Security the Hayekian Way

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I was having dinner the other night with a group of people that included a professional economist. He criticized someone else at the table for worrying about the threat to liberty in the wake of the terrorist attacks of last year. "The most important thing after September 11th," he told us, "was not liberty, but making sure we don’t get attacked again."

After dinner he delivered a talk on the benefits of the free market as seen by F.A. Hayek. What struck me at the time was the gap between the acknowledged benefits of liberty in providing most goods and services and its failure, in his eyes, in providing adequate security. He would never think of suggesting that we must trade liberty against material well-being. Quite to the contrary, he would insist that it is only because each of us acts so as to improve his own condition, as he sees it, that we enjoy the material comfort we have now.

His talk was good, but as I listened to it I couldn’t help but applying his arguments to the problem of providing security. What follows is some of the major points of his talk, along with the thoughts they prompted:

  • The rational allocation of resources depends on prices.

And prices depend on private property and contract – the very essence of liberty. Furthermore, supplying the "right" amount of security is a matter of rationally allocating resources. So any move away from liberty will lessen our ability to perform that rational allocation. Consider, for example, the fact that airlines are not allowed to individually decide what sort of security their customers will prefer and at what cost. Instead, they must use the one-size-fits-all, federally designed airport security that allowed the September 11th hijackers to pull off their attack in the first place.

  • Markets allow people to discover profitable uses of their time and resources.

A market for security allows people to discover profitable ways to make themselves and others more secure. On the other hand, when security is nationalized, the profit incentive is absent, and many potentially advantageous discoveries will never be made. Who knows what screening technology or passenger-profiling capabilities we would have today if airlines were free to set their own security policies, and could advertise their superior security systems to potential customers. (E.g., "Very Safe Air: No Hijackings or Crashes in 25 Years of Flying.")

  • Practices, routines, and conventions evolve in a market setting but become ossified in a bureaucracy.

When a business finds that its current practices for securing its property are seriously inadequate to the task, it will probably take it a day or two to make initial changes, and a few weeks or months to completely revamp its approach. The criterion by which to choose is clear: the business must find a security practice that yields more in benefits than it costs to implement.

Whereas the owner of a private firm can simply declare a new security policy when he sees fit, bureaucracies must adhere to complex procedural guidelines in their decision-making. As pointed out by Ludwig von Mises, that is because, lacking market prices for its inputs and/or outputs, "[bureaucratic] conduct of affairs is conduct bound to comply with detailed rules and regulations fixed by the authority of a superior body. It is the only alternative to profit management" (Human Action, XV.10).

Bureaucrats must swim in the sea of special-interest-group politics when a change in their guiding rules is needed, and the change ultimately will be made based on its political popularity rather than it adequacy to the task at hand.

  • We can’t "economize" for the entire economy. Only entities pursuing a unified goal, such as individuals, families, churches, businesses, and so on, can economize relative to that goal.

To economize means to pursue the least costly set of means that one envisions as leading to a chosen end. But the market economy has no single, chosen end. Instead, it is only a name for a network of individuals freely interacting to achieve their own ends.

The idea that "the people of the United States" have a single, chosen security end in mind is only useful for ideologically inspired soundbites. In reality, security, too, is only consumed by individuals, each of whom will have his own view of how much of which type of security he wishes to consume. Some people will prefer additional guards at nuclear power plants. Some will want greater control of crop-dusting flights. Some people want nothing to do with guns, while others would like to arm themselves like Rambo. Some people might want convenient, fast access to their plane, while others don’t mind a strip search if it makes the flight a little safer.

When market participants can choose how much of their resources they will commit to particular security projects, the result will be a structure of security that roughly reflects how much people think various security projects are worth to their own well-being. Cases where an individual property owner is seen as imposing undue risk on those around him, such as the owner of a nuclear-power plant who allows anyone off the street to come in and try out the system for a day, can be handled through tort law.

No doubt, a free market security structure will have deadly failures at times. It is pointless to compare what that free market result might be with a world of "perfect security." Such a world cannot exist. What markets provide is not a perfect allocation of resources but a rational one. And that is precisely what collectivist efforts to provide goods, such as "national security," cannot provide, as they lack market prices to guide them.

That isn’t to say that various interventions in the market can’t increase the satisfaction of some people, at least in the short run. Government agents are very good at using our resources to protect themselves. I, too, would feel safer if I had my own trained security detail assigned to me, flew on private jets all of the time at someone else’s expense, had special "no-fly" zones put in over my house and office, and was whisked off to a secured bunker at the first sign of trouble.

Liberty and security are not goods competing for our scarce resources, so that we must accept less of one to get more of the other. Liberty is not a good at all, but rather the inalienable condition of every actor and every action. It manifests itself as a web of relationships in which each one of us pursues the goods he values in the best way he can imagine. We cannot sell the responsibility for our own choices to another. Therefore, attempts to trade one’s liberty for something else are acts of self-deception and rewards to the "buyer" of liberty for employing threats of violence and aggression.

In trying to sell what we cannot sell, we should not be surprised if we haven’t bought what we thought we were buying.

Gene Callahan [send him mail], the author of Economics for Real People, is an adjunct scholar of the Ludwig von Mises Institute and a contributing columnist to

Gene Callahan/Stu Morgenstern Archives

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