More on Libertarianism
by David Deutsch
Some weeks ago I wrote an article called “A Nation of Toll Roads: Why Libertarianism Can Never Work.” In it I highlighted the shortcomings of libertarianism, noting that it presents a compelling yet ultimately impractical and impossible economic theory.
The article got picked up by a libertarian blog, who determined that I am “completely fucking clueless” and said my political beliefs were somehow akin to “initiating violence against” people, or something.
While I am unable to refute every comment made, I’d like to respond by explaining what free markets are, and what they aren’t, to address the underlying complaints. By no means am I an expert on economic theory, but I have worked as an international economist and have a BA in econ from the University of Maryland, Baltimore County, so I do have a good understanding of how decentralized markets work, the advantages and shortcomings of decentralized markets, free enterprise and so forth.
Private firms have one, and only one goal: to make as much money as possible. That’s their job. If firms don’t do this, they won’t be in business too long. This profit motive is very powerful and can be a very good thing. In fact, profit maximization is the primary engine which has driven unprecedented global economic growth unmatched in human history. So a lot of good comes from profit maximization.
However, free markets are almost never entirely free, and there are such things as market failures. Many Libertarians seem to have a problem with these concepts, so I will address them here. Let’s start with the idea that free markets are rarely free.
Governments oftentimes help markets in amazing and powerful ways. When President Eisenhower commissioned the creation of the U.S. interstate highway system, he indirectly subsidized the U.S. automotive industry, allowing them to focus on making cars rather than making, repairing and maintaining our national highways. Also, the government standardized power outlets, light bulbs, food safety, national parks—all of which helped fuel private industry in one way or another. Governments also provide local, state and Federal law enforcement infrastructure to help arbitrate disputes and enforce private property rights. Indeed, there can be no such thing as private property without government assistance and enforcement. So governments help private firms in myriad ways, and the idea that private enterprises are completely free is pretty much impossible in the real world.
Now let’s discuss market failures. Market failures occur when the public requires certain things which are not profitable, yet are necessary for a society’s existence. Take the U.S. military: there is no direct profit motive for any one firm to hire and deploy a military force to protect a country, so our government taxes citizens to raise armies. Another good example is our aforementioned legal infrastructure. There is no free market for creating and maintaining a court system, prisons, judges, stenographers, bailiffs, etc. Because of this, government provides these to act as an interpreter of the law.
There are many examples of market failures, but for the sake of brevity, I will re-argue that national roads are a market failure, thus requiring that government step in. As I stated earlier, private firms have one and only one goal: maximize profit. And there are really only two possible scenarios by which roads could be privatized:
- One firm has a monopoly on the roads and charges whatever they want and do as many (or as few) repairs as they choose without recourse.
- There are multiple roads going to the same place to foster competition.
These are literally the only two options possible. As you can see, a private market for roads is so impractical it’s not even worth discussing them as viable options.
There was one good rebuttal which came from a friend and was not posted on the original article: the whole point is moot because I was only describing extreme libertarianism and not mainstream libertarians. In essence, my friend argued that my article is a red herring, highlighting only the most extreme elements of libertarianism, which do not necessarily represent its entire spectrum. This is a fair point, but I’d like to rebut it as well.
Every political movement is filled with people who have different ideas. It’s sometimes said that if you debate an issue with five liberals you’ll get ten different opinions. But the vast majority of the feedback I received from this article, my friend notwithstanding, did not make this point. The critics directly challenged me by essentially saying government is an evil and apparently “violent” entity. So perhaps my friend is a minority in that he understands the need for some government more than most libertarians, which is why I believe he falls more into the “small government conservative” camp rather than the libertarian one.
Regardless of the degree to which libertarians disagree with each other, they all seem to agree about the need for less government—except for the parts of the government which directly benefit them. Being anti-government is great, but they openly wonder where the government is during natural and man-made disasters. Very few people would argue that the free market can be trusted to repair New Orleans post-Katrina or post-BP.
Does the government do these things perfectly? By no means. Is there room for improvement? You betcha. Can government be excessively obtrusive? Perhaps. But the classical libertarian alternative—no government at all—is much worse. The Onion once illustrated this point beautifully with their article, “Libertarian Reluctantly Calls Fire Department.” How true this is.
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