I view government as a necessary evil, but still necessary. While government slows growth, it also provides cushion for the crashes. Right now is unlikely to be a good time for any sort of move in the direction of economic libertarianism.

There is no difference between us on that front. Governments are staffed by people too and I don’t expect them to behave properly either and that if we must have them, I want them to be as small as possible. It is not enough to say “people don’t act properly, we need regulation”. How is regulation meant to improve things if its people that enact them?

It’s not really my business, and I don’t want to be mean, so I’ll just say that if you were to investigate that claim carefully I think you would change your mind about making it.

It seems to me that the difference between your outlook and mine is that you seem to expect most people to act properly, and I don’t.

I hope you don’t mind my butting in, but I think there is quite a bit to say about your original post:

1) Your example of the investment (where I am forced to give you my pound so that you can invest it at a profit for both of us) is actually a very illuminating one. The basic point that libertarians make is that in the presence of a possibility such as this, it is all things considered probably best if I am the one who gets to decide. This is for two fundamental reasons: firstly, I am the one who will profit, which means that I am the one with the most incentive to carry the deal out. Secondly, I am the one ‘on the ground’ so to speak, which means that I am far more likely to have the relevant information. Contrast this to with the situation the interfering agent (presumably the government) is in, with neither a personal interest in the matter nor the relevant information to hand.

As you yourself admit, in real life you wouldn’t have to take the pound by force, because (if the deal really was as peachy as you say) I would simply hand it over willingly! If I don’t hand it over willingly, this tells you something about the deal: either I don’t believe it will be profitable, or I don’t trust you, or I think it is too risky, etc etc. Taking the money by force and going ahead with it anyway is in effect saying that you know better than I do about the consequences. And sure, in some circumstances this might even be true – all that libertarians like me say is that as a general rule, people on the ground have a) more incentive to make the best deals for themselves, b) are better informed and c) probably have a better idea about what it is that actually *is* better for them than a remote, external interferer does. (By the way this entire argument is ignoring the immorality of taking someone’s money ‘for his own good’ – which I believe is also true – and just focusing on the bad consequences.)

Of course, you might say (as you apparently do) that markets are flawed, that there are market failures, and that public goods do justify governments spending people’s money for them. I think most reasonable people will agree that public goods in some sense exist. But what is not so obvious is that market failures are worse than government failures. (For this point, I’d highly recommend a talk David Friedman gave at Oxford (http://oxlib.blogspot.com/2008/11/video-of-david-friedmans-talk.html) where he makes exactly this case.) Once you compare imperfect markets with imperfect governments (rather than governments made up of omnipotent, perfectly motivated angels) I think the ‘public goods’ argument has much less purchase.

2) Your example of driving on the left seems to me to be very misguided. Imagine a little thought experiment, that the law saying people have to drive on the left is repealed tomorrow. Do you really think behaviour would chance very much? I mean, would you suddenly say “Fantastic! Now I can drive on the right!” and actually do it? I don’t think so, unless you wanted to end up dead very fast. In fact I think the example is a perfect one of a convention that does *not* rely on the law to be kept in place: once it becomes an equilibrium (and known to be an equilibrium) it is self-enforcing. To put it another way, is there anyone you know who would love to drive on the right hand side but refrains from doing so purely because of the law? I don’t think so.

3) When you say you have a “profound *need* within myself to make sure that no-one else should have to dig around for half an hour to find twenty pence for a pack of custard creme biscuits which will be their only meal of the day” I agree with you, and I think most libertarians (Randians aside, but no-one likes them anyway) do too. Let me be clear about what I believe – I think that people who are morally decent *should* help the needy. What I do not think, though, is that it is morally acceptable to force somebody who is unwilling to do so. Can we look down on them? Sure. Can we socially ostracise them? Definitely. But what I think we can’t do is threaten them with force. And because so many people feel similarly to you and I about not letting people starve, I’m optimistic that in the absence of the knowledge that the state is taking care of things, they’ll do something about it off their own backs. (And don’t even get me started on the fact that government welfare actually corrodes this sort of giving, and the civil society that implements it).

On the currency front, I am not advocating gold or anything. Just free banking. Allow people to issue whatever currency they want and the more stable will be more popular. Of course, I have a feeling that many of those currencies will be backed by something like gold, silver or platinum (perhaps even a basket of commodities), but who can be sure? I am just saying there should be choice.

And why not? In a real libertarian system, all that I have to do is sell these things, make my profit, and when people start dying say, “Well, they didn’t have to buy it!” No repercussions, and I’ve got the cash to lay low for a while and start over again later.

The reason that neither unfettered capitalism nor complete socialism will work is because each of them depend on people doing what is right. People don’t work like that.

And who besides national governments should have a monopoly on legal currency? I don’t want to read too much into what you are saying here, but if you are arguing for a return to the gold standard, that ship has pretty much sailed at this point.

While I agree with you to a point about government managed pension funds, I fail to see where to alternative works out better for the majority of the populace. The recent “market correction” shows that as well as anything could.

How could our current financial system be described as deregulated? Governments have a monopoly on legal currencies and government agencies set their interest rates. It is pretty much the most government regulated part of life as there is. I am pretty sure no one would use these sort of unstable fiat currencies if they had a choice. For now, they don’t. The same goes for the biggest ponzi schemes of them all – our government managed pensions funds: http://www.samizdata.net/blog/archives/2008/12/the_metacontext_1.html

I don’t think we would use them either if he had a choice.

It also seems to me that while the losers in a libertarian setting may have more spending power than in a mixed economy, they also have less recourse against things like lead in toys, tainted food, or Ponzi schemes.

The libertarian economic ideal that less regulation on business is always better is a large part of what caused the current economic crisis. The idea that the market could simply correct itself doesn’t take into account the root problem. In the US, there was no real push for government intervention (from the Treasury side at least) until the commercial paper markets froze up. That isn’t something that was going to correct itself in the near, or probably even in the medium term.