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The Trouble With Liberty

Same story on issue after issue. Taxation isn’t just a poor allocation of resources; it’s an act of violence. “At least the highwayman would take your money and leave you alone,” says Douglas French, president of the Mises Institute. “The government takes your money, then stands around and tells you what to do with it.” The Federal Reserve doesn’t just restrict the markets; it’s an arrogant monstrosity that should be abolished and replaced by the gold standard—a policy that most economists agree would lead to economic meltdown. War isn’t just bad; it’s a bankrupt excuse to suppress personal freedoms and wield state control that’s never justified by the inciting incident. The North should have let the South exercise its “right to secede,” argues libertarian commentator Lew Rockwell. Conservative Pat Buchanan penned a book in 2008 calling World War II “unnecessary.”

No political movement deserves to be defined by its extreme elements. (For Democrats, that way lies socialism.) But middle-of-the-road libertarianism is already pretty far out. “The dominant strain of libertarianism these days is—and I’m not using these words in any kind of pejorative sense—radical and utopian,” says Lindsey. But if Libertopia is the goal, no one knows how to get there. Lindsey compares libertarians who preach purity to the “Underpants Gnomes” in South Park, a popular analogy in wonk circles: “Step one, articulate Utopia. Step three is Utopia. Step two is a big question mark.”

Libertarian minarchy is an elegant idea in the abstract. But the moment you get specific, the foundation starts to crumble. Say we started from scratch and created a society in which government covered only the bare essentials of an army, police, and a courts system. I’m a farmer, and I want to sell my crops. In Libertopia, I can sell them in exchange for money. Where does the money come from? Easy, a private bank. Who prints the money? Well, for that we’d need a central bank—otherwise you’d have a thousand banks with a thousand different types of currency. (Some libertarians advocate this.) Okay, fine, we’ll create a central bank. But there’s another problem: Some people don’t have jobs. So we create charities to feed and clothe them. What if there isn’t enough charity money to help them? Well, we don’t want them to start stealing, so we’d better create a welfare system to cover their basic necessities. We’d need education, of course, so a few entrepreneurs would start private schools. Some would be excellent. Others would be mediocre. The poorest students would receive vouchers that allowed them to attend school. Where would those vouchers come from? Charity. Again, what if that doesn’t suffice? Perhaps the government would have to set up a school or two after all.

And so on. There are reasons our current society evolved out of a libertarian document like the Constitution. The Federal Reserve was created after the panic of 1907 to help the government reduce economic uncertainty. The Civil Rights Act was necessary because “states’ rights” had become a cover for unconstitutional practices. The welfare system evolved because private charity didn’t suffice. Challenges to the libertopian vision yield two responses: One is that an economy free from regulation will grow so quickly that it will lift everyone out of poverty. The second is that if somehow a poor person is still poor, charity will take care of them. If there is not enough charity, their families will take care of them. If they have no families to take care of them—well, we’ll cross that bridge when we get there.

Of course, we’ll never get there. And that’s the point. Libertarians can espouse minarchy all they want, since they’ll never have to prove it works.

There are all sorts of situations the private market isn’t good at managing, such as asymmetrical information (I know my doctor is qualified to treat me because he has a government license) and public goods (it makes sense for the government to cover vaccines, which benefit everyone, not just the consumer). There’s also a consistency problem: Why should the government be responsible for a public good like national defense but not air-quality protection?

Or, say, a stable world financial system? Most of the libertarians I spoke with said they would have let the big banks fail in 2008. “I wouldn’t have done anything,” says French. “The key to capitalism is you have to have failure.”

The financial crisis was not an indictment of their worldview, libertarians argue, but a vindication of it. Letting the banks fail would have been painful. But the pain would have been less than it will be now that the government is propping up the housing, banking, and automobile industries. Plus, the economy would have recovered by now. “You’ve probably never heard of the depression of 1920,” says French. “You haven’t heard of it because it came and went in one year, because the government didn’t do anything to prop up failed businesses.” (Other economists argue that the government’s response was actually consistent with the philosophy of John Maynard Keynes.) Letting banks fail would also avoid moral hazard, say libertarians, since investors wouldn’t take such risky bets the next time around.