What a Real “Libertarian Experiment” Looks Like

In labeling the current government shutdown as a “big libertarian experiment,” economist Paul Krugman has adopted what I’ll call the Left Behind theory of libertarianism. Like the rapture that portends the coming of the biblical end of days, Krugman imagines a government that flashes out of existence overnight and asks, “Are you happy now, libertarians?”

Of course, this is patently absurd. Ryan Bourne at Cato and Peter Suderman at Reason eloquently point out Krugman’s most egregious error: that removing the government from an economy it has already influenced is not the same as removing government’s influence from an economy.

But Krugman is also guilty of a much more common error that I like to call the nation-state fallacy: that the things our national governments do now can only be done by national governments, and that libertarians believe they shouldn’t be done at all. One need not look further than AIER’s own brain trust to poke giant holes in the nation-state fallacy. AIER President Ed Stringham has shown how private governance institutions pop up all around us. And just last week, Jeffrey Tucker wrote about how the political instability exemplified by the current shutdown shows that many government services should be provided privately.

Playing Defense

The libertarian movement, in all its diversity, spends a lot more time arguing for less government than it does advocating better, smaller, more-voluntary private institutions of governance. This is often for good reason. There’s a lot of defense to be played right now, with the left proposing sky-high tax rates and huge new government programs, and the populist right stuck on trying to erect a wall on our southern border. But without a positive vision of a world with radically smaller central governments, too many people, Nobel-laureate economists included, will remain stuck on the question “But who will pick up the garbage?”

This leads to a dilemma because the lack of a coherent vision for a world with radically less government is a feature rather than a bug of libertarianism. If we knew how to formulate all bottom-up institutions that would allow society to work together far more effectively than coercive central governments, then we could just have governments impose those institutions. Just like innovations in the marketplace, decentralized institutions need to evolve over time to the point they work better than what any central authority could have written down.

This is a tough sell for people used to a world where government plays countless roles. And it’s why libertarians need to play just a little less defense and aim for the goal, showing where and how private institutions can spring up and work better than the government. In his gloating, Krugman inadvertently provides just such an example: the Food and Drug Administration.

A Positive Vision

The Progressive Era of the early twentieth century gave birth to many of the laws and government agencies that do things people now assume are both essential and impossible to perform without government. No wonder the era is a favorite libertarian punching bag. But step back and think about how much society, and especially technology, has changed since the 1906 Pure Food and Drug Act.

We now have the ability to receive information and broadcast it to the world, which would have been unfathomable even a generation ago. Krugman doesn’t register this fact, even as he steps away from his vision of the political rapture: “Maybe you believe that private companies could take over the F.D.A.’s role in keeping food safe, but such companies don’t exist now and can’t be conjured up in a matter of weeks.” To Krugman, the only alternative to how we currently monitor food safety is a private company essentially doing what the FDA does now. But in the highly networked, technological society of 2018, we can do so much more.

With each of us as a communication node, cases of food contamination can be identified, broadcast, and traced to retailers and distributors and ultimately to the source itself. This can likely be done faster than any lab test in a primarily top-down system. Such a system is ripe for blockchain technology, with the aid of which companies could agree to source the food they produce in a detailed and secure way without government or any other intermediary calling the shots.

In a theoretically perfect government system, the FDA would never let contaminated food reach consumers. But one need only turn on the news to see the obvious fact that perfection is unattainable. The nongovernmental system is closer to what Nassim Nicholas Taleb has called antifragile: where a system allows for a small number of failures but addresses them and uses them to improve, avoiding larger ones.

Start Small

The liberty movement sometimes feels bifurcated, talking amongst itself about big goals for radical change while simply trying to stem the tide of taxes, deficits, and encroachments on civil liberties in the wider political world. The problem is that most people cannot imagine a world where government is not the primary and sometimes only means to coordinate and solve problems. The example I propose above is a drop in the bucket, but in order to shift people’s perspectives, we may need to start small. We can live together in far more prosperous, voluntary, and humane ways than by government edict. And we can start by fostering the growth and evolution of institutions that show people how.

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Max Gulker

Max Gulker is an economist and writer who joined AIER in 2015. His research often focuses on free markets and technology, including blockchain and cryptocurrencies, the sharing economy, and internet commerce. He is a frequent speaker at industry conferences, especially on blockchain technology. Max’s research and writing also touch on other economic topics, including governance, competition, and small businesses.
Max holds a PhD in economics from Stanford University and a BA in economics from the University of Michigan. Prior to AIER, Max spent time in the private sector, consulting with large technology and financial firms on antitrust and other litigation. Follow @maxgAIER.