarian Studies. Vol. 3, No. 1. 1979 for a good antidote to the
popular moviegoers' view of that period.
Murder
rates in the "Wild West" were
low compared to today and one reason was that there were very few guns per
capita compared with America now. Another reason was that many frontier towns
actually had gun control that is much stricter than what is allowed today. However, this is straying from the original
point. I was not giving a moviegoer's
view of the period. I was pointing out
that in the absence of government on the frontier, vigilante justice often
evolved that was cheap and
ruthlessly efficient at deterring crime, but not very just by today's
standards. There are also numerous
other more recent examples such as the IRA criminal justice and enforcement in
catholic neighborhoods of in Northern Ireland or the remarkable absence of
theft or burglary in drug processing towns of the Columbian cartels.
6. David Friedman has some
good points here. I am not going to argue
about how the American legal system works with someone who teaches at an
American law school.
8. Me: David Friedman
goes to the heights of absurdity to claim that libertarians achieved the
"abolition of slavery, the institution of large scale free trade, the
destruction of guild restrictions on employment--most of the progress of the
19th century".
David Friedman: Are you denying
that the changes I described were the work of classical liberals?
There
was much involvement by classical liberals.
However, libertarians and classical liberals are two different breeds
and current liberals make just as much claim to affinity with classical
liberals as libertarians do. Who is to say that the classical liberals would
not call themselves liberals today? I
am certainly denying that vast majority of the people who worked to abolish
slavery would call themselves libertarian in its current tradition and I doubt
that they were even mostly classical liberals.
Many were religious conservatives and other groups.
9. David Friedman suggested
"that we reduce government expenditure to the level that can be supported
by taxing [income from unproduced resources]." I am still curious how
David Friedman would spend the billions of dollars the government would get
under his scheme. That is a more
meaningful way to discuss libertarian reform.
Start with what is the most egregious government problem and work your
way from there. With only a few hundred
billion to spend, David Friedman's job is easy. Start by listing the best roles of government.
Me: It is also ironic that
David Friedman chooses to live in a city and a state with relatively high
property tax, sales tax, income tax and extensive local government services and
regulations. If he were really convinced that taxation is the moral equivalent
of violent theft via men with guns, then why doesn't he take some very simple
precautionary steps to avoid it and move to a city and state with less taxes
and regulation? Most people go to great lengths to avoid violent crime. Perhaps
he doesn't really believe his own analogy.
David Friedman: You could choose to
live in a country with a lower murder rate. Does it follow that you don't
really believe that murder is immoral?
I
minimize my risk of death just like everyone does. I can extend my life much more cheaply by exercising and eating
healthy food than by moving to a country with low murder rates. I also choose to live adjacent to a police
station. However, I do not pay a large
percentage of my income to support what I consider murder and theft. How many hundreds of thousands of dollars is
David Friedman paying over his lifetime to finance what he calls government
murder and robbery? David Friedman chooses to pay some of the nations highest
state taxes (in 2000 California had the 6th highest total tax per capita) and
live in a high-tax nation. I did not
look up his place of residence, but he works in a city with above-average sales
tax and if his behavior is consistent, he probably also lives in a place with
above-average property taxes and fees within California. I would guess that even ignoring federal
taxes, David Friedman's local and state taxes alone top 20% of his income. The annual local government
"theft" rate is lower in most of the country. Perhaps even a move to a rural part of David
Friedman's own state could save a couple percent. A move to Alaska could save all state and local taxes and a move
to Hong Kong would additionally save money on federal taxes. An English-speaking professor with his
ability and name recognition would have no problem getting a good paying job
there. If libertarians believe their
own rhetoric, they should vote with their feet to be consistent with their
morals and to save a large portion of their income. If all productive citizens did it, it would put tremendous
pressure on politicians to lower taxes.
David Friedman must like paying taxes that are above
average because nobody put a gun to his head to make him move to a place with
high local taxes.
10,
11, 12, 13 Me: Again, a social
contract is an arbitrary social construct, but the same thing is true of
property rights or laws.
David Friedman: All laws? You
believe that laws against rape and murder are merely "arbitrary social
constructs?" If so, then if the law were the other way murdering and
raping people would be just fine. Is that your view?
Obviously
everyone is against rape and murder, but everyone has different definitions.
Laws are arbitrary social
constructs. Murder is a good example.
David Friedman carefully chose this example because it is probably the
most universally unambiguous of laws and even one of the Ten Commandments. Yet even here there is a problem with
definition. Is abortion murder? If not, then when exactly does a fetus
become a person? Is suicide murder and
if not, then can someone assist someone else commit suicide? Could a poor single mom sell her liver to a
billionaire with liver sclerosis even though the operation will be suicidal? When is wartime killing justified and when
is it murder? Would it be murder if
someone had been able to strangle Hitler and shorten WWII? How do you separate murder and self
defense? What if a crime victim shoots
a fleeing mugger in the back after all threat is gone? If I kill a panhandler because I incorrectly
think he is pulling a gun is that murder?
What if someone is temporarily insane?
If a drunk drives over ten people in a stupor is that murder? In some cultures groups of people get
together and shoot guns straight up in the air at New Year celebrations. When one of the shooters gets killed by a
bullet coming back down, is it murder and who gets the blame? If a parent withholds lifesaving medical
treatment from their child is that murder?
Does is matter if they do it for religious reasons? How about when parents withhold water and
food (which are the private property of the parents over which the child has no
God-given property rights) until a child dies?
Even
if David Friedman believes that he knows the perfect natural definition of
murder, it is much, much harder to come up with a perfect, natural method of
enforcement. Who can do it? Who decides
what evidence of guilt is sufficient and what punishment should be used? All of these arbitrary social constructs are
different in every society. Even
considering the most clear-cut kind of laws like those against murder, there is
still an important role for government to define the crime and the method of
justice. These are arbitrary social
constructs. You cannot morally justify
a binding legal definition of murder and a system of justice that deals with it
without creating the kind of moral framework (like a social contract) that can
also justify taxation.
Me: If you copy CDs and freely
distribute them at your own expense to the poor (who probably would not buy
them anyway) MEN WITH GUNS will initiate force and put you in jail. Why do
libertarians get more excited about tax law than copyright or other laws?
David Friedman: Why is it that,
when your argument is about "other laws," you conveniently choose
intellectual property laws for your example--a category of law that many people
do not find morally persuasive.
I
chose intellectual property because it is a property right and libertarians
like to talk about property rights. It
is also an excellent illustration of how arbitrary property rights are. However, even the property rights for land
are arbitrary. I gave some examples in my previous essay, but here are some
more: Is it a private-property right to
put landmines on the perimeter of private land to keep out wandering
neighbors? Is there a right to freedom
of expression on private property even if it is so loud that it keeps the
neighbors awake? If I die with neither
heirs nor a will, who should get my property rights? If someone squats on a property for 50 years without permission,
builds a house and makes large improvements (like a stone house), can the
"owner" suddenly claim 50 years of past rent or bulldoze the house or
does the property now belong to the squatter?
etc. etc.
It
is interesting that David Friedman objects to my use of intellectual property
as an example even though having them can clearly increase economic
efficiency. Few TV programs or
medicines would be made without intellectual property rights.
David Friedman: You could have made
your argument just as well by starting out "if you go around murdering
men, raping women, and torturing children to death, MEN WITH GUNS will ...
." Why didn't you? You might want to think about the question, in order to
decide whether you really believe the arguments you are making.
If
David Friedman is suggesting that government intervention in the private
murder, rape, and torture markets is justified, then I agree as does nearly
everyone. I did not select to use
murder, rape, and torture in my example because they are such obvious arenas
for government intervention. Even many
libertarians accept that role for government.
14. MH: Some libertarians make a big deal about needing to
actually sign a contract. Take them to a restaurant and see if they think it
ethical to walk out without paying because they didn't sign anything.
David Friedman: The act by which one agrees to an implicit contract is an act
that the other party has the right to control
Me: David Friedman's assertion
makes no sense. In any contract, both parties must agree. Thus with an implicit
contract, David Friedman is arguing that both parties must have the right to
control the act. In the case of the restaurant, who has the right to control
whether food is exchanged for money?
David Friedman: Both parties have the right to veto the act, neither has
the right to insist on it
Then,
going back to the original analogy, both government and citizens have to right
to veto whether they exchange government services for taxation. In this case, because government services
are mainly public goods, the only way to restrict service is to remove people
from the premises. Thus, David Friedman
would seem to argue that both government and citizens have the right to leave
or to be forced out. This does not seem
workable to me. Of course, in reality,
US government action against tax cheats is much more mild. The government generally does the kinds of
things that a private restaurant might do to collect a large bill such as
garnish wages.
15. David Friedman: So far as the
claim that without "territorial rights" there is no way to have law,
that's absurd. The Law Merchant arose without territorial rights, as did the
law of the sea. There are lots of historical examples of societies where what
law applies to a dispute is determined, at least in part, by something other
than what territory the dispute occurred in--including ours.
Even
though the "Law of the Sea" contains the word "law," it is
really more like an international treaty and one that is interpreted and
enforced very differently depending on what national territory you are in (or
near). However, even treaties are
impossible without territorial rights.
UN conventions like the Law of the Sea are only created by nations that
have clear territorial rights. The UN does not admit members that have no
territorial rights. This is a
particularly ironic example for David Friedman to use to explain the
irrelevance of territorial rights because a large part of the Law of the Sea is
merely to agree to extend national territorial rights farther out into the sea
than they had been before. I am
unfamiliar with "The Law Merchant".
Is that a person or a bookstore or a treaty or what?
However,
even if a libertarian society could figure out a way to have binding laws
without any territorial jurisdictions, one could not create the sort of legal
system which underpins most of the US economy.
Advanced markets depend on very specific laws to reduce transaction
costs. Without the ability to have
clearly defined laws within a territory there will be no stock market, no mass
market for credit and no insurance market to name a few examples. Again David Friedman would clearly have to
give up much efficiency without territorial rights.
David Friedman: Do you believe in
government run agriculture? If, as I assume, the answer is no, does that mean
that you want to create a society where everyone has to grow his own food?
Do
you believe in market produced automobiles and aircraft? If, as I assume, the
answer is no, does that mean that you want to create a society where everyone
has to work independent of any supervisor or organization and sell piecemeal
services on the open market? Why are
command-and-control bureaucracies better at coordinating the production of
aircraft than markets? The vast
majority of people work for a boss who tells them (to some extent) when to
work, what to produce, how much to produce and how to produce it. Very few people's work is coordinated by the
free market as grain farmers are. Why
is it that markets actually produce so few things and hierarchical corporate
organizations produce so many?
Internally, corporations function in a way that is much more similar to
a communist bureaucracy than to a market.
You may reply that corporations are disciplined by the market, but then
so are governments.
David
Friedman’s question is ironic because David Friedman seems to overlook that
there would now be much more starvation in the world without the intense
government intervention in agriculture that produced the Green Revolution. Perfect competition conspicuously lacks an
abundance of examples in the real world, but agriculture fits the bill as
closely as anything. David Friedman
selected this textbook example of perfect competition because it is the most
efficient sort of market. However, the
efficiency of perfect competition is very short term. In perfect competition, there is very little
incentive for any single producer to invest in researching new technologies
that will increase production. Most
agricultural research is extremely expensive and beyond the means of any single
grain farmer, so they do not do it. One
farmer cannot ever reap enough future profit to recoup the huge
investment. Governments have remedied
this situation first by using public money to directly fund public agricultural
research and second by creating intellectual property laws (which David
Friedman complains are not “morally persuasive”) to create incentives for large
corporations to invest in certain kinds of patentable research. Without patents, any increase in
productivity could be instantly copied and immediately becomes worthless to the
innovator under perfect competition.
Some
of the earliest central governments evolved to manage irrigation canal
systems. Even in prehistoric times
government intervention in agriculture could make it many times more productive
by managing water systems.
16. David Friedman: Your second claim is that governments produce mostly public goods
for the benefit of all citizens. You asked me to provide support for the claim
that governments in the past century killed more people than private
individuals--a statement that is true with a safety margin of well over an
order of magnitude.
If
you actually read what I wrote in my original essay, I did not ask for support
of David Friedman's claim. To the
contrary, I demonstrated that David Friedman's claim is pointless. The question I actually asked was "Do
democracies kill more citizens than private murders?" which David Friedman
has not provided support for.
David Friedman: Would you like to
provide support for your confident claim about what government produces and who
benefits?
In
my previous essay I asked David Friedman to provide support for essentially the
same thing, but he ignored the request.
He claimed that "it is hard to justify anything approaching the
current level of government on that [externalities and the like]
basis". This claim is essentially
the exact opposite of mine because “externalities and the like” are essentially
the same thing as public goods. Because
I was the first to request an estimation of the value of externalities and the
like, I will again request David Friedman to proceed with this difficult
exercise although it is impossible to do with any precision.
David Friedman: Governments quite
routinely do things--the farm program and all tariffs come immediately to
mind--that injure most citizens.
I
agree with this, but in the absence of government, private individuals
routinely do things that injure most citizens too. Pollution, over exploitation of natural resources, poor
sanitation and public health, marketing cigarettes to children, come
immediately to mind. Democratic
government is probably the worst possible way to organize society, except for
the alternatives.
17. David Friedman: Schooling is the
largest single expenditure of U.S. governments--and it is a private good in the
ordinary sense of the word. The private sector quite routinely makes a profit
providing public goods--consider radio and television broadcasts, which unlike
schooling really are pure public goods.
Schooling
has huge positive externalities. Those
externalities are a public good.
Increasing education lowers the crime rate, increases the effectiveness
of democracy, and increases productivity growth and living standard of the
country. Public funding of education is
probably the best long-run poverty prevention program ever invented. Nobody can draw a line to show how much of
education is a public good and how much is a private good, but without publicly
funded education, there would be vast under-investment in education because
private individuals would not take the huge externalities into account. Anything that reduces educational levels
will reduce economic growth and productivity for everyone in the economy.
David
Friedman implies that radio and television are examples of public goods that
could be produced in a libertarian society without government. However, the airwaves that TV and radio
require are private goods and without government defined and enforced broadcast
frequency restrictions, the airwaves would be a cacophony and in all the major
markets (cities) there might not be anything to listen to at all. Without government defined and enforced
intellectual property rights, (almost) nobody would produce TV shows. On top of that, these public goods are paid
for by a public bad: advertising. Advertising
has its good points, but it also distorts markets giving companies market power
to influence prices which decreases efficiency. It is not absolutely clear that advertiser-funded TV and radio
are really net public goods nor that they could be provided better in the
absence of government.
David Friedman: If public goods are
produced at suboptimal quantity or quality, people are on net poorer than they
would be if public goods were produced in optimal quantity and quality, all
else being equal. But to get from that to "therefore government should
produce all goods that the market underproduces" you need at least one
further step--an argument to show that the political marketplace will actually
yield production at optimal quantity and quality. No such argument exists.
There
is no need to produce the optimal amount.
You only have to do better than the market. Think about catalytic converters on cars for example. Are we better off with them or without? It is clear to most people how to improve on
the laissez-faire market outcome in this example. It is much harder to know if we have the optimal amount of air pollution or lead in the environment, but we
do not need to know. We can make an
improvement over pure laissez-fair markets by correcting some of the market
failure even if we do not correct all of it.
Similarly, few if any real-life markets produce output at the
theoretical optimal quantity, but that does not mean that markets are bad.
Me: Unfortunately, whenever
there are laws created by humans, some of it will be bad regulation. A
libertarian government will not change that. American citizens will always have
to be vigilant to put pressure on lawmakers to change laws regardless of how
big or small the government is.
David Friedman: My libertarian society will change that,
because it won't have a government to make bad regulations.
Is
it any wonder why people think libertarians are utopian? I will repeat my suggestion to first
experiment on your own family. If that
works, then try it with a small band of people. You could live apart from society like the Amish or pool
libertarian money and buy an autonomous free-trade zone within a country or
even set up an independent economy on board a cruise ship in international
waters. That way if your society
implodes, only voluntary participants will get burned and not innocent
bystanders. If it works as well as you
seem to think, it will be like the shot heard around the world. Everyone will want to emulate it and there
will be revolutions everywhere. The
world is waiting to see any working example of libertarianism.
David Friedman: Or in other words,
I am offering a theory of what government will do, you are offering pious hopes
inconsistent with what we know of human behavior.
Actually,
I also offered a theory of what democratic and other government does which is
based on the work of Mancur Olson. I
don't know how it is any more pious than libertarian ideology (theology?). There are numerous examples where government
is working pretty well even despite all the inevitable imperfections. There are no examples of libertarian anarchy
working better. But I sincerely pray to
God and beseech Him to divinely bring it to pass according to His market-loving
will.
18
19 Me: Many of the services that government provided in the 19th century,
such as defense, education, and public health, have become much more expensive
relative to other sectors of the economy…
David Friedman: Why is it that government
activities become selectively more expensive to produce--by a factor of nearly
four…
Private health care and private
education (if America's huge private university system is any indication) have
increased by more than a factor of four in the past century, so government
expenditures can be seen as a bargain in comparison. My other example, Defense, can't be compared to a private sector
equivalent, but it is easy to see why it is also many times more expensive
because quality has changed so much.
Today soldiers are volunteers who are paid better than the draftees of
the 19th century and today's soldiers are also more expensive
because they are better educated and get better healthcare. Secondly, defense is many times more capital
intensive today than a century ago.
David Friedman: How come none of
these services exhibit economies of scale? Wouldn't you think that, as they
became relatively more expensive, we would substitute away from them? Don't you
detect a faint whiff of special pleading?
Could
the answer be that government SERVICES are generally part of the SERVICE
sector? Wouldn't you think that as
private services became relatively more expensive, we would substitute away
from them? Why is it that the private
service sector has seen very little increase in productivity over the years and
yet that sector continues to expand its proportion of the economy? Manufacturing and agriculture have seen huge
increases in productivity, but their share of the economy has plummeted over
the past century. There is no special
pleading. The same mechanisms are
happening in government as in the private sector.
20 David Friedman: But if you actually read what I said, instead of inventing claims
to refute, you might notice that I didn't say or imply that most economists
were libertarians.
But
if David Friedman actually read what
I said, instead of inventing claims
to refute, David Friedman might
notice that I didn't say or imply that he
said that most economists were libertarians. I have no idea where he gets such umbrage. I merely gave an example to demonstrate that
most economists clearly recognize the flaws of popular libertarianism and the
neo-economics that they espouse.
David Friedman: I merely said that standard neoclassical economics solved
one of the problems that Mike raised with libertarianism--the problem of how
individuals can live "as if they are the only human in the universe"
when they are actually part of a complicated interdependent society.
Completely
untrue. Economics has not solved this
except under very specific idealized conditions that are exceedingly rare in
the real world. Standard neoclassical economics recognizes that there are many
externalities, price fixers, problems with incentive for investment, transactions
costs and other market failures that can be improved on by government.
Me: I checked David Friedman's
link to his textbook chapter on efficiency and found it conveniently omits
several preconditions to efficiency which other, less ideological, textbooks do
not. Not everyone are price takers, there are transaction costs, and there are
externalities.
David
Friedman points out that he did mention that price takers are a pre-requisite
of efficiency and then says:
David Friedman: If you are going to
make statements about books, even chapters, it is useful to first read
them. You will find transaction costs
and externalities in Chapter 18.
I
apologize for overlooking David Friedman's inclusion of price takers as a
pre-requisite, but the other two equally needed pre-requisites are indeed
missing even though they do happen to be mentioned separately in a different
chapter (chapter 18) without any
connection to efficiency. It is as if a
physics textbook proves that lead balls and ostrich feathers fall at the same
rate, but neglects to mention that the proof only works in a vacuum. Just because there is a separate chapter on
vacuum theory with absolutely no connection to the proof does not make the
proof honest.
25. David Friedman: I certainly don't deny that there are some checks on the excesses of government--if there weren't we would be a lot nearer starvation than we are.
As
I pointed out before (in #15), without massive government intervention in
agriculture (which is a textbook example of markets working at their best:
perfect competition) we would indeed be nearer to starvation than we are. By contrast, no functioning mass democracy
has ever faced starvation among citizens with voting rights.
David Friedman: But you are
jumping from the claim that government isn't infinitely evil, which is true, to
the conclusion that government will predictably tend to exercise its power in a
fashion that on net increases economic efficiency. And the comparision here is
not "government versus bandit gangs" but "government vs
laissez-faire"--
I
am only drawing conclusions by looking at concrete examples that actually
exist. No examples of anarchy or libertarianism have ever existed that are more
economically efficient than societies with democratic government. In fact, anarchy tends to be characterized
by bandit gangs except sometimes when the population is small, homogenous and
isolated. So, in the real world today,
the comparison really is
"government versus bandit gangs".
All successful examples of so-called "laissez-faire" economies
existed within the relatively safe environment of strong government.
Me: ...The incentive for the ruler of the government is self-interest to maximize long term revenue by maximizing economic growth.
David Friedman: That might work for an immortal absolute ruler, assuming he was competent, but that isn't the system we are describing. In our system, political actors have insecure property rights in their political power,
No
need to be immortal. The
"long-term" incentives mostly occur within a ten or twenty year time
horizon depending on the investment in question. Democracy can be seen as a dictatorship of the majority and the
majority has been in power much longer than that. To begin understanding the dynamics, you could get an
introduction by reading, Power and Prosperity by Mancur Olson.
There
is still a principle agent problem for government. However, this is a problem with any social organization. Many corporations like Enron have had
dramatic difficulties getting the management to maximize profits for the owners
because the management is always tempted to siphon off whatever they can get
for themselves.
David Friedman: Besides, even if
the rest of your argument were true, you are confusing maximizing tax revenue
with maximizing human welfare. Suppose there is some public good which benefits
people not by increasing their future output but by increasing their present
happiness. Happiness isn't taxable, so why should your hypothetical ruler
bother to spend a penny producing it? Wouldn't his optimal policy be to impose
the revenue maximizing tax rate on it?
Why
criticize taxation for not optimizing happiness when no economic system
optimizes happiness? Happiness is not
optimized by taxation, but it is not maximized by markets either. If it were,
markets would have to redistribute income from wealthy people who the people
who get the least additional happiness from an additional dollar. A homeless person would be a lot happier to
find a dollar on the sidewalk than Bill Gates would be. Thus it is possible to increase happiness
above the market outcome by the government redistribution of a dollar from Bill
Gates to a homeless person.
Actually
governments do spend taxes on goods that directly produce happiness rather than
only productivity although it is surprising that David Friedman pines for this
because most libertarians criticize this function of government. A hypothetical dictator will spend tax
revenues on increasing his own happiness.
A hypothetical dictatorship of the majority (democracy) will spend tax revenues
on increasing its own happiness. The extent that power is shared in a democracy
will determine how the political process distributes these happiness-producing
public goods. Democracies make
happiness-producing expenditures, but they are usually criticized by
libertarians for being useless or worse: national parks, NPR, fireworks
displays, trees along streets, etc. It
seems odd that David Friedman would seem to fault our government for not making
more of them.
Government
is inevitable in today's interconnected world.
The most important criteria in evaluating government is its efficiency
at producing public goods and the distribution of power within the
society. Generally, the more broadly
power is distributed, the better the provision of public goods for providing
happiness for the citizens.
27. Me: Even if you accept David Friedman's
nostalgic version of history, David Friedman doesn't give any "real
world" examples [of libertarian societies] that are more recent than the
19th century.
David Friedman: Hong Kong is quite
a bit more recent. The U.S. has mostly private radio and television
broadcasting; the U.K. for a long time had only public. The U.S. had private
monopoly phone systems; European countries had government phone systems.
I
would think the people of Hong Kong, the U.S. broadcasting industry, and the US
telephone industry would be just as surprised as most of the people who fought
to end slavery that David Friedman thinks they are somehow libertarian. None of these examples of "libertarianism"
demonstrate that modern society can survive without strong government or
taxation. It is ironic that the two
American industries that David Friedman selects as examples of libertarianism are
two of the most heavily regulated industries in America. If Hong Kong is the best example of a
libertarian society since the 19th century, then I guess I can't
complain too much about how unrealistic libertarian visions are. I am especially fond of Hong Kong's
efficient government-provided health care which charged me only a negligible
fee when I required hospital care for a bicycle accident in China. Hong Kong guarantees medical care without
regard to ability to pay. It is a bit
odd that the libertarian Hong Kong government owns all land in the country
(except a little church property) and everyone must lease from the
government. It would be nice if the
world’s best example of libertarianism was more democratic and was not a part
of a communist country, but the people of Hong Kong are not suffering by world
standards and have a pretty effective government. Hong Kong's strict gun control helps keep murder rates extremely
low (and what little there is often is merely internecine gang fighting). Hong Kong has decent environmental
regulations and spends a lot of tax money on public education and cheap public
transportation. Off hand, I can't think
of any major area of government involvement that it lacks, so I guess modern
libertarianism is not so bad. Still, if
I had to pick an Asian city-state to live in, I find Singapore more pleasant
and it is just as prosperous.
David Friedman: As to my
"nostalgic view of history," I believe that all of my historical
articles are available on my web page. Perhaps you could point out the
"nostalgic" bits.
I
was not referring to all of David Friedman's articles. I have not even seen most of them. I was
only referring to his one web page that I was critiquing and it has an oddly
nostalgic perspective. It is nostalgic
to only give examples from past centuries when making prescriptions for a brave
new future world. Most futurists
extrapolate from the present, not the distant past. One nostalgic bit claimed that libertarianism can be attributed
with "most of the progress of the 19th century, some of it reversed in the
20th." Without having
some serious nostalgia, it is hard to find a major area of human well-being in
the 19th century that was reversed during the 20th
century and it is easy to find numerous examples of 20th century
progress that surpass the 19th century.
Me: As I said before, we
libertarian-skeptics are waiting for some brave libertarians to put their money
where their mouth is and start creating a small libertarian community.
David Friedman: There have been a
number of attempts along those lines.
Really? How interesting. Why aren't they widely respected as models for how to organize
society? Did they fail spectacularly or
why aren't any libertarians boasting about their achievements?
David Friedman: The problem is that
existing governments are very reluctant to sell property along with
sovereignty--…
History
is full of examples of countries selling territory along with sovereignty. Why can't libertarians do it? Sounds like
special pleading to me. How is this
sort of market failure possible with about 200 potential producers? There is no monopoly on sovereign land and
there are a lot of poor countries that would like some cash.
David Friedman:…and if they do, it is difficult to prevent them from
reneging on the deal.
More
special pleading. It is always
difficult to prevent other countries (or businesses or individuals) from
reneging on deals. That is why a
sovereign libertarian country would have to have a defense strategy just like
anybody else.
Me: Much popular libertarian
rhetoric is a subtle revolutionary call to arms.
David Friedman: Much liberal
rhetoric is, in the same sense, a subtle justification for poor people mugging
rich people. In both cases, the fact that the rhetoric can be used that way
tells us very little about whether the underlying arguments are true or false.
However,
liberal rhetoric is not a revolutionary call to arms. To the contrary, it is a part of the democratic process. Rich and poor will inevitably vie for
influence within the democratic system and I encourage libertarians to do so
too. However, popular libertarianism
says that taxation is the initiation of violent force via men with guns on
innocent people and since only the initiation
of force is wrong, logically, a violent response is justified. It gets more chilling when you also consider
libertarian enthusiasm for the right to bear arms without any
restrictions. Pretty soon I might start
hearing that, "If [anthrax] is outlawed, only outlaws will have
[anthrax]." David Friedman might
abhor violence, but popular libertarian rhetoric is full of justifications for
it.
In
any case, it is impossible to prove whether the poor are using government to
mug the rich or if the rich are using government to mug the poor. In the current US conditions, I would tend
to make the second argument.