Who Are the Real Realists?

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Libertarians
are regularly referred to as unrealistic. I cannot count the number
of times that I have presented a libertarian idea to someone only
to have them respond with "Well, maybe in a perfect world,"
or "Sure, in theory," or some other variant on
the same theme. The implication is always that libertarians spend
most of their time dreaming of a utopian society with maximum freedom,
while those hardheaded conservatives, liberals, and centrists hammer
out governmental policies that are practicable. All of these reputations
are undeserved. It is in fact the conservatives, liberals, and centrists
who exhibit unrealistic faith in government, and the libertarians
who realistically advise that their policies are unworkable.

Before
going any further, it is important to distinguish between two different
ways of being realistic. If being realistic means predicting the
results of a policy with some kind of accuracy, then libertarians
are the most realistic of the bunch. However, if it means proposing
ideas that are widely popular and likely to be passed into law,
then by all means libertarians are terribly unrealistic. I think
people often combine these two concepts, when in fact they are usually
— but not necessarily — quite different. For instance, during the
Great Leap Forward, Mao's defense minister Peng
Dehuai
told Mao that the Leap was a failure and that it should
be stopped. Politically, this was an incredibly unrealistic move
as it did nothing to stop the program and cost Peng his post, freedom,
and eventually his life, but actually it was Mao's policy of building
backyard furnaces across China that was insanely unrealistic.

That being
said, how are libertarians more realistic than other political persuasions?
Let's look at a few different issues.

The
Iraq War

There was
a period between September 11 and the terrible trifecta of the battles
of Najaf and Fallujah and the breaking of the Abu Ghraib scandal
in the spring of 2004 when neoconservatives seemed like the smartest
and most realistic — people — in the country. This reputation has
dimmed somewhat as of late, but it still behooves us to revisit
some of their prognostications from those heady days at the beginning
of the Iraq invasion. On April 1, 2003, neoconservative par excellence
William Kristol went on NPR to offer intellectual ammunition for
the war. When the host asked about possible sectarian tensions in
post-war Iraq, Kristol brushed
her concerns aside:

I think there’s
been a certain amount of…pop sociology in America that somehow
the Shia can’t get along with the Sunni, and the Shia in Iraq
just want to establish some kind of Islamic fundamentalist regime.
There’s almost no evidence of that at all. Iraq’s always been
very secular.

Really? So
how's that working
out
for you?

On the
other hand, most libertarians warned against the war, saying that
it could be disastrous for Americans and Iraqis alike but were for
the most part roundly ignored. Ted Galen Carpenter was one libertarian
making such arguments, and as the vice president for defense and
foreign policy studies he is about as mainstream as libertarians
come. In February 2003, Carpenter wrote
the following:

It is highly
improbable that overthrowing Saddam’s regime and setting up a
democratic successor in Iraq would lead to a surge of democracy
in the region. Indeed, it probably wouldn’t even lead to a stable,
united, democratic Iraq over the long-term. A U.S. occupation
force would be needed for many years just to keep a client regime
in power.

The harsh
reality is that the Middle East has no history of democratic rule,
democratic institutions, or serious democratic movements. To expect
stable democracies to emerge from such an environment is naive.

Moreover,
even in the unlikely event that a wave of democratic revolutions
swept the Middle East following the U.S. conquest of Iraq, the
United States would probably not like the results. If free elections
were held today in such countries as Egypt, Jordan, and Saudi
Arabia, they would produce virulently anti-American governments.

Four years
on, after the electoral victories of Mahmoud Ahmadinejad in Iran,
Hamas by the Palestinians, and Hezbollah in Lebanon, Carpenter seems
absolutely prescient. Yet libertarian ideas on foreign policy are
still unjustly marginalized as unrealistic while Bill Kristol is
still a regular on Fox News and the Sunday morning talk shows.

Free
Trade

Libertarians
advocate a policy of completely unregulated trade between countries
— a policy that has never been implemented in this country and threatens
a great many powerful, entrenched interests like unions, steel companies,
and sugar farmers. Surely in part for the latter but also because
most people have little knowledge of economics, free trade is regarded
suspiciously
by the general public. But aside from a few cranks
like Lou Dobbs, Naomi Klein, Pat Buchanan, and Lyndon LaRouche,
almost no one who has thoroughly studied the issue questions the
economic benefits of free trade. According to Robert Whaples recent
study
of prominent economists' positions on various political
issues, 87.5% agree that “the U.S. should eliminate remaining tariffs
and other barriers to trade," and 90.1% disagree with the idea
that “the U.S. should restrict employers from outsourcing work to
foreign countries.” In fact, I will go a step farther by saying
that free trade is the most beneficial policy ever devised to benefit
all the people of the world. Milton Friedman made a similar point
at an American Economic Association meeting. Walter Block recalls
Friedman saying:

“Thanks to
economists, all of us, from the days of Adam Smith and before right
down to the present, tariffs are perhaps one tenth of one percent
lower than they otherwise would have been.” Dramatic pause goes
here. A very long pause. He then continued: “And because of our
efforts, we have earned our salaries ten-thousand fold.”

So while there
may be tremendous political resistance to it, free trade is a highly
practicable policy in that it assures the greatest increase in wealth
for the greatest number of people.

Medicare

Medicare
is one of the largest (if not the largest) contributors to
the federal government's tens of trillions of dollars in unfunded
liabilities
. Furthermore, because the elderly are the block
of voters with the highest turnout, Medicare has essentially fused
with Social Security to create one huge, untouchable third rail
in American politics. However, it has also become clear to pretty
much everyone with brain waves that something in this formula will
have to give within the next generation or so: taxes will have to
be raised dramatically or liabilities will have to be cut (or abolished),
both of which are political non-starters.

Before
turning to the solution to this seemingly intractable problem, it
is necessary to know: what are the benefits of Medicare? True believers
in the welfare-state often seem to think that Medicare is so necessary
and beneficial to the elderly that without it, many old people would
be eating cat food so they could afford basic medical treatment.
But the truth is that Medicare never really provided a great benefit
to the elderly.

In his excellent
history of the 1960s, The
Unraveling of America
, Allen J. Matusow details how Medicare
contributed to medical inflation and primarily served to transfer
money from taxpayers to doctors:

Medicare
not only increased the cost of medicine for society as a whole;
it provided far fewer financial benefits for most recipients than
was commonly believed. For that small minority of old people who
had both long periods of hospitalization and small savings, Medicare
was everything it was cracked up to be. But the average aged person
was little better off. True, he paid only 29 percent of his medical
bills directly out of pocket in 1975, compared to 53 percent before
Medicare; but his total bill was also much higher. The average
beneficiary spent $237 out of pocket the year before Medicare
and $390 ten years later — in constant dollars almost exactly
the same. (Matusow, 1984, p. 229).

A few pages
later, he concludes, "[a]side from middle-class old persons
protected from the financial ravages of long illness, the clearest
beneficiaries of Medicare-Medicaid were doctors, who, according
to one estimate, enjoyed an average income gain of $3,900 in 1968
as a result of these programs." (Matusow, p. 232).

So why
should we expect terrible consequences for the elderly to ensue
if a program that was only somewhat beneficial to a small number
of them were to be gradually phased out? There is no doubt that
the American health care system has a number of problems, but Medicare
is not solving any of them.

Conclusion

Libertarians
are unjustly maligned as mindless ideologues, but while many of
us adhere to a version of natural rights, we also believe that our
policies lead to good consequences. Further, we understand that
incentives matter far more than intentions, which leads us to be
suspicious of even the best designed laws because we know that design
will not remain pristine for long in the hands of self-interested
politicians. Perhaps there was a way to invade Iraq that wouldn't
have been so disastrous (that still wouldn't have made it right),
but how likely was that policy to come out of the sausage grinder
that is Washington D.C.? George Mason economist Russell Roberts
made a similar point
after discussing the possibility of a higher gasoline tax with Harvard
economist Greg Mankiw:

The standard
argument against government intervention to correct market failures
is that you have to look at government failure, too. It would
be naive to argue that we shouldn’t worry about pollution because
people will feel guilty polluting and that will discourage pollution.
Similarly, it strikes me as naive to encourage government to solve
the pollution problem via a gasoline tax if you know that the
level of the tax will be set wrong and that the money will be
badly spent.

He's right:
it's the people who believe the government can dictate the smallest
details of 300 million people's lives and achieve a desirable outcome
who are naïve; libertarians are the realistic ones.

February
13, 2007

John
Payne [send him mail]
resides in Saint Louis, MO and is currently taking classes to teach
high school history. He blogs at RougholBoy.com.

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