A Defense of libertarianism (and response to Zed, etc.)
In response to the recent slew of articles posted to HN criticizing libertarianism, I have decided to jot down a few points that I think were overlooked.
First, George W. Bush and the Republican party are NOT libertarians. Zed's argument was essentially this, and it's about as logical as declaring that you're going to write an essay about the flaws of vegetarianism and then proceeding to mention a bunch of bad things about pepperoni.
Republicans occasionally use some libertarian rhetoric, but they do not follow it at all. George W. Bush has increased the size of government tremendously, and he's intervened in international affairs and created all kinds of entangling alliances, etc. Libertarians are also strongly opposed to the "family values" rhetoric used mostly by Republicans and by some democrats. Libertarians have been opposed to nearly everything Dubya has done, from No Child Left Behind to the Iraq war to the Treasury's bailout of wall street.
Before we continue, I'd like to recommend two books for those curious about what libertarianism actually is -- Milton Friedman's "Capitalism and Freedom" and David Boaz's "Libertarianism: A Primer". Both articulate a lot of the philosophical and pragmatic aspects. Of course, Atlas Shrugged is interesting for its presentation of a moral argument in favor of capitalism. Notably, it is mainly a critique of crony capitalism, something I think most people would agree is quite different from what capitalism should be.
I've found that many times, people stop at the superficial goal of a government program when determining how they feel about it. Social Security is an example: The idea of everyone paying 1% and then being able to offer everyone basic financial security in old age is not controversial -- I'd say most libertarians would consider it very low on the list of programs that ought to be changed. However may people seem to stop with the program's initial goal and forget about the trends -- increasing costs and increasing retirement age, and no guarantee that the congress (and the public) will support the necessary tax increases needed to keep benefits remotely the same.
So some consider the program "good" because it has a noble end, and others express scepticism because of the various deficiencies.
It's worth noting that if we judged all programs by the nobility of the proposed end, there would be absolutely no reason to think any of them would be successful.
One argument I am quite sympathetic to is that with federalism we get "50 experiments in democracy" to paraphrase the Federalist Papers. Doing a program at the federal level is like using 1 Petri dish, and doing it at the state level is like having 50... which seems more scientific to you?
I'd like to see state legislatures, governors, etc., challenged to come up with creative ways of solving the nation's great problems... this doesn't really happen today. Instead, both parties raise vast sums of money fighting over "wedge issues" that are extremely unlikely to change any time soon. It would take a 2/3 majority to create any of the amendments that the parties promise/refuse, and that's just not likely to happen the way congress is at present. Federalism is a good example of a concept embraced by libertarians -- it respects the basic "engineering" that the legislative process actually is, and recognizes that the first solution may not be the best one. I think it's hard to read the Federalist papers without seeing the whole process as a massive engineering work in progress. So it's just good QA to have a lot of tests running simultaneously.
It's probably not necessary to mention this, but libertarians aren't opposed to regulation, they just try to have a clear-headed view of the actual outcome regulation without getting attached to the stated goal of the regulation. One study that was done by Regulation magazine (affiliated with Cato) showed how an EPA law about polution failed to account for how wind blows pollution between municipalities. ...
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I hate the idea of paternalism and as someone involved in the small business arena I really wish the government out of my way most of the time. However, people affect others. You buying an SUV increases the aggregate demand for gasoline which raises the price of gasoline and so I pay more at the pump because you bought an SUV. Maybe that shouldn't be regulated, maybe it should. You pollute and lower my standard of living. Maybe it should be regulated, maybe it shouldn't.
The problem is where libertarianism typically draws the line. Shooting me: not ok! Investing in risky stocks that destabilize the economy creating a panic that loses millions of jobs and causes enough chaos in my personal life: that's ok (according to the original poster).
I do have a lot of respect for Milton Friedman - in fact, he argued that one of the functions of government was to combat the neighborhood effect of things like pollution. However, most libertarians I know today aren't so keen on things like pigovian taxes to correct differences between marginal social cost and marginal private cost.
And part of this goes down to freedom of choice. Let's say I decide that a fireworks display would get people together watching it, having BBQs, etc. I could get dominion over the most choice seating from the government, but plenty of people would be able to watch for free - a positive externality. So, there is an argument to be made that this should be subsidized because people won't create enough fireworks displays if they have to pay for it themselves since they can't capture the revenue from the benefits because people can freeload. However, not everyone gets to decide for themselves whether they would appreciate this event. Maybe you hate people and don't want to socialize. Either way, it's unfair to take money from you to pay for something that you might not want.
So, there are two issues: first, there's the issue that I don't want people messing up my life too much. So, there should be (in my opinion) limits on how much stupid risk someone should be allowed to take given that those risks often affect other people. You want to destabilize the economy? No, not ok. Second, there's the issue on how much we should be individuals or how much we should be a society when it isn't such a dire situation. Should the government chip some money into a parade? Should the government encourage community? How far should the government go on pollution? I'm sure no libertarian would argue that the government shouldn't regulate dumping nuclear waste into my drinking water, but what about a coal plant, what about CO2 from cars?
Libertarians aren't foolish people. It's just that often times I find myself thinking, "well, that's fine and good for you, but it doesn't scale." Like, it's fine to let someone like Warren Buffet do whatever the hell he wants. He's responsible, stable, and smart. As we've seen recently, even CEOs commanding many millions a year in compensation aren't able to work without a net.
The problem really is that freedom doesn't exist. There's definitely more freedom and less freedom, but freedom doesn't exist. Why? Because your actions affect me. The fact that some geniuses at Citibank and others screwed up makes it harder for me to switch jobs, means raises are going to be nil this year, etc. The freedom they had took away freedom I had. And so it becomes a balancing act and often I get lectures about freedom as if it isn't such a balancing act.
How do you deal with this balancing act? I don't know. It's hard. You want to maximize happiness. This is probably my biggest beef with libertarianism because freedom != happiness even if there is a str...
In other words, if you put toxic waste on your property, that's fine UNLESS it leaks onto someone else's property. So there is no need to open the discussion of how pollution impacts the greater good, because polluters just can't harm the neighbours' good!
The perverse incentive for planners to identify the "greater good" is the same as the way priests and religious leaders do so -- and they are likely to shake their finger just as judgementally.
Which is weird! I've never understood why libertarians seem to discount external costs so deeply.
I think there is a breed of libertarian that values them sanely, but that it's the less rabid sort that tends not to rant on the internet. I'd include Friedman and Megan McArdle in this group.
I don't agree about valuing happiness instead of freedom, though. It's shouldn't be the government's job to worry about how happy you are, it should be government's job to make sure you're free to pursue happiness should you so choose.
Most libertarians are aware that the Government meddles heavily in the economy, and everything bad about the economy that's blamed on capitalism wasn't a fair test b/c it wasn't actually laissez faire capitalism that was tested. There is no good reason to expect external cost problem to be worse under a genuinely free market than they are now. So libertarians needn't say much about the issue.
And anyway, what do you expect libertarians to say about it? Either one can say that Government is the answer, or isn't. Libertarians are exactly the people who have knowledge about why Government is bad at solving problems, so they are the last people you'd expect to want the Government trying to solve this one.
Ah, we've pinpointed the nonsense! I'll leave you with some words from Milton Friedman on the New Deal:
> The other part of the new deal policy was relief and recovery … providing relief for the unemployed, providing jobs for the unemployed, and motivating the economy to expand … an expansive monetary policy. Those parts of the New Deal I did support. (…) Because it was a very exceptional circumstance. We'd gotten into an extraordinarily difficult situation, unprecedented in the nation's history. You had millions of people out of work. Something had to be done; it was intolerable. And it was a case in which, unlike most cases, the short run deserved to dominate.
With the point being, sometimes government is necessary and sometimes it's not. It's not an all-or-nothing endeavour.
Next you can add me. I think libertarianism today is too isolationist regarding war and terrorism.
But we cannot find the truth by analyzing who said what. The important thing is which ideas are right, not who said them.
At a very basic level this is simply a scientific, non-political world view. It's evidence-based. If you read through many of the threads on HN you can feel the deep sentimentality that people feel about things like Social Security, etc. It's an emotional, irrational, unscientific response.
Why are you critical of libertarianism? Do you support some special interest group that stands to lose simply from smaller government? Or are you sentimentally attached to the grand vision presented as the persuasive argument for some piece of historical regulation? Or are you a career burocrat :)
I'm a bit confused. The post you've replied to was in favor of libertarianism.
Isn't that what the defenders of communism say about the USSR and China? (Stalinim and Maoism respectively, rather than pure Communism as Marx et al. intended)
The point being that 'pure' libertarianism is possibly just as realistic as pure communism, or perhaps even democracy (either in the sense of 'pure' (i.e. direct) democracy at a national level, or even, with representative systems, that the majority of the population is well informed regarding issues at hand and actively participates in the democratic process).
Let's take Citibank.
The government is involved in changing behavior right from the inception of a corporation. It is called limited liability. We as a society accept this as we believe it encourages people to take more risks. It used to be that a corporate charter could be revoked if it were decided that the company was somehow harmful to the public. I am unaware of the last time this has actually occurred.
The government also encouraged risky behavior through GSEs (Freddie and Fannie). There was an implication that the government would take care of things when they went bad.
I personally believe that all of these problems are exacerbated by large public companies. Other than the possibility of having to find another job there is generally little risk in performing poorly or even maliciously at an individual level. Those at the top likely make enough money to survive a lifetime if they were fired tomorrow.
Now let's shift to the issue of energy.
Every drop of fuel you put in your vehicle is subsidized by the government. We spend trillions of dollars to fight wars in order to secure energy resources. These costs are externalized through taxes and it is thus feasible to drive vehicles which are not fuel efficient.
I have only scratched the surface on these two issues. I'm not advocating abolishing all regulation and government institutions. I do wish for more discussion which considers the effects that the government has on society. As the original poster alluded to, good intentions are not enough.
I think that the field of game theory, and as the most simplistic example, the prisoner's dilemma, shows that libertarianism, as defined by the idea that individuals acting in their own self-interest will create the greatest common benefit, is flawed. Specifically, this will limit the benefit of each individual as well as the aggregate.
Individuals acting in their own self-interests categorically do not arrive at optimal solutions for themselves or for the whole society. It's a complete joke, mathematically provable, and thus ridiculous that it's still being argued. We need coordinators. All forms of government have been imperfect at achieving perfect coordination, which has inspired libertarians and objectivists and etc., but that doesn't invalidate the coordinators' work. Instead, a meaningful endeavor would be to improve the scientific rigor and quality of the policy-based coordination. This is what my research as an undergraduate was based around...
Libertarian, I invite you to go start an investment bank and act in your own unfettered best interest. I'd be hard pressed to see you not end up in a similar situation to investors in any of the past bubbles and collapses.
Unfortunately, most supporters of Libertarian policies only get to the first-order implementation and then stop and are rightly criticized for the limitations and flaws that result. All of the complexities of higher-order effects are neglected, but those are the parts that actually make the theory workable in the real world.
I'd argue the opposite, that a big, opaque regulatory state is the perfect environment for corruption.
For example, the basic principles of a free market (e.g., supply and demand) are easy to state but result in complex transactions. When things don't "work out" for someone in the real work and they raise an argument against "free markets" (as in the current housing bubble), we need to be ready to point out all the complex ways that the free market worked correctly but where the non-free parts distorted it (government policies encouraging loans to unqualified applicants).
In complex systems with non-linear behavior, we need to be very careful that we understand the full context of an event or we won’t be able to extrapolate the results. That’s why first-order approximations fail so often in mathematics and in real life.
I think it's somewhat absurd that Obama and Bush even pretend they can do anything about the financial crisis.
http://dieoff.org/page95.htm
The tragedy of the commons demonstrates that with certain shared resources, when everyone freely pursues their rational self interest not only is utility not maximized, sometimes the result is catastrophic.
Libertarian solutions to the tragedy of the commons usually involve attempted parcelization and privatization of existing commons, and while that's practical in certain cases, in many others -- fishing grounds, air quality, global warming, etc... -- it is not.
Again, this is a low priority issue, and the thing to look out for is when planners try to use the 'greater good of all' to give handouts to special interests, as has been overwhelmingly the case with eminent domain lawsuits around the country.
http://links.org.au/node/595
My guess is that you double check the government when it comes to your personal safety. So why should anyone believe automatically that just because the SEC exists, any investment bank will be a safe bet and act in precisely the way it ought to?
Any firm is prone to conflicts of interest, fraud, deception, lack of transparency, etc. Investment banks are no different.
It's a reality of life that sometimes people/groups will try to defraud/deceive others. Self-interest (being symmetric) offers a backstop against this, UNLESS regulation gets in the way.
The analogy I'd use is this? SEC regulations on iBanks were as effective as a paper seatbelt. In other words, not effective at all. What did the SEC spend last year doing while the financial meltdown was brewing? It shut down prosper.com!
You may think that it's optimal to declare that everyone should put on a paper seatbelt and that when things get bad just do a bailout, but libertarians would prefer to let people make decisions based on facts the whole time.
Just because the seatbelt is broken, doesn't mean we should abandon seatbelts. It means we should work harder to make better seatbelts.
An argument I see when libertarians are faced with such questions is that libertarians aren't 'against' seatbelts, but they want to explore the alternatives. And yet they don't seem to come up with any other alternatives...
What we should not do is idealize the paper seatbelt or pretend that it works when it does not, or pretend that the design of that paper seatbelt hasn't been heavily influenced by corporate lobbyists, corrupt politicians, etc.
How can investing in stocks destabilize the economy? If I invest my money in stocks that aren't worth it, then I will lose my money but noone else. If my investment temporarily causes stocks to rise, and people therefore buy (hoping it goes higher), then it's obviously their fault and they too will lose their money. But if you don't invest in stocks, how can you be affected? The only way for this to happen is when government intervenes and takes money from taxpayers to bailout organizations that took too big risks.
http://en.wikipedia.org/wiki/Stock_bubble#Positive_feedback
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But if you don't invest in stocks, how can you be affected?
Market shocks affect the entire economy (through expanding and contracting credit, etc.). If one does a cannonball into a pool, how can it affect anyone else in the pool?
http://images.google.com/images?q=pool+cannonball
First, note that if it weren't for regulators deciding on the amount of reserve capital Citibank was required to hold, the market would probably have demanded that it hold much more. For a long time iBanks have been benefiting from the Fed's power to bail them out. Unlike banks, whose asymmetric liquidity is due to customer deposits, iBanks are risk-taking businesses who are just trying to make people rich. If Yahoo can fail, why not Citibank?
So you were actually a temporary beneficiary of SEC and Fed policies that led to the over-leveraging of Citibank's capital and your previous ease at finding a job. Your major life decisions were perhaps influenced by this false sense of reality.
On to your thoughts on happiness: Would people be happier if they weren't allowed to eat junk food? What about if they weren't allowed to drop out of college? What about if they believed in a specific version of the Christian God? What if they wore an American flag arm band at all times in public?
It's highly subjective what makes people happiest. I personally don't want anyone telling me what will make me happiest.
I am registered Libertarian, as I believe in marketizing problems whenever possible; however, the markets must be set up correctly to be truly free, and only the government can do that.
The psychology people seem to have is to believe that if the government regulates it, then anything that falls under the regulation requires no independent thought.
On the icy road, the safe speed maximum is probably about 30 mph, but many accidents are caused by people going the posted limit, as people seem to trust the wise planner above their own ability to judge.
Similarly, people assume that a firm that is regulated by the SEC and backed buy the FDIC is going to be a safe place to put money, which is not always true.
I agree with your last statement, but note that 1) the SEC required insufficient reserves, and 2) because the government set the reserve limits, there is the implication that it ought to bail out the firms that were "just following the rules".
Hence the view of firms being "too big to fail" comes from the idea that regulation is perfect and if only it's followed then everything will be fine.
In a better, more libertarian world, banking crises would result in some failures, and once-burned investors would look carefully at what reserves actually mean, look sceptically at rating-weighted reserve requirements, and expect that if things go wrong there will not be a bailout.
This would help put money into firms that actually know how to act in a trustworthy, sound way, not just the firms that are able to successfully lobby the SEC, the way Madoff's did.
In the car example, I think we have a difference of philosophy. I think that regardless of the posted speed limit, some people will not exercise the proper judgement because they have evaluated the conditions differently.
In the example of reserve funds, imagine a world with similar information asymmetry to today. Banks are semi-transparent, and deposits are backed to some extent by the FDIC. However, the SEC takes less of an active regulatory role, the result of which is that some unscrupulous banks have started offering insanely high interest rates based on dangerous fractional reserves. People will likely flock to those banks, especially given that the FDIC is backing their investments... and then the whole thing collapses.
One solution is to get rid of the moral hazard inherent in the FDIC, and make it clear that the only way to hold your money safely is in cash, in your home. But one of the signs of civilization is increased specialization of labor; I should not have to do the job of banker and regulator all rolled into one, just to have a place to keep my money. Worse, it's not even clear that this is possible, because of inherent information asymmetry.
We can argue about whether an adequate ad-hoc bank insurance solution would arise, however, I'm not sure that such an invention would increase efficiency in the market.
As for regulation, there doesn't really seem to be any real alternative, unless the direct consequences for the operators of failed financial institutions became much more dire. And criminalizing poor business decisions doesn't seem very Libertarian at all.
If I walk into a bank and consider depositing my hard earned cash, perhaps I'd demand enough transparency to determine whether to trust that entity with my cash, in exactly the same way that I must trust Amazon when I place an order online, etc.
Information will always be imperfect, but it's in both parties' interest to increase transparency. It's barely even a coordination problem in today's world.
As a note to your remark about my speed limit explanation, why is it then that on an extremely icy road people go exactly the posted speed limit rather than, say, 90 miles per hour? Clearly they are taking the sign literally and at face value.
So one regulatory approach that would be an improvement over the current one might be to require a reserves "rating" to be published, much like the smoking causes cancer warning. Perhaps right under the bank's logo it would have to say "This bank has a reserve score of 71 (moderately risky)".
And yes, there would be room for 3rd party ratings to be applied to bank solvency as well. I'm not sure what the best approach would be, but consider that most securities regulations were made in the 20s before the information revolution (ironically, the "Financial Services Modernization Act" removed a few of the depression-era regs that were actually smart and prevented moral hazard and conflict of interest). Surely there would be a lot of clever approaches. One idea that intrigues me is that the government could offer its rating, but banks would be required to obtain several. I'd love to see someone like Michael Moore create his own such agency and use his genius to publicize it.
Analogously, consider the FDA drug approval process. Everyone knows that the FDA process is flawed, as people are routinely killed by side-effects of drugs. So why not have several ratings: One from a consortium of insurers, one from the AMA, and one from the FDA -- each group has a slightly different downside risk (and upside) to approving a dangerous drug or failing to approve a safe one in a timely fashion. Why not have a grid of 3 checkboxes on every drug. The absence of an AMA approval might be a warning sign to some, but not others.
If you think this idea is silly, consider what happens when the FDA gets it wrong and lots of people die because of a drug... exactly nothing but a too-late knee-jerk reaction. Usually the drug is immediately pulled even if it has other valid uses, etc. One perverse example: many doctors knew the dangers of Vioxx well before the scandal (the same risk exists in lesser form with all such drugs, even Ibuprofen) and good ones didn't use it on patients at risk for bleeding without great caution. Yet it took a few years and then bang, it's gone from shelves even though there are a few essentially identical drugs that stayed on the market and do still occasionally kill people when used without caution by docs.
I'm not claiming to have the whole idea of optimal regulation for the 21st century figured out, but I'm just brainstorming. Surely there would be a lot of great and clever ideas. The current, one-size-fits-all approach leads to massive and often ineffectual regulatory apparatus.
Why shouldn't coming up with ad-hoc regulatory / information-dissemination / transparency-reducing systems be something that startups do? Why not in the case of medical trials have data published to the web so that people can make mash-ups with all the data that is being considered by regulators? A few weeks ago the SEC approved a plan to put financials in XML format, but it's all very primitive and is unlikely to be all that useful, but the core idea of transparency through an API is a good one, I think.
The role of the "regulator" of the future, I think, is to design a good API spec (metaphorically and literally) and possibly make a list of all of the watchdog groups offering analysis. State and federal governments could fund their own watchdog groups too -- maybe I notice that Wyoming's prescription-drug watchdog group has been ri...
But according to your own line of thought, shouldn't people be fully responsible for their own conduct, regardless of the surrounding circumstances? If so, how is lack of governement regulation going to help people determine the correct speed to go at on icy roads?
The heuristic becomes one of people believing that the government must have already looked out for all dangerous possibilities, so anything that is legal is safe.
I don't feel the need to look down my nose and say "people should be individually responsible" because I don't consider that productive. I think people are naturally responsible enough to look out for their own interests, unless they are misled.
One example: investors in Madoff's hedge fund were misled by the SEC stamp of approval on that fund. Don't you think that normal scepticism about the returns ought to have led to some scrutiny?
I don't think financial regulations are any different, but unfortunately most people take the fact that a firm is regulated to mean that it's totally safe. Similarly, many foods that will result in an early death are perfectly legal and consistent with the USDA food pyramid.
If this were true (and it certainly is not!) then the market really would be just as incompetent as its critics say it is.
In an environment where the government decides what is prudent, there is no incentive for a bank to say "We are sounder than our competitors because we keep more reserves". Why not? Because they would be competing against the government for their definition of soundness.
Sure it could happen theoretically, but it would be a tremendous competitive disadvantage.
The way it is today, any bank that is legally allowed to operate is considered equally sound by borrowers and investors, and banks have no incentive to try to prove to customers that they are actually more sound than their competitors.
In a highly regulated environment, that works for all banks because they know that if there is a major economic downturn everyone will get bailed out.
Notice that all banks were required to accept TARP loans whether they needed them or not. Why? To avoid SIGNALING which banks were hurting and which were not. Why? To avoid capital flowing to the banks that were actually sound!
Why? Well, partly because government wants to avoid a crash, and partly to keep the status quo going strong. Also, consider what all of the major industry players in banking want... what does any firm want? No competition. They were all happy to share a big market and to have as few as possible attributes on which to have to compete for business.
Simple, smart, behaviorally sensible regulations make sense, but the SEC has been notoriously behind the curve for years. The missing piece has been to regulate appropriately while allowing there to be an incentive for banks to actually compete on the basis of soundness. The decision not to let the concept of bank soundness enter the brains of mere citizens must be a knee-jerk reaction to the great depression.
Instead, in exchange for various political concessions, banks were given every incentive to be extremely leveraged. Consider the impact of the GSEs on housing prices, MBS prices, etc? The implicit guarantee of Fannie and Freddie alone probably led to banks thinking (rightly, it turns out) that any housing related crash's impact on banks would be bailed out.
Side note: Are the banks going to be better off after the bailout? Of course they will be. The desired "sweet spot" for most firms is to be in a heavily regulated, heavily protected industry, as it means that there are huge barriers to entry and the profits (though sometimes essentially set by regulators) roll in year after year. See the military industrial complex for an example of the idealized sort of model.
Market forces have been very far from banking for a long time. Why else would financial services be the biggest donors to both parties. Libertarians are not opposed to regulations, just not ones that create perverse incentives and lead to massive bailouts! Any time a firm would rather spend its money on lobbyists and campaign contributions rather than innovation, there is a big problem.
This was your original point. Let's stay on track.
Your claim that regulators decide how big Citibank's reserves should be is false. They set a minimum, not a maximum.
You then tried to draw an analogy between speeding and regulation, one that, as I have explained, is totally inappropriate.
You then claimed that "most people take the fact that a firm is regulated to mean that it's totally safe", which is a massive exaggeration. If that were true, bank bonds would be considered as safe as government bonds and bank runs would never happen. All other regulated industries would be exactly the same. Also, you are confusing reserve requirements with broader regulation as a whole.
You then claim that banks raising their reserves would be "competing against the government for their definition of soundness", despite the fact that no government has ever claimed any 'definition of soundness'. This appears to be something that you have invented.
You then give an argument as to why other forms of regulation encourage banks to hold lower reserves. This contradicts your original point, which was that if reserve requirements were abolished then the market would force banks to raise reserves. What you have demonstrated is that the market, bail-outs and broader regulation would actually force reserves to even lower levels in the absence of reserve requirements. You have changed your argument from one about reserve requirements to one about broader regulation, and bail-outs such as TARP.
I do not think you have refuted my claim that regulation leads to people suspending critical judgement about risks.
Reserve requirements are a good example of this effect. Industry lobbyists try very hard to have the limit decreased while benefiting from the public perception that the regulator has assured that the bank's assets are sound.
If you don't buy my argument then you probably believe that people are so stupid that without regulation banks would hold $0 in reserves.
The alternative view of humanity is that people are sensible enough to demand sound practices from institutions they deal with on important matters.
My argument is that banks don't use reserves as a way to win customers the way they would if regulators weren't giving an A+ to every bank that holds the minimum :)
One exception is Goldman Sachs. It did not need TARP funds to remain solvent. Yet Treasury forced all banks to accept the funds. What did Goldman do? It immediately paid a huge dividend to its investors.
What happened? Goldman actually had more sound practices than the rest of the industry and was not in danger of failing. It would probably have waited for bankruptcy proceedings and picked through the assets of the other banks, strengthening its already strong balance sheet.
Regulators did not want more money to flow to the firm that had good practices, so it insisted on bailing everyone out. This was to hide information from investors and customers. Goldman angered regulators by paying out the dividend right away, but managed to signal its health.
To understand the point of libertarians on this issue, consider the world in 10 years from today. We might have had a world where chastened investors and customers looked a lot more carefully at the risk management practices of banks before trusting them. Instead, we have a world in which our government owns 30% of all banks and regulators are being hailed as the saviors of the banking industry.
Do you want to live in a world where people act based on reality, or one where taxpayer money is appropriated without congressional approval and given to selected industries, and the appropriators are hailed as heroes that helped the little guy keep his job, prevented another great depression, etc.
It all comes back to the burden that people take upon themselves to assess the riskiness of the decisions they make. Industry loves to have its status quo practices rubber stamped by regulators, to add additional credibility. It all works out well as long as there can be another bailout, etc., but it's not based on reality and represents the slow transfer of wealth from the most productive companies to the ones with the most effective lobbying.
We have a name for that.
http://en.wikipedia.org/wiki/Risk_compensation
risk compensation is an effect whereby individual people may tend to adjust their behaviour in response to perceived changes in risk. It is seen as self-evident that individuals will tend to behave in a more cautious manner if their perception of risk or danger increases. Another way of stating this is that individuals will behave less cautiously in situations where they feel "safer" or more protected.
Mirrlees also did highly theoretical work on another incentive problem: “moral hazard.” As is well known to those who study insurance, insurance coverage gives the beneficiary an incentive to take more risks than would be optimal. This is called “moral hazard.” Mirrlees’s insight, based on a complex mathematical model, is that the problem can be solved with an optimal combination of carrots and sticks. Insurance payments are essentially a carrot. But “sticks” could be designed also, so that an insured person who takes risks pays a penalty for doing so. With this combination of carrots and sticks, the insured person acts almost as if he is uninsured, and the insurer acts almost as if he were the insured.
My point was that you analogy doesn't apply. Pointing to ice on the roads is completely missing the point: that the analogy doesn't hold in the first place.
>I do not think you have refuted my claim that regulation leads to people suspending critical judgement about risks.
I did not say this! I said that specifying a reserve requirement does not reduce bank reserves. Please keep this argument to reserve requirements, not general regulation.
>If you don't buy my argument then you probably believe that people are so stupid that without regulation banks would hold $0 in reserves.
The UK does not have reserve requirements and they don't have zero reserves. But they did not raise their reserves to safe levels either, refuting your original point.
Incidentally, it's you that's arguing that regulation encourages banks to hold lower reserves than they would without reserve requirements. You are constantly conflating reserve requirements and general regulation, moving an argument about one to a conclusion about the other.
You then go on to talk about TARP again, illustrating my point.
To manage the risk of your car going out of control, you choose a safe speed.
To manage the risk of a bank becoming insolvent, it chooses an amount of capital to keep in reserve.
I seriously doubt you take exception with any aspect of the analogy so far...
A speed limit sign suggests a speed that is safe to drive. However like any regulation it is only an imperfect estimate. Yet people seem to drive at that speed under adverse weather conditions completely irrationally.
A reserve requirement suggests an amount of reserve capital that is safe for operation of a bank. However like any regulation it is an imperfect estimate. Few banks carry reserves in excess of those set by the requirement.
These are completely identical scenarios. In each case, humans cluster around the regulation without exercising independent judgment. Drivers slide off of the road all the time, and a bit of recent price volatility sent many banks into insolvency.
Your example about the UK is noteworthy but I would argue that due to the dominance of US banks (and US regulations) in financial markets, UK banks are inclined to mirror US policies in order to remain competitive with US banks. Analogously, a Russian firm may adopt some US accounting practices if it wishes to attract investment from the US.
There are two factors: The first is the way that the bar is set by the regulation in the first place. T
he second is the grouping/incentive effect. If your competitor has too few reserves then you are at a disadvantage for not copying that behavior unless the economy crashes (such that your competitor goes out of business and you don't).
In one case we have members of the public who have passed a driving test. In the other, we have the foremost experts in the field, using the latest theories of risk, working with millions of dollars of modelling and statistical equipment, with their jobs on the line. For what good reason would a single one of them look at the reserve rate and say "Although the government doesn't claim that this is a safe rate for banks to operate at, but instead sets it completely arbitrarily, and admits to the fact that it's totally arbitrary, and has not changed this rate in several decades because it is an obsolete tool of monetary policy, I am nevertheless going to take it to 'suggest' a safe level of reserves, totally ignore all of my models and education, and just pick that number on a completely irrational basis."
To be clear, the items you state here aren't _rights_. Rather, they're privileges that aren't guaranteed. If you work and do a great job, you're not entitled to a big house in the suburbs, but you're increasing the odds of being able to afford it.
The Constitution guarantees rights to life, liberty, and property, as well as several other rights in the Bill of Rights and other amendments. But nowhere there will you find a right to have a job or right to make x% interest in the stock market (or right to be bailed out if you get in over your head in the real estate market).
As a nation we have a real problem of mistaking opportunities for rights, and feeling entitled to things that we want.
Extreme liberty == Articles of Confederation (the first failed U.S. government, wasn't strong enough) versus extreme national socialism == 10s of millions dead.
s/libertarianism/internet "libertarianism"
http://www.ssa.gov/OACT/ProgData/taxRates.html
Worker "contributions" also are immediately spent on unrelated programs (the trust fund is given special government IOUs that are valueless) leaving an unfunded liability in the trillions of dollars. On a cash-flow basis, the program will begin to run in the red as the first boomers retire in 2017.
Medicare is already running in the red, by the way.
You seem to believe in a weak central government and strong state governments that try new approaches and get shit done. This is nice, except most libertarians believe in weak governments in all levels of government. No, not a government that works as well, not an efficient government, but a minimal government.
As an example, take the health care debate. Compared to some european countries with good healthcare systems, the US spends substantially more (~15% vs ~9% of GDP) covers substantially fewer people (the millions without coverage) and the overall health of the population is poorer. By nearly all objective measures, a good public system is much better than an all-private system and yet, we know this is not compatible with libertarian ideology - you will have to search far and wide to find a libertarian group that supports a public healthcare system.
Like I mentioned above, the libertarian ideology is one of minimal government, which is sometimes, but not always the best type of government. This is why libertarianism relies on simplistic catch-allisms (government=bad, regulation=bad, private-good) and parodies of reality like Atlas Shrugged and other Ayn Rand fiction-pseudo-philosophy writings and not your idealistic "engineering and scientific assessment of reality" idea.
While I'm not a libertarian, libertarians don't encourage small government just to hear themselves speak. If one doesn't err on the side of limiting government, you tend to get one useless bailout bill after another as people with power, but not much more brains than yourself, frantically fling money around trying to solve problems they don't really understand. Unfortunately, it's not play money.
People have written books on the subject. Any internet discussion of it is bound to be "simplistic" to some degree.
Really, though, wheels sums it up best:
http://news.ycombinator.com/item?id=419503
The issue is that in most countries there is no separate health care system. There is an integrated social security system, including pensions, etc. The problem is that there is a minimum charge that you have to pay irrespective of your actual income.
This "standing charge" varies a lot. It's negligible in the UK ($15 per month) and (I believe) in Ireland. But it's awfully high in most of continental europe ($300 per month). That increases the burn rate for self funded startups by about a third.
The reason why it's so high in some countries is that you don't get to choose what kind of risks you want covered. The assumption is that you pay for the older generation so that the next generation pays for you.
It's one size fits all, decoupled from individual choices. You must pay into the retirement system even if you decide (as I have) that you are never going to stop working unless you're unable to (which should be covered by a basic disability insurance which is much cheaper)
As a result, many people (including myself at this moment) have no health coverage at all. Either because they cannot afford it or because the rules are so complicated, inconsistent and inflexible that people with unusual CVs slip through the net.
Do you have a reference for the "standing charge" in the UK? I've never heard of it.
I can't remember if I had to show my NI card when going to the doctor when I was at university there.
Later on when I was working I normally paid for my own private doctors, due to my experience with the horrible NHS system during my student days.
The rates are here: http://www.hmrc.gov.uk/rates/nic.htm
If you earn below 5715 per year you only pay class 2 NI contributions, which is 2.4 pounds per week.
[edit] I forgot to mention that you can apply to be exempted from class 2 NI altogether. I didn't do that because 2.4 pounds per week seemed already very low to me.
The point is that in the UK you pay according to your actual profit wheras in other european countries you pay a lot starting on the day you register your business.
Having lived there for 25+ years and now 10+ in the US I can discern no difference. Both systems are broken with a capital F.
I consider myself a libertarian so I would love to see a simple health care option e.g. provides low level emergency care, low level preventative measures.
So you get a busted bone set, colds/infections treated, child birth and pre/post natal, annual check up etc.
But major stuff is not covered e.g. you have a heart attack you're on your own, you need a lifetime of expensive drugs no chance, hip replacement nope.
The idea being that costs are minimized and a clear directive can be written. Like all things you want better treatment you need to put your hand in your pocket.
Anyway, in a libertarian USA, most if not all of that $1.2 trillion would stay in the hands of the people; that fact, along with a few other libertarian ideals, would mean a more prosperous people.
A more prosperous people, with the knowledge that the government no longer provides inefficient health care to others with their hard-earned money means... you guessed it. Also, a libertarian USA would mean cheaper /everything/ (including health care) because of the Austrian economic, free-market principles.
I truly believe it. I've got some excellent ideas based around for-profit charities. Imagine famous, fancy restaraunts situated in the big cities. The bottom floor sells wonderful food to the celebrities and rich folks. The rest of the building houses and feeds homeless people. Of course, it doesn't even have to be a fancy restaraunt, and it doesn't have to house homeless people.
Including $11 billion that would otherwise have been spent on tax collection.
http://www.whitehouse.gov/omb/budget/fy2009/treasury.html
Also minimal government is not the same as weak government. A libertarian government wouldn't do much, but the things it would do (such as operating the courts) it would do with absolute authority. What we have now - in most of the Western world - is large, weak governments.
To have a minimum, you have to have a set of constraints. There's no reason those constraints could not lead to "weak governments in all levels of government"
I must be misreading you. I keep finding people making these broad over generalizations about libertarianism. Yes, libertarians are for minimal government, but minimal is a term you can drive a truck through. Simply because one libertarian believes that limited government is minimal, tiered, distributed government and another thinks it means single-layer, centralized government doesn't make one person libertarian and another person not.
The terms you mention are not simplistic, they are broad. There's a big difference. It lets a lot of people have libertarian leanings and prompts the individual to continue the definition process at a personal level, which is exactly what you want in a democracy, right?
That's why many Libertarians believe in a _Constitutional_ government. I.e. there is absolutely a standard for what size the US federal government should be (and what purposes it should serve). It's the US Constitution.
Consider this: If more big problems were solved in various ways at the state level, there would be COMPETITION and government might be BIGGER in some areas and SMALLER in others.
My guess is that in many cases it would be smaller if there were more competition between regulatory ideas/approaches, but this is probably not going to be the case in every area.
Libertarians don't believe in small government at all cost, only that government should be put under competitive pressure so that it's as minimal and efficient as possible, and so that there are not perverse incentives and special interest entrenchment created.
I haven't been feeling my best lately.[1] I apologize for not supporting my argument, but I believe Chile has a reasonably good healthcare system, where the rich go to the private system and the rest go to the public system.
[1] I just moved to the US from Chile.
http://mises.org/story/1086
I think that an important part of libertarianism is its fairly consistent position for negative liberty:
http://plato.stanford.edu/entries/liberty-positive-negative/
From the perspective of environmental issues, the government is not doing ENOUGH to protect people from corporations that violently destroy citizen's rights to life and property. The corporations do not own the air in the sky, they don't have a right to pollute the river you drink from, and they certainly don't have a right to cause you to be diseased by Mercury poisoning.
It may be possible to successfully argue, as you and Shimrod do, that inequality is, in significant part, because of rather than in spite of the government. I'd rather like to see such an argument. As I understand it the classic libertarian arguments have focused on increasing production and efficiency rather than decreasing inequality.
(NB decreased inequality is a very different thing from decreased poverty)
It is true, Libertarianism does not focus on decreasing inequality - at least not in the sense of absolute privilege, because it is a meritocracy - Libertarianism does, however, focus on decreasing inequality of opportunity. If you decide to slack off like the cricket during the summer - your fault. But you learn, that maybe next time you should work, instead of getting bailed out and then noone has incentive to ever do any real work. This is why communism failed. The truth is, that if you want people to not go hungry, and live prosperously, the only way to do that is to craft the game, such that the Nash equilibrium is beneficial, rather than harmful. And yes, there are some people incapable of taking care of themselves - they might be handicapped, or get in a car accident - however, in a society of prosperity and freedom, people will have enough extra, and not be afraid of everyone trying to steal what they have, that charity will increase. So, first, you decrease the poor population to a size that is pretty much as small as theoretically possible, and then those people are taken care of by the abundance of all others. I mean, if you had $1million dollars, and you didn't have the government trying to take it all the time, would you really pass up helping out those in need? The reality is, that there will always be poor people, and history has shown that socialism certainly does not solve that problem (the more socialist countries have more poor people). If you claim the US is a capitalist system, well it might be compared to some other countries, but then again, we are more prosperous compared to those countries as well.
Suppose Libland is a libertarian state. The occupants of Libland stay alive by eating Food. Xia is another state. For whatever reason, they don't like Libland, and for whatever reason, they can produce Food much more cheaply than Libland.
Xia starts flooding the Libland market with cheap Food, so that it's is uneconomic for anyone in Libland to produce Food, and the Food industry disappears.
Suddenly Xia cuts of Libland's food supply, and invades several days later. Libland has no means of producing food in short order, and they cannot buy it from anyone else for some reason (for example Xia is the only other state, or it would take too long to open trading routes with other states).
How does Libertarianism cope with this situation?
[edit: please don't treat me as stupid or a troll. I genuinely want to understand libertarianism, and extreme counter-examples are a method of understanding that I find very helpful]
Therefore, I presume, Libertarianism has a way to prevent the situation arising in the first place. What is it?
If they hoard individually it buys them a few more months of survival in dire circumstances. What's the point? They might as well spend their money to best enjoy their remaining time before invasion.
You seem to think the responsibilities of "the state", "the military" and "individuals" are distinct. They're not. Some individuals like to pretend they are, and rely on the government to do X (and some governments play the same game and rely on individuals to do Y) but reality will always eventually assert itself, whatever system of government you prefer.
I agree with you that "reality will always assert itself" but I'm having a hard time understanding how anyone things that Libertarianism can be that reality.
* Firstly, who's to tell Liblanders that they risk invasion? It's not clear that Libertarianism supports the notion of foreign policy, diplomacy, espionage etc.
* Secondly, all the food in the country is coming from Xia. Once demand grows Xia realises that Libland has recognised the threat and invades immediately.
Just like 9-11, Dec 7, 1941, the anschluss, mongol invasions...the Hitties and Philistines versus the Israelites, yeah, military ops are always telegraphed.
"War between Japan and the United States had been a possibility each nation had been aware of (and developed contingency plans for) since the 1920s" - http://en.wikipedia.org/wiki/Attack_on_Pearl_Harbor#Backgrou...
"Austria was merged into Nazi Germany on 12 March 1938. There had been several years of pressure from Germany and there were many supporters within Austria for the "Heim ins Reich"-movement, both Nazis and non-Nazis." - http://en.wikipedia.org/wiki/Anschluss
Your less specific in the details of your other facts so it's hard to get specific counter-facts on them.
It is entirely clear that Libertarianism does support those things and one of the two roles of a Libertarian government is the physical security of the nation and its citizens.
Now, a worthy chap sees a report about Xia on CNN and gets suspicious. How's he going to get enough money to mount a publicity campaign warning Libland citizens of the danger?
I completely agree that Libertarianism can't be retro-fitted onto any existing human society.
Regarding your second paragraph, and completely independently, how do you propose we reach a libertarian society from the position we are now?
The problem with retrofitting it is unless you already have the no-coercion culture and infrastructure in place, too many people acting in their personal short-term self-interest find coercion easier. Which doesn't mean mugging people in the street; it's as mild as "my vote for your handouts of their money".
The military may well have reserves, but if they are supplied by Xia, all bets are off once those reserves are depleted.
If Libland does not have the capacity to generate Food during a protracted war then it is vulnerable to external aggression. However, I don't see a way that a Libertarian state can ensure that sufficient Food production capacity is maintained in the presence of cheap Food available on the international market.
And the point is not food either. "Food" is an arbitrary good that people rely on to survive.
How big are your food reserves that you have on hand right now? One year? Two years? Ten years?
http://a.abcnews.com/images/abc_doomsday_080812_mn.jpg
You don't tell your neighbors about it, do you? They might say, "Oh, I don't need to store any food. I'll just go over to cx01's house and eat his food."
What would your neighbors think if you told them in advance that they couldn't have any of your food, that you personally sacrificed for in the form of opportunity cost? Would they think that you're not very neighborly? When the National Guard comes around to collect all of your stored food so that it can be distributed equally among your neighbors, are you planning on handing it over peacefully?
http://proliberty.com/observer/20070917.htm
Paul James, 85, standing beside some 200 cases of Mountain House freeze dried food. Purchased and trucked all the way cross country from Oregon in 1975, this "mountain" of food was recently pulled down from where it was stored for 37 years. [...] The year was 1975. At that time many Americans were concerned that the Cold War with Russia could turn hot. People all over the country were building bomb shelters in their backyards and storing large quantities of food.
I was one of them. I didn’t build a shelter, but I did order $10,000 worth of Mountain House freeze dried food
Personally I don't keep reserves because there's no risk of war (at least I think so). If there was war and I had reserves, then libertarian ethics would allow me to defend my reserves (with force).
The nation that does not prepare for war, is at risk for war. If you personally do not have any food stored, and you and I live in the same nation, it puts me personally at risk of war.
Massive French government fortification program designed to protect their borders with Germany and Italy.
France knew perfectly well that the Germans were a clear and present danger. They just could not do anything about it - despite having that great protector: government military.
Indeed everyone else will wait for someone else. Prisoner's Dilemma. Oops.
If you're going to cop out with intellectual laziness rather than provide your own opinions and observations, I think I am justified in referring to someone else's work on this topic who has addressed everything you are anemically trying to assert: http://www.jrbooksonline.com/PDF_Books/why_govt_doesnt_work....
Regarding the title of the reference, I'm happy to accept that government doesn't work, but I can't understand why libertarians think that libertarianism does. I shall save further comment until I've had a look at the reference.
"In Game Theory, simple mathematical ``games´´ such as the prisoner's dilemma or the ``chicken´´ race, model situations where there is a potential benefit for players in finding a way to coordinate their action. All the ``theorems´´ about such games merely restate in formal terms the informal hypotheses that were put in the model. It certainly does not follow that government is the right way to achieve this coordination — though such is precisely the non sequitur claim of statists. Actually, it is possible to apply game theory to compare coordination through government coercion with coordination through market competition; and this exercise in game theory will easily show how dreadful the effects of government intervention are."
Libertarian thinking is predicated on the concept of minimal government, such as the author of that document (who was the Libertarian Party candidate for President). I'm confused as to why you would accept that government doesn't work, yet think that is somehow in conflict with libertarianism.
Libertarianism risks outsourcing manufacture of vital goods to foreign states of dubious intent, leaving domestic industry to die with no means of resurrecting it in an emergency.
The closest the above reference comes to dealing with this issue is:
* with free international trade, nobody will want to attack Libland because they can get at all its resources cheaply anyway, and
* Xia won't actually be able to invade Libland because they'll be too busy dealing with their own citizens, who, impressed by Libland's affluence, are too busy trying to convince Xia's rulers to convert to Libertarianism.
Unless Xia managed to perfectly conceal its dislike for its neighbour, that is. Perhaps they had MAGIC UNICORNS to help?
Perhaps you ought to go to Wikipedia and look up the difference between Libertarianism and Anarchy?
How does a Libertarian system decide which roles (like researching the intentions of foreign states, and defending against them) a government should play, and which (like presumably researching the weather, and defending against natural disasters) it shouldn't?
The United States does not have food reserves (other than grain stored in grain elevators, which grain Tome implied Libland would instead be importing just-in-time). Here is what the United States has to look forward to in a national disaster:
http://www.google.com/search?q=you+will+survive+nuclear
You are a survivor. Doomsday has occurred and you are a survivor. While you are waiting for the spouse and kids to get home maybe you should do something practical. Like go down to the supermarket and lay in a bit of an extra stock.
You may notice that the little corner store has closed. If he has believed the rumor, he wants to save his stock. And besides, your money may not be worth anything tomorrow. You thought you had seen rapid inflation before but this is like from zero to a million in sixty seconds.
At the supermarket, if you are early enough, you will find pandemonium. If not, you will find practically nothing. Maybe a large bag of dog food (take it) and some cans of floor wax (forget it). The rest of the stuff was all in those carts that you met come flying up the walk as you came running down.
There won't be any girls at the cash registers, (they have done their shopping and gone). Besides, the cash registers aren't working anyhow, with no power. It may have taken the hired manager a little longer to figure out that he should grab what he can and head home to his family, but he has probably gone now. The only cops you will see are the one's grabbing stuff themselves.
If Libland has positive economic relations with other states (as most free people seem to prefer), it would theoretically have alternative sources of food from those allies. In addition, unless Libland's government had irrationally incited Xia's actions (theoretically, an unlikely choice for a free society), other states would see this a flagrant attack on Libland and come to its aid.
The example is certainly viable for a case where one state (out of over 200 in the real world) has a monopoly on producing any essential good, or where Xia's military is more powerful than the combined strength of all potential opposing states. I don't think the example extends beyond those corner cases, however.
To answer your points:
* yes, Libland could buy Food from alternative sources. To extend the discussion I would need to adjust my hypothesis.
* no, the other states would not come to Libland's aid. If they were libertarian, they would not get involved in other states' disputes, and in any case they would know Libland would never come to their aid, so why should they reciprocate?
Tho' given that the Libertarian value is long-term freedom, it's unlikely for a Libertarian nation (not the same thing as s state) to be caught napping. A Libertarian country is likely to have a well-trained and well-armed militia, but not much equipment or experience or inclination for expeditionary warfare.
First let me answer your question directly: in this example, Libland is undoubtedly screwed because Xia has a monopoly on the food supply. The people of Libland would not be able to cope with this situation and they'd most likely be overrun. Sure, there will be pockets or resistance with guerrillas doggedly fighting on for years or decades, but as a state, Libland would no longer exist.
Nevertheless, I think that the example isn't helpful because of two positions:
1) The unexplained reason why Xia can produce food so cheaply. 2) That it would be uneconomical for anyone other than Xia to produce food.
In the real-world, there would be a competitor for Xia to supply food. Even if Xia started off as the only supplier, someone would realise that they could enter the market supplying food that's a little cheaper, higher quality or just a little more different. The people of Libland, knowing the dangers of relying on only one source, would then also start purchasing from the competitor _in_addition_ to Xia.
I therefore think that your hypothetical scenario wouldn't exist outside of the 'thought laboratory'.
No explanation is needed.
http://en.wikipedia.org/wiki/Absolute_advantage
http://en.wikipedia.org/wiki/Comparative_advantage
1) Does Xia have better climatic conditions? If so, why wouldn't neighbouring countries have similar conditions to become a viable competitor?
2) Do the have better packing and transportation technology? If so, why can't another country develop/buy/steal the technology?
3) Etc, etc.
Hence, my point is that the imposed constraints may not normally exist.
If not, it's a religion rather than a political philosophy.
There was not actually deregulation. The markets were still highly regulated, so the act of deregulating part of them threw the whole system out of whack and everyone wanted to reinstate regulation.
http://www.world-nuclear.org/info/inf65.html
Libertarianism is like prayer. If it works, the religion is right. If it doesn't, you did something wrong and it's right.
Examples abound. I just mentioned one deregulation example because such things are often touted as libertarian accomplishments when in fact markets are often still highly regulated and the deregulation was just a handout to one interest or another.
People side with libertarianism because it sounds good, but haven't reasoned through the side effects. If you thought for just 15 minutes on what people would under libertarianism would do, you'd realize it just won't work.
The point you made at the end is essentially the argument for why legalization of drugs will solve a lot of problems. Competition will bring in ligitimate sellers (as in the alcohol industry) and get rid of all of the crime that comes from the local dealers who "own" street corners.
First, libertarians seem to enjoy attacking other political parties specific positions while taking only a rhetorical one themselves. This feeds into #2:
Second, until the libertarian party actually puts together a platform, they aren't a real party. The reason's simple: first, nobody can tell what they're really voting for in terms of deltas to the legal codebase, and second, without going in with a plan, I don't think we'd even get the libertarians to agree with each other for doing anything.
To sum it up, I haven't seen a political party that's taken a real stance, but would rather sit on the sidelines and throw stones. Call me when you have a platform, not rhetoric. I don't want argument, I spent 11 years in a college town -- I've done it to death, I want actual proposals that I can personally evaluate. Until then, all I hear is ideology, and that's the last thing I want in government.
The point of discussing libertarianism is to see the philosophical difference between someone who advocates personal freedom and economic freedom vs someone who doesn't.
He actually ran for President as a Republican in 2008.
grandalf, I think you missed one of Zed's main points. Here's a more entertaining, less rambling, version from Belle Waring:
http://examinedlife.typepad.com/johnbelle/2004/03/if_wishes_...
In the real world there are large, extemely powerful, centralized power structures. And they don't plan to go away, only to become more powerful. If your libertarian politics doesn't include an actual plan to diminish the power of these centralized social organizations that want to control people's lives then it's not politics, it's fantasy.
The 'A' is not really 'B' the way I define 'B' in my fantasy world argument is used by idealists of every stripe. Ask any Marxist about the Soviet Union.
Dow Chemical is one other such organization, as is General Motors, as is Google, as is Canada, etc.
Why do you presuppose that it is necessary to diminish the power of some of these organizations?
I would argue that one of the main reasons that corporate interests become "large, centralized power structures" is because they are able to manipulate government regulation to their advantage.
There was a Stanford Entrepreneurial Thought Leaders talk where one guy said how much he loves starting companies in heavily regulated industries -- because there is such a high barrier to entry that once you do the extensive paperwork and legwork and politicking get approved there is very little competition.
The real "sweet spot" for firms is to be in a heavily regulated AND heavily protected industry (aka too big to fail). The military industrial complex is one such example, as is the financial services industry (as of the past few months) and also now the US automotive industry.
So rather than viewing the world as one in which government protects me from these entities, I view it as one where these entities conspire to prevent revolutionary innovations from threatening their dominance.
Further evidence that countries do this is the big trend toward treaties to prevent "tax competition" between countries. France doesn't want Poland luring companies in with low corporate taxes, etc. This is blatant collusion. Why are state taxes typically lower than Federal? Not because state regulators aspire to less grand programs than Fedreal ones do, but because it's easy to move to a different state, not so easy to move to a different country.
Consider how many businesses spend more money on a presence in Washington DC than they do on innovation. Google learned from Microsoft's mistake and now has an active office in DC trying to build influence -- and with Schmidt's appointment has the ultimate influence in the new administration.
To maintain its status as legitimate, one of these entities, government, must constantly reinforce its own story through pageantry and pomp. Did you know that George W. Bush conducted more ceremonies than any other president?
We're supposed to believe that all other "powerful, centralized power structures" are evil (various companies, Saddam's Iraq, Castro's Cuba) and that the only hope lies in unquestioning, unthinking loyalty to the US government. We're taught to see all regulation only as the "grand vision" associated with it, not as a law that creates incentives, winners, and losers. We're taught to fear and to trust. We're given black and white messages like "good and evil", etc.
I just refuse to believe this. I live in a country where "The Patriot Act" takes away rights and where the financial services industry -- for quite a while the biggest industry donor to both major parties -- gets a massive bailout from the Treasury department. We live in a place where eating according to the USDA food pyramid will lead to heart disease while benefiting the dairy and beef and corn industries.
Why do I not just think we should strive to improve regulations against "evil corporations"? I think people are capable of processing information and using basic cognition. In many cases, such as the SEC, regulations only lead to a false sense of security. Isn't it a bit crazy that in the same period that Madoff's firm conducted the biggest scam ever, the SEC was warned of this by multiple parties and instead chose to shut down prosper.com on a technicality?
I'm not anti-government, but I would like to see more competition -- in the form of more being handled at the state level so that we can see the effects of multiple approaches to solving the same problem, as well as move to a different ...
The plan is simple: education. Libertarianism is so unconventional you'll be lucky to hear the media bring it up once or twice a year. Ron Paul (probably not a "pure" libertarian, but pretty close) is starting to change this with his huge grassroots following.
I'd venture to say 98% of Americans have never heard of libertarianism, and if they have, they simply dismissed the ideas as illogical, without actually researching the ideas. This needs to change.
The people ultimately decide who gets into Congress and who gets elected President. Once the people are educated and accept the ideas of libertarianism, it's cake.
-The Moral Argument-
Libertarianism is about rights & opposing coercion. Other people & by extension governments should stay out of other people's business. Don't tell me where to work or what to do. Don't tell me to wear a seatbelt. Mostly that works fine
-The Economic Argument-
There is the second argument that (when it being criticised) gets called 'idealistic' or 'religious.' This is the idea that by not intervening in peoples' lives & by extension in companies, everything will work out good. Markets will function better. Economic output will be higher. Public good would be increased. This relies on economic theories, theoretically anyway. So far, most countries are really a balance here.
These are seperate & the arguments for them are seperate. On the first, I am pretty clear where I stand: I agree mostly with the libertarian position on personal rights. I am against drug/alcohol/seatbelt/smoking/exercise bans, prohibitions or requirements. I am willing to relax that if the negative public effects are substantial & prohibition side effects are less substantial. So if we legalised drugs & found we ended up with a severe amphetamine problem, I would consider reinstating the prohibition.
My biggest problem is the welfare approach. For a similar reason to the amphetamine prohibition above, I think that welfare/health is essential & should be provided by the state. If it is provided by non-state bodies to a sufficient level, the state doesn't need to do it. I would even extend that to international welfare.
The economic arguments get very technical. It is also an area where theories are rarely good at being predictive. I see the connection between the moral & economic theories. But I am not as worried about the rights of a corporation as I am the rights of an individual.
I think you will find that a libertarians actually don't mind it being provided by a /state/ government (myself included) The issue comes in when the /federal/ government provides it. This is not freedom, because unless you move from the USA you are forced to subsidize what is arguably an inefficient system caused by bad government policies.
I'm a strong believer in the 10th Amendment. If it ain't in the Constitution, it's for the states to decide. If the people of a state want welfare, they'll vote someone in who will give it to them; whoever opposes can move to another state. 50 different implementation possibilities for everything. That's freedom.
Some parts of it seem outdated. The US isn't an ungovernable collection of states that need Federation only for dealing with other countries anymore. There is also nothing wrong with Federation if it works. Even if you decide to work at county level, that's fine. But as with anything, you end up risking income discrepancies & the consequences of this (migration, resentment, estrangement, etc.)
But anyway, that's a completely administrative issue. How you should form a Government (states//Federation, Republic, Kingdom) is one thing. Deciding what this government should do is a seperate issue.
If you are not opposed to Government provision of health/welfare (or as I prefer Government guarantee of these, but the de facto difference is quite small), I think you are pushing the definition of libertarian.