30 Aug 2014

Responding to Bryan Caplan on Why Government Enterprises Are So Good

Big Brother, Bryan Caplan, Shameless Self-Promotion 5 Comments

My newest LibertyChat article takes on Bryan Caplan’s surprising argument that Rothbardians can’t explain why government enterprises work so well. Here’s my conclusion, so you can see where I took the argument, but you should read the whole thing; I even talk about ice-pick lobotomies. (Yes, I went there.)

We see that the spirit of Rothbard’s analysis stands up, after all. There is not a sharp divide between “purely private” and “totally government” enterprise, but instead there is a spectrum. Some enterprises, like your local grocery store, are purely private–they can’t hobble their competitors and they can’t force their customers to give them money. Others, such as the Post Office, still have to convince their customers to give them money voluntarily, but they enjoy legal monopoly privileges. Still others, like a government school, receive tax funding regardless of how satisfied their “customers” are, but they can’t force parents to send their kids to that particular school, because even attendance laws can be satisfied by private schools or homeschooling (depending on the state). Finally, some enterprises–such as the NSA–can take your money and force you to enjoy their “services” with no choice on your part whatsoever.

The Rothbardian analysis, adjusting for this more nuanced spectrum, would say the grocery store is great, the Post Office and government school are a lot worse but not monstrosities, while the worst people in society will end up messing with you in the NSA and related agencies. And yep, that sounds about right, looking out at the world with open eyes.

5 Responses to “Responding to Bryan Caplan on Why Government Enterprises Are So Good”

  1. Jan Masek says:

    In Caplan’s view not even communism was a disaster. In Czechoslovakia in the 1980’s we all had food, we had a place to live, evey family had a car, we all had plenty of cloths, teachers also smiled at us and people were geneally happy.
    Of course the place to live was usually a block of apartments, the car was a Trabant or a Skoda 120, clothing was pretty uniform and if a gal wanted to stand out she had to learn to sew and make it herself. If you wanted new shoes you had to get to the shop on the day of shoe deliveries (once a week or so), wait in a line an hour before opening time. Then the selection was “black shoes” or “brown shoes” and you couldn’t be too fussy about the size, either. For kids one size bigger was the best as you had the added benefit of the shoes lasting longer with your foot growing and until then you just wore padding in it made of newspaper. Oh,newspapers were also quite good when you ran out of toilet paper.

    But hey, it was definitely not a disaster. We had tap water, quite good quality actually. To say it was an utter failure would be “explaining too much”.

    I don’t believe Caplan was ever an Austrian, from his “Why I am not an Austrian” he never got Rothbard because the paper is full of strawmen. His subsequent exchange with Block revealed really fundamental misunderstandings.

    The key sentence from his post is probably : “And I’ve worked in a government enterprise for seventeen years. “. Yeah, that explains it.

  2. Knarf says:

    Of all possible internet fights, clashes between ancap economists are by far the best. If you guys can somehow get David Friedman into the debate, then we’d really be cooking.

    Caplan has spent his professional career trying to stake out a middle ground between Austrianism and neoclassical thought, or just arguing that there’s no significant distinction between the insights of the two, so I don’t see this objection as a surprising turn of events. He plays the gentle contrarian role well, though, and his back and forths with Austrians are useful exchanges to flesh out concepts that us non-economists may not have considered in depth. Block’s debate with Caplan over cardinal vs. ordinal utility was a huge aha moment for me about thinking like an economist, and this is another good exchange.

    I understand the impulse to defend some state services–the post office is inefficient, but rarely TSA-style nasty, so Things Aren’t Really That Bad, Murray–but BC’s error is in assuming that Rothbard and other radicals leave no room for nuance when they condemn a state system where payment and service are inverted. Nothing in Rothbard’s argument, which is brief and broad, leads me to believe that he thinks all state services are necessarily equally abusive, so to the degree that he criticizes Rothbard rather than elaborating on him, BC is taking on a straw man.

  3. Brent says:

    I would just respond to BC by pointing out that the Postmaster General regularly says things like, “We are losing $25 million per day.” That seems like a disaster.

  4. Major.Freedom says:

    Good article.

  5. Bogart says:

    I agree with your critique of the article that Caplan did not answer two extremely relevant questions: What is the definition of “Work so well”? It seems to me to be an arbitrary valuation at best. Secondly, what is the definition of “Government Enterprise”? A variety of pure socialist and fascist institutions were mentioned in the article and comments. Without explicit definitions of these concepts there is no argument given against what Rothbard wrote.

    My own view of the difference between Government Enterprise and Private Enterprise is that the incentive problem hides the real problem which is Economic Calculation. There is simply no way for the bureaucrat to measure how efficiently they are using resources. And piggybacking on the fascist pricing system only gives the bureaucrat slightly more ability to determine the optimal uses of scarce resources. But what is not mentioned by Caplan or by anyone else making these comparisons outside of Austrians is that the most scarce input of all is human labor. And in this area government enterprise fails miserably in it’s efficient use.

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