02 January, 2012

Why I am not a "big-L" libertarian

The short answer: for the same reason I'm not an anarchist, or a communist, or whatever--I don't trust absolute principles.

The long answer is articulated by nobel-prize winning economist Ronald Coase in a classic interview:

Reason: Though you are now known as a leading free market economist, you started your intellectual career as a socialist. Why and when did your political views change? 
Coase: They changed gradually. What was most important was the work I did on the economics of public utilities at the London School of Economics. I studied the results of municipal operation of utilities and the effects of nationalization, particularly in the post office. This led to grave doubts about nationalization. It didn't produce the results people said it did. My views have always been driven by factual investigations. I've never started off--this is perhaps why I'm not a libertarian--with the idea that a human being has certain rights. I ask, "What are the rights which produce certain results?" I'm thinking in terms of production, the lives of people, standard of living, and so on. It has always been a factual business with me. I discovered that municipal operation didn't work as well as people said it would, and nationalization did not either. 
Reason: You said you're not a libertarian. What do you consider your politics to be? 
Coase: I really don't know. I don't reject any policy without considering what its results are. If someone says there's going to be regulation, I don't say that regulation will be bad. Let's see. What we discover is that most regulation does produce, or has produced in recent times, a worse result. But I wouldn't like to say that all regulation would have this effect because one can think of circumstances in which it doesn't. 
Reason: Can you give us an example of what you consider to be a good regulation and then an example of what you consider to be a not-so-good regulation? 
Coase: This is a very interesting question because one can't give an answer to it. When I was editor ofThe Journal of Law and Economics, we published a whole series of studies of regulation and its effects. Almost all the studies--perhaps all the studies--suggested that the results of regulation had been bad, that the prices were higher, that the product was worse adapted to the needs of consumers, than it otherwise would have been. I was not willing to accept the view that all regulation was bound to produce these results. Therefore, what was my explanation for the results we had? I argued that the most probable explanation was that the government now operates on such a massive scale that it had reached the stage of what economists call negative marginal returns. Anything additional it does, it messes up. But that doesn't mean that if we reduce the size of government considerably, we wouldn't find then that there were some activities it did well. Until we reduce the size of government, we won't know what they are.

(Thanks to Virginia Postrel for reminding me of this interview.)

It's about estimating and observing consequences, within the context of an ethical framework.  What is the right end to achieve, and how do you avoid a means whose anticipated and unanticipated consequences are worse than the original problem you want to solve? Today, in an era of "negative marginal returns," large-scale government action often (usually) makes things worse.  But not always.

Thus, when I hear Ron Paul talk about reducing America's military presence around the world, I think he's on the right track.  I'm willing to be persuaded otherwise, but the knee-jerk interventionism of the past sixty or so years doesn't seem to be supported by the evidence.  When he talks about ending trade treaties, I want to learn what he'll replace them with.  The world is too interdependent for economic artarky.  International law and organizations have emerged, piecemeal for the most part, because they meet a need.  When he talks about removing all social safety nets, even for catastrophic and random events, he sounds wrong both morally and economically.

The big-L Libertarian Party bills itself as the "party of principle," and I admire that.  I also fear it.  The Bolsheviks were a "party of principle," too.  When political principles become so absolute that they get in the  way of observing and thinking and adapting to change, it's time to rethink the principles.

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