The Economics of Libertarianism, Confused
Today at Mises.org I respond to Ed Glaeser’s recent piece on libertarianism, in which he pointed to the BP oil spill as proof that we need government regulation:
We’ve seen this rhetorical move so often that it no longer shocks, but I ask the reader to stop for just a moment and consider what Glaeser has done. In order to “prove” that heavy-handed government intervention works — in contrast to a world of libertarian laissez-faire — Glaeser points out that our present system allows massive oil spills and corrupt judges.
This is really amazing when you comprehend it. It would be as if we were arguing about capitalism versus socialism, and Glaeser said, “Well, the greed of the Communist Party officials in the USSR clearly shows that the profit system can’t be trusted to provide a fair society.”
Let me make the point from a different angle. We can argue theoretically all we want about a purely private “regulatory” framework, in which insurance companies and private judicial rulings constrained businesses in their narrow pursuit of profits. But we also would want to occasionally check our theoretical musings against reality.
Now then, what system is currently in operation — the unregulated utopia of the libertarians? Or the highly regulated, social-democratic world of the interventionists? It is clearly the latter.
Suppose for the sake of argument that the libertarians are right, and that big government can’t be trusted to provide us with a safe environment, a drug-free world, inner cities free of crime and poverty, and a well-educated citizenry. In that case — if the libertarian critique of big government were correct — then wouldn’t the world look exactly like it currently does?
Great job.
My latest DEEP THOUGHT (in addition to a) “money dilution” as the favored term for “inflation” and b) “covenant communities” curing sin under laissez faire) is:
Why do people distrust “the free market”? Is it because whenever they get ripped off, they have to visit with a GOVERNMENT JUDGE and PAY AN ATTORNEY and then hope and pray that the judge finds that the sky is blue and cows can’t fly? Good luck.
“In order to “prove” that heavy-handed government intervention works — in contrast to a world of libertarian laissez-faire — Glaeser points out that our present system allows massive oil spills and corrupt judges.”
And this is how an ideology protects itself and filters all evidence in such a way that whatever happens proves the ideology correct! Pretty much every single person in the world except libertarians sees that this is obviously a situation that called for more, not less, regulation. But libertarians see that some minimal regulation did exist — as if there could possibly exist an “unfettered” free market — and blame that minimal regulation. Just as “tobaccoitarians” would surely find that all cases of lung cancer have been caused because the victim could possibly have smoked more.
I was getting ready to argue with you, Gene, except I would have ended up re-writing my Mises.org article. If you have the time, I encourage you (on your blog maybe) to go through it, picking apart, say, five of its arguments. For what you’ve done above is focus on my point that *Glaeser* has the insulated worldview.
Do you really not see that? We have a real-world situation where a disaster occurred. So two conclusions are: (1) There wasn’t enough gov’t regulation, or (2) The gov’t regulation obviously doesn’t work. Glaeser simply assumed (1) was the only possible conclusion, based on the evidence, and I was pointing out the flaw in that argument.
To then argue with me, you act as if I held position (2), when I didn’t do that at all in the article.
Sorry, Bob, the entire actual article is every bit as bad as the excerpt above. The best part is how, when the society you live in is engaged in murder, you will fix it by opting out of the only process by which you might change anything and instead making up fairytales about a glorious land in which there is no government. (And marshmallows grow on trees, no doubt.)
Are you talking about my critique of voting? So in your study of history, you have never encountered people altering (what they considered to be) government oppression through means other than voting?
I don’t just mean revolution–I’m also thinking of Gandhi.
You’re right, I personally can’t do all that much, writing articles and giving talks on these things. But I can do a heck of a lot more than voting (a) for a person who I am 99.9999% sure will lose or (b) that is himself/herself a murderer/thief.
“BP apparently rejected advice of a subcontractor, Halliburton Inc., in preparing for a cementing job to close up the well. BP rejected Halliburton’s recommendation to use 21 “centralizers” to make sure the casing ran down the center of the well bore. Instead, BP used six centralizers.”
http://www.globalresearch.ca/PrintArticle.php?articleId=19762
I have a hard time believing that this would have happened if the Gulf had been privately owned and the owner’s representatives had been breathing down the neck of BP.
How the hell can you own the gulf? Might as well own Saturn.
Louis,
Can you own a lake? If so, how does removing one land-side of the lake complicate the issue of ownership?
I am just asking, not trying to pick a fight here.
The same way one would own a water park – only it’s a little bigger.
See Rothbard for starters:
http://mises.org/daily/2120
Plus, there is such a thing as the “tragedy of the commons”.
http://tinyurl.com/2enmtkk
“… if the libertarian critique of big government were correct — then wouldn’t the world look exactly like it currently does?”
I think that is a sublime statement – as beautiful as a sunset.
And quite Bayesian, too. Perhaps Bob will turn someday…
I don’t think I’m anti-Bayesian, Silas, I’ve just seen it used to justify a lot of arguments that I think are nonsense.
I don’t know what experience you’ve had with Bayesian arguments, but if you’re referring to the Caplan thing about “do you think we were really in a crisis?”: his error, to the extent he made one, was in thinking that the future state of the economy was necessarily informative about our proximity to collapse in 2008. That error would persist whether or not you use Conservation of Expected Evidence.
Plus, there’s nothing wrong with saying, “Yes this raises my degree of belief in Hypothesis X, but still find X less than 50% probability”, which is what Caplan did after seeing the evidence. Similarly, seeing a rock shaped like Zeus is (weak) evidence of Zeus’s existence, but doesn’t require me to suddenly believe in Zeus.
If you want to email me with some of the worse examples you’ve seen, I’d appreciate that. (I remember talking with you in December about the Bayesian approach about trying to infer probabilities from a series of temperature histories.)
The Caplan thing was one. I think I also flipped out when Tyler Cowen said no one is considering the possibility that the CRU scandal means we should revise our belief in global warming upward (since the scientists were willing to ruin their careers over convincing the public of the threat).
Also there was a moment in undergrad when a philosophy professor dismissed one of my arguments by saying, “You’re a Bayesian and you don’t even know it.” I am still bitter about that. I also am mad about kids peeing on my campaign posters in 8th grade. One day they’ll be sorry…
Bob, your site is not Silas free!
And if the Marxist critique of capitalism were correct, then the world would look exactly like it does today. That’s the advantage of dealing in fantasy: you can tailor your story so that the imagined villains produce today’s world exactly. Try it! It is very easy to make up a story in which the world is controlled by Martians, and the Martian control produces the exact social ills we see around us. Then, you can use this remarkable fit as EVIDENCE that Martians must really be in control!
And by the way, Bob, lest you think I’m picking on you, mea culpa: I recognize the fantasizing because I was so guilty of it myself. And if I seem harsh, well, sometimes, being awakened from a dream takes rough shaking.
Not really. The additional supposition of Martian control creates a conjunction between two hypothesis, which attenuates the odds you assign to the conjuction, compared to a hypothesis that describes the same world but without the Martian supposition.
So Occam’s razor shaves it off.
The minimum message length formalism eliminates such arbitrary hypothesizing by similar methods.
“The additional supposition of Martian control creates a conjunction between two hypothesis, which attenuates the odds you assign to the conjuction, compared to a hypothesis that describes the same world but without the Martian supposition.”
Same way the additional supposition of “a pure free market” attenuates the odds you assign to the libertarian analysis.
Where it happens, sure. Is your complaint that Bob was doing that here, or were you just ranting?
Of course he was.
Right Gene, maybe you expected me to sputter and compare you to Nazis (ha ha, inside joke everyone), but that’s a good point. I totally understand Marxists who think this whole episode proves giant corporations can’t be controlled by piddly social democratic means. I’m not a Marxist of course, but I would deploy the calculation argument and the history of the regimes closest to Marxism, to argue with them.
But what I *can’t* understand is someone who looks at this situation and thinks, “If only the MMS had more regulatory authority.” It’s not an a priori argument Gene to notice that they literally accepted sex and drugs from the companies they were regulating, or had a cake with “Drill Baby Drill” on it. In a market where the regulatory agencies (whether insurance companies or some other ones) were voluntarily chosen, those particular regulators would be out of business. But now, instead, we Salazar not getting canned and just renaming the MMS the Bureau of Ocean Management.
I understand the analogies you are drawing Gene, but you are simply wrong. I am not advancing the argument you think I am. You are so sure that you’ve nailed down “the libertarian mindset” that you can’t see that I’m not fulfilling your stereotype.
“I understand the analogies you are drawing Gene, but you are simply wrong. I am not advancing the argument you think I am. You are so sure that you’ve nailed down “the libertarian mindset” that you can’t see that I’m not fulfilling your stereotype.”
So, Bob, what you’re saying is that Callahan “filters all evidence in such a way that whatever happens proves [his conception of libertarians] correct.” Shocking.
Another point: Gene does it make you pause even for a second when I remind you that the government itself kept repeating BP’s bogus estimates of the leak in the initial days, when “independent scientists” were looking at the video footage and saying it was off by a factor of five or more? Are you still so sure that the problem here was inadequate powers for the federal government?
Or how about the NPR stories I heard of reporters who wanted permission from the Coast Guard to fly over the spill and get video footage, and the Coast Guard denied access. Then the Coast Guard guy said, “Hey, don’t get mad at me, these are BP’s rules.”
(Of course the Coast Guard PR person interviewed for the NPR story said that BP in no way sets Coast Guard flyover policy, and the lesser official misspoke.)
What would have to happen for you to abandon the federal government as the way to keep us safe from oil spills? I hope your faith in Leviathan isn’t non-falsifiable, Gene. That would sound so Rothbardian!
“And if the Marxist critique of capitalism were correct, then the world would look exactly like it does today.”
But we don’t have capitalism, or anything even reasonably close to it. We have mercantilism or, if you prefer, fascism.
So I don’t understand the point you’re trying to make. Would you provide a different example?
Bob, the above is like arguing that because one has a really bad diet that no food at all is the answer.
How about this for a reulatory regime that would work perfectly well: NO OFFSHORE DRILLING.
Done and done.
‘But what I *can’t* understand is someone who looks at this situation and thinks, “If only the MMS had more regulatory authority.”’
That you can’t believe this tells me that my analysis above is exactly correct.
How about this for a reulatory regime that would work perfectly well: NO OFFSHORE DRILLING.
Are you sure? So with cocaine, the problem is that we are just regulating drug dealers? If we had a flat-out prohibition, then there would be no corruption and no systematic drug dealing going on?
I realize it would be a bit harder for them to get away with publicly proclaiming they were trying to stop offshore drilling (while actually allowing it) than it is to get away with publicly proclaiming they are trying to stamp out cocaine use (while plenty of federal agents deal cocaine). But that’s why they haven’t actually banned it. So even on your own terms, Gene, yes it would be a much better regulatory regime, which is why our beloved, democratically elected representatives won’t actually implement it.
‘But what I *can’t* understand is someone who looks at this situation and thinks, “If only the MMS had more regulatory authority.”’
That you can’t believe this tells me that my analysis above is exactly correct.
Well then you’re still wrong. Let’s try this:
Suppose a concert promoter always hires a heroin addict to hold the cash box at events. He can’t understand why he keeps losing thousands of dollars.
He keeps firing heroin addicts and replacing them with new ones. He even tries to be extra cautious by installing a team of heroin addicts, where each one has a key and all keys are necessary to open the cash box. Still, he keeps losing money.
I walk along and say, “I can’t believe you think hiring more heroin addicts is the way to fix this.”
Have I just uttered a religious statement based on ideology? Do I just “have it in” for heroin addicts? Or might my observation be based in fact?
In any event Gene, you can say I’m hairsplitting in the above response, but I did not do any of that in the Mises article. There, the point was to show that the knee-jerk conclusion that the BP spill proves the case for more government, was flawed. Yes, I was saying that anarchy was my position, but my argument wasn’t, “All you need to do is look at the BP spill and ‘anarchy’ is obvious.”
“Have I just uttered a religious statement based on ideology? Do I just “have it in” for heroin addicts? Or might my observation be based in fact?”
Now, the ideological element shows up in the analogy. Let us assume all heroin addicts are thieves (which they are not) and none of them can handle ticket sales. To assume all governments are similarly alike is an ideological move, certainly not supported by history.
How is the belief that all government workers are bad at their job any worse than saying a regulatory regime will work perfectly well?
The only sense I can make of this is that for you, ideology means “having a hunch based on experience.”
Are you asserting that it would work “perfectly well” if the U.S. government banned drilling in its own coastal waters?
Wouldn’t that simply move the drillers to Mexican, Cuban and Venezuelan waters?
If all governments everywhere banned drilling offshore, wouldn’t the price of oil skyrocket? And wouldn’t the price of food follow? And wouldn’t the world’s poorest people starve? How can that be considered “perfectly well”?
Yes, after having gotten hooked on heroin, you do have to come down slowly. Similarly, having gotten hooked on cheap oil, it makes sense to let the world “come down” slowly. But drilling for oil a mile under the surface of the sea is idiotic.
Oh my gosh Gene. I need to stop being shocked by your positions. I am a walking refutation of rational expectations. (Yes we are mostly geeks here.)
Just to be clear, to outside observers: When I was talking with Gene about a “good” regulatory regime, I meant one that achieved its ostensible objectives. I wasn’t saying that it actually would be good if the government banned offshore drilling altogether.
I didn’t think Gene meant that either, but now I see that he did.
No more automobiles. There, now one of the leading causes of death in the U.S. is history.
Yes! Yes!! And no more sex, either! Now, one of the leading causes of ALL human deaths (i.e. human births) is ALSO history!
It’s worth distinguishing here between discretionary power and substantive policies.