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
