Why I Am Not A Libertarian

Recently, there appears (and ‘appears’ is the word – it’s almost certainly an artefact of looking over a few blogs and reading more into tone than into content, but this is something that has been remarked on by people other than myself) to have been an influx into the Liberal Democrats of Libertarians. This is typified by the members of ‘Liberal Vision‘, which is in turn part of a Tory organisation called ‘progressive voice’ (essentially a bunch of Objectivists).

Now, in many ways I agree with libertarians on many subjects – which is, of course, why we can be in the same party – I am all for more personal freedom, for a lack of government interference in people’s lives, for the restoration of recently-lost civil liberties and so on. But libertarians seem, to me, to have two big holes in their thinking, both of which are summed up by some recent comments by ‘Nick’ in this thread on Liberal Conspiracy (scroll down).

‘Nick’ may or may not be a self-described libertarian (or indeed liberal) but he’s following the libertarian ‘party line’ almost exactly. The government should not interfere with the workings of the market when companies are failing. Not only should they not spend any money bailing out the companies (a reasonable, debatable position) or on retraining the workers so they can get jobs elsewhere (a much less reasonable position in my view) – they should not even pay unemployment benefit to the people who lose their jobs, because the money would be better allocated by the market.

Now, there are two distinct errors here. The first, and less important, is the one that pretty much every ‘free market’ advocating politician of whatever stripe for the last thirty years has fallen into – the belief that markets will always guarantee the most efficient allocation of resources.

People who know a little about economics can fall into this trap, because free-market economists define ‘efficiency’, tautologically, as the state where everyone has the maximum possible without anyone else having any of their property taken from them – in other words, as ‘that state which a market will produce’.

However, ‘efficiency’ in this context is merely a local optimum, not an overall optimum. As an example, suppose that you, O Hypothetical Reader, have a pound – a whole shiny pound all to yourself. And I have nothing. Now, assuming you don’t want to just give me your money, that’s the most efficient distribution of the money possible.

But suppose that, while you don’t want to give me your money, you were forced to, and I invested the money and made ten pounds, of which I was forced to give you five. Instantly, we have *both* benefited, substantially, even though this is ‘less efficient’ in market terms.

Now, in this hypothetical situation, you would of course either just give me the money or invest it yourself. But in a real life situation involving billions of pounds in the pockets of millions of people, it can’t be guaranteed that the equivalent would happen.

A market is a very good way of ensuring, not that the economy always gets more efficient or runs at peak efficiency, for the common understanding of the word efficiency as opposed to the economists’ understanding, but rather that the economy *always moves into the most efficient adjacent position in the economic phase space*. These are very similar things, but they can be crucially different.

As an analogy (appropriately Newtonian for today) imagine a ball rolling downhill. Now, normally, that ball will continue down until it reaches the bottom of the hill (a state of maximum gravitational efficiency). But imagine a little dip in the hill halfway down. The ball rests there, because to go any further down it would first have to go up.

That kind of situation, economically, is when it makes sense for government intervention. Sometimes a mass of people acting independently do not come up with the most efficient solution, and a change, even an arbitrary one, needs to be made to free the ball from the rut. As an example, we need laws stating that you should only drive on one side of the road. The choice of which side is arbitrary, but not having those laws would cause infinitely more problems than the tiny amount of personal freedom given up.

I think the main defining characteristic of a liberal – as opposed to a libertarian – is that a liberal recognises the need for such measures but thinks they should be as few and as minimal as possible.

However, I have left the more important error to last, which is simply this – who says ‘efficiency’ of whatever kind is the thing we need most? For a long time the right have predetermined the terms of the debate by talking about ‘economic efficiency’ and ‘modernisation’. These are probably good things, overall, but are they the be-all and end-all? I think not.

Libertarians almost all seem to believe that they have achieved everything in life entirely by themselves, having struggled against mighty odds and overwhelming enemies to become moderately successful computer programmers, despite the horrible disadvantages of being born white, English-speaking heterosexual males in middle-class families. Their thought is ultimately a selfish one – “I did this, so anyone else can, and I had no help so I won’t help anyone else”.

I, on the other hand, have experienced poverty. I’ve never been at the lowest possible point, but the few months when I had to support my now-wife and myself on one person’s benefits were unpleasant, to say the least. So now I’m in a position where I’m working for a well-known company, earning a good income, doing a job I enjoy, I feel not only an obligation to society to pay back what I’ve taken (for I couldn’t have got this job without help both from individuals and from government institutions), but 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…

PEOPLE are inefficient, messy things. There is no possible rational justification for supporting the continued existence of the human race, let alone helping individual members of it. But anyone who would gladly see tens of thousands of people jobless and with no source of income, either in the name of keeping a few extra pence a week in their own pocket or in the name of a heartless ‘efficiency’ has so little compassion in their heart, so little empathy, that I can’t even begin to imagine a common frame of reference for discussion, despite many surface similarities in our philosophies.

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18 Responses to Why I Am Not A Libertarian

  1. Nick says:

    Andrew – an interesting and full response to our brief discussion. Note a couple of points however:

    1. I never said I would remove ordinary unemployment benefits.

    Why?

    Because people have a legitimate expectation that they are eligible for unemployment in the case of them losing their jobs. If they had not, they would more than likely have entered into a social insurance scheme, insuring themselves against unemployment. But because the government has demanded so much of their money while they were employed and promised to look after them, they have not make any significant provision for themselves. it would be utterly heartless to withdraw or significantly reduce it now. I may disagree with the structure, perhaps even the principle, of welfare benefits in general but I can understand that you need continuity.

    2. Your ball example is interesting but it doesn’t quite fit what an economy faces. If a ball has hit a rut, an external force can certainly move it out. But in the analogy, the government has NO external force to use on the economy. It is part of the ball, and stuck in it with everyone else! It cannot be the deus ex machina to lift us out. In the best of circumstances, it could only shift the weight of the ball around a bit, hoping to develop some momentum to leave the rut.

    That is certainly not impossible. I am just saying in the last thread that it is very unlikely because government will tend to mispend the money it acquires (it certainly doesn’t have much business demanding more while its still devoting so much funding to foreign wars of dubious justification and constructing unnecessary and unjust projects for domestic surveillance). What you denigrate as the few extra pennies in people’s pockets (as if once they are in private hands, they are outside the economy), I think might be very important for co-ordinating a response, whether its through spending or savings invested in banks. I think already posted this video in the last thread but it is worth repeating: http://www.classicalvalues.com/archives/2008/12/stimu_lust_pack.html

    I suppose on one level, Libertarians just take a more realist position on the state. Just because it has an announced agency, doesn’t mean it is an especially good moral agent – in many ways it acts much worse than any other participant in society. We cannot realistically delegate our moral response to recession to the state (although it is certainly more than happy to take on the extra ‘responsibility’). We have to decide what we can do to help people (and ourselves) for ourselves. And the use of coercive interventions (for that is the state’s sine qua non) doesn’t suddenly sanctify an act, and make it more likely to be effective.

  2. Andrew Hickey says:

    Nick, my apologies for reading slightly more into your responses than you actually said. I did, however, specifically raise the question of unemployment benefit, when pointing out that the state would definitely be spending money anyway – possibly as much money as it would on a bailout or retraining – on unemployment benefit. Your response (that the government should not spend any taxpayer’s money at all on the situation) led me to believe you were saying that even the unemployment benefits should not be paid.

    The state is external to a ‘free market’ economy in that it does not (or should not) act to maximise its own gain…

  3. Dave Page says:

    There’s a quote I heard, but can’t find a reliable source for, which says “The market where possible, the state where necessary”. This seems to be a fairly sensible way of doing things.

  4. Wish I’d heard that quote before writing the above – it would have saved a lot of time ;)

  5. Nick says:

    Well everyone from classical liberals to socialists endorse that division of labour but it doesn’t really answer any substantive question. The point of contention is what “necessary” means and exactly what the market has to offer. If, as classical liberals would argue, institutions of strong property rights protected against expropriation, are the necessary and sufficient conditions for generating any level of prosperity beyond subsistence, then it means that economic state intervention (whether justified or not) are always parasitic off the existence of a stable system of laws.

    Consider why people think money has ANY value whatsoever. It is because people imagine that money can be possessed over time and that it can be fairly easily transformed into whatever someone wants or needs. Economic intervention, when you either directly or indirectly expropriate people of what they thought was their property doesn’t merely redistribute wealth – it destroys it in so far as it damages money’s use as a token of value. Whoever ends up with the money hasn’t got something as useful as it was before because anyone receiving it doesn’t know what the chances are of it being taken in part from them again. The result is that even the beneficiaries of state intervention are merely receiving a larger share of something rapidly diminishing in value.

    This is why the sort of ad hoc interventions that are becoming so popular are the most dangerous. At least a stable tax rate can be factored into an economic decision. But ‘pump priming’ or whatever else the government tries cannot really because it is unexpected and where the costs are going to appear is quite unpredictable.

  6. Hexar says:

    It’s a bit weirder over here in that the social libertarians tend to be left leaning (given a USAian value for “left”) while the economic libertarians are fighting with the social conservatives for control of the currently anemic Republican party.

    I supported the US Libertarians in every election from 1994 to 2004 due to dissatisfaction with both major parties and because I perceived a need for movement in the area of individual liberties. Economic libertarianism suffers from the same problem as classical Marxist communism. Neither factor human nature into their models. If anyone still questions the effects of deregulation on an economic model (I’ve yet to see where there is much else to economic libertarianism), we’re looking at the results right now.

    Economic libertarians (USAian variety; YMMV) also seem by and large unable to come to terms with the idea of compromise. The purpose of the government is to enforce the social contract; and to help those who are unable to help themselves. This seems utterly antithetical to the Randian viewpoint that most self-proclaimed libertarians hold, but the reason that economic libertarianism isn’t more than a theory is that the losers in such a system so vastly outnumber the winners.

    The “winners” in a mixed economy tend to be inconvenienced by taxation, but the losers are far better off than they would be under any system I’ve ever heard advocated by economic libertarians.

  7. Nick says:

    Few libertarians are also Randians. In absolute terms, even what you term ‘losers’ can be better off under economic libertarianism, as even they can have much more spending power than under more compromised system. In relative terms, they might well not be – plenty of people will have more wealth than them, but in a free society that need not mean so much. Compared with life in previous generations or in less free societies, even people as rich as Bill Gates or Warren Buffet live lives surprisingly similar to you or me. Tom Palmer explained this brilliantly at a recent Oxford Libertarian Society talk: http://oxlib.blogspot.com/2008/12/tom-palmers-talk.html

    Andrew, if you study for a diploma at Oxford, it would be great if you wanted to drop by some of the discussions next term.

  8. I’m afraid I actually studied (past tense) there – the course finished a couple of months back – and I was also doing a distance learning course (I’m based in Manchester).
    Sorry I can’t take part more in these discussions today – we’re at my in-laws’ house in the states, on dial-up, and we’re packing for our flight tonight….

  9. Hexar says:

    I don’t know what percentage of people who identify as libertarians do so from a Randian philosophy. I do know that the most vocal libertarians that I have encountered tend to identify very strongly with Ayn Rand’s philosophy.

    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.

  10. Nick says:

    I think this is simply untrue. In a free market, you wouldn’t have lead in toys, tainted food or ponzi schemes because no one would buy into these sort of products. So long as people have the choice to buy or not to buy and people can develop their reputations, there would be too many better choices available.

    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.

  11. Hexar says:

    In an idealized free market perhaps people would be given all of the information that would allow them to find out which products are being shipped into their local markets with lead or melamine. In the sort of free market which tends to occur in real life, news outlets are afraid of biting the hand that buys advertising. Time after time, manufacturers have shown a willingness to put out shoddy goods for a short term profit rather than think about the long term.

    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.

  12. Nick says:

    It is a really weird idea that people could do well under any system by killing their customers! I mean before long you won’t have any. In fact, the only way agency that can do that is the government and agencies that are given license by the government. I am not saying that you won’t see occasional abhorrent behaviours within a system of market anarchy, only that the cure is far worse than the disease. It is like saying “well we have a problem with a few muggers on the streets and fraudsters in the market so we are each going to give a crazed psychopath the right to tell everyone what to do (he’ll have to take our votes into account when he makes decisions, don’t worry he has promised to maintain this system); he’ll sort out all these devilish criminals for us”. In comparison to government, anarchy is actually pretty pragmatic, and I would even hazard that in so far as a society’s government is contested and alternative frameworks for resolving disputes exist, society tends to be better off.

    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.

  13. Dan says:

    Argh sorry, the formatting of that messed up entirely – here’s what I meant to say, in the right order (can you delete the first one?):

    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).

  14. Hexar says:

    It’s also weird that a man who said that, “In today’s regulatory environment, it’s virtually impossible to violate rules … but it’s impossible for a violation to go undetected, certainly not for a considerable period of time,” would go on to be busted for the largest Ponzi scheme ever. People do weird things for money.

    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.

  15. pillock says:

    “In a free market, you wouldn’t have lead in toys, tainted food or ponzi schemes because no one would buy into these sort of products. So long as people have the choice to buy or not to buy and people can develop their reputations, there would be too many better choices available.”

    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.

  16. Nick says:

    “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.”

    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?

  17. Hexar says:

    But you seem to expect that somehow the market will sort out any problems that we have with business, I don’t see that working. Historically, that path ends with whatever the current equivalents of railroad barons turn out to be.

    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.

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