Libertarian on Air America

Posted at The Thom Hartmann Program - August 3, 2007. Below this post are responses from scottlibertarian and my comments.

The "Libertarian Menace," of which scottlibertarian is a devotee, is more dangerous than the "Communist Menace" ever was. Evil lies at both extremes. See Explaining Liberal Principles .

As another person noted, they are utopians. They believe their ideology will produce economic paradise. But there are no utopias in social systems. Basically, they do not understand the nature of reality. The issue goes way beyond the "commons" and it's unfortunate that Thom doesn't talk about that.

At The Trade Deficit and the Fallacy of Composition there are examples of how paying attention to the "individual" guarantees the system will fail. Health insurance fails: A Market Failure: Health Insurance. Education fails because education has, as do libraries, positive externalties (I love my public library). Public health has positive externalities. We have infrastructure backlogs (with steam pipes exploding and bridges falling) because regions have "economic development" policies that are individually logical, but collectively irrational (see The Growth Trap and the Growth Facts of Life).

Almost all of our major social problems are due to the Fallacy of Composition, which is based on a deeply flawed perception of reality.

Libertarians are so ignorant of reality that they would rather pursue their ideology and crash into walls than understand reality and be able to find the door. They're "free" to stay in the prison of their own thinking. See On Freedom.

Libertarians don't understand the threat from the loss of manufacturing. They can't tell the difference between farming crops, for which supply and demand are relatively inelastic, and manufacturing things, for which there's inelastic demand. On farming, see Farm Policy Failure, on the loss of manufacturing see The Trade Deficit and the Fallacy of Composition.

This lack of understanding illustrated by scottlibertarian is leading us, within a few years to the next Great Depression.

Convince libertarians of their errors in thinking ... never. It's a religion based on faith in a distorted view of reality. In their view, if the "free market" fails, it's only because it just wasn't "free enough."

Thank you for turning me onto the "Explaining Liberal Principles" website. I will be reading it tonight. Meantime, I would just point out a few things. I wish I had a nickle for every time that I have heard fellow libertarians say "there is no utopia"...that is certainly what I believe. So I was really surprised to read that "libertarians are utopians"...just ain't true.

I do NOT believe that more liberty will produce economic paradise...only a better situation than we have now.

The cause of the great depression was the bad monetary policy at the FED. Do you dispute that in the late 20's and early 30's the FED drastically cut the monetary supply? If you do, please give me a source...I truly would be interested.

Also, I would be interested in learning how the "labor market is controlled to assure there are always more people who need jobs than there are jobs"...

If you define "free market" as "individuals and/or groups of individuals making voluntary exchanges...free of coercion by government or criminals"...then please tell me how that can fail. If someone defrauds someone else, that is hardly a "free market exchange"...call it what it is, criminal behavior.
If a health insurance company and you enter into a contract, and they do not live up to the contract, how is that a "market failure"? Sounds like breech of contract to me.

But again, thank you for the "liberal principles" website. I promise to spend time reading. If any of it changes my thinking I will comment on next weeks blog. I truly want to find out if I am wrong about liberty and markets being better than big government and central planning.

Below are e-mail responses from scottlibertarian with my comments. His text is in blue.

Date: Sat, 4 Aug 2007 10:27:33 -0700 (PDT)
From: scottlibertarian
Subject: I disagree with you on many, many things...but here's one.
To: scuba@usa.net

I disagree with you on so many things that it is hard to pick where to start. But here is one.

Not surprising. I disagree with libertarians on almost every aspect of economics.

You called the free market the "lawless market". Let's look at that for a minute, if you will. Would you say that freedom of religion is "lawless religion"? Would you say that freedom of speech is "lawless speech"?

Yes, "free speech" is lawless if it's OK to yell "Fire!" in a crowded theater.

Religion is lawless by definition. It's about belief. When laws are applied we have dictatorship that declares some beliefs to be against the law.

Deregulation is explicitly about making "the market" lawless.

And yet, you seem to be saying that freedom of economic exchange is lawless exchange.

Freedom is about more than the ability to take action; it's more accurately about the ability to take effective action. That requires ... requires! ... attending to the whole as well as the parts. It's not one or the other. In many cases the Primacy of the Whole means that attending only to the parts dooms the system to failure.

This is the case for ocean fishing, urban growth, health insurance, what's called "trade", and many other areas. If you desire oceans to be depleted of fish, incredibly large and growing infrastructure backlogs, large and growing numbers of uninsured, and an economy without the ability to produce tradeable goods ... well, you've got it. Good for you. Congratulations.

But I don't consider these results to be desirable.

And freedom requires balance. One person's freedom ends when it impinges on the freedom of others. "Freedom of economic exchange," without laws, allows exchange that can incur costs on, and even kill, others (e.g., by pollution). So yes, economic exchange without laws is lawless exchange.

The "freedom" being introduced into Iraq was well-described by Defense Secretary Rumsfeld:

"Freedom's untidy, and free people are free to make mistakes and commit crimes and do bad things," Rumsfeld said. "They're also free to live their lives and do wonderful things. And that's what's going to happen here." Looting, he added, was not uncommon for countries that experience significant social upheaval. "Stuff happens," Rumsfeld said.

This isn't "freedom", it's the tyranny of lawlessness.

Naomi Klein explains in Harpers in "Baghdad Year Zero" (print-friendly versions: Word and PDF formats) that it's this "freedom" and economic insecurity that has brought on much of the violence in Iraq. The neocon plans for a perfect libertarian "corporate utopia" morphed into a perfectly "ghoulish dystopia." It's a "must read" for anyone wanting to understand what's happening in Iraq and what laissez-faire capitalism fosters.

What libertarians don't grasp is that an exchange and the economic activity allowing that exchange can have negative externalities. That is, economic activity can affect others negatively. Not understanding that there are negative externalities is a perfect illustration of not understanding reality. Libertarians redistribute costs, which I call "cost-side socialism."

Perhaps I should say "most libertarians," because scottlibertarian does seem to recognize below that, as he says, "it is legitimate for government (or the third parties) to respond to that. However, he implies that government will just mess things up more, so it's not clear he'd really be for doing anything about it.

It's that Libertarians are stuck in 16th century thinking. They don't believe that effective policies can be designed. Perhaps they wouldn't even want to if collective effects, which they can't see, were to be addressed. For discussion of this, see Government Dysfunction and Command and Control.

Libertarians are fundamentalists. At Mental Models & Beliefs I quote John Sterman, Director, MIT System Dynamics Group, in All models are wrong: reflections on becoming a systems scientist:

"Fundamentalism, whether religious or secular, whether the unquestioning belief in an all-powerful deity, the all-powerful state or the all-powerful free market, breeds persecution, hatred and war."

Libertarians know truth. But because they wear blinders that prevent perceiving the collective dimension of reality, they cut themselves off from great portions of the whole truth.

The mental condition of not being able to see the Primacy of the Whole may be related to a physical condition that I learned about from the movie, "Human Nature." It's simultanagnosia: "The inability to perceive elements as components of a whole." Those with this condition literally cannot see the forest for the trees. The dimensions of reality include the individual-collective and the interior-exterior.

The mental condition counterpart, libertarianism, is dangerous to society.

I think that it is clear the founders, and other philosophers, meant "freedom" to be a negative concept. That is, freedom FROM excessive government and criminals.

It's not that freedom is either "freedom from" or "freedom to." It's both. The shift from "either-or" thinking to "both-and" can be difficult, but it's integral to systems thinking: seeking to understand system behavior by examining "the whole," instead of by analyzing the parts.

The saying, "the whole is greater than the sum of its parts" is fact because systems have "emergent properties." You can't cut an elephant in half and get two elephants. An elephant is the sum of its parts. A mind isn't in the parts of a brain; it's a manifestation of the whole of a brain and the interactions among its parts.

Not the freedom to fly or the freedom to never have to work (those are "wishes" ...not rights). FDR's "four freedoms" should have been called "four wishes".

Here are the Four Freedoms from Franklin D. Roosevelt's Address to Congress January 6, 1941:

The first is freedom of speech and expression -- everywhere in the world.

The second is freedom of every person to worship God in his own way -- everywhere in the world.

The third is freedom from want -- which, translated into world terms, means economic understandings which will secure to every nation a healthy peacetime life for its inhabitants -- everywhere in the world.

The fourth is freedom from fear -- which, translated into world terms, means a world-wide reduction of armaments to such a point and in such a thorough fashion that no nation will be in a position to commit an act of physical aggression against any neighbor-- anywhere in the world.

Libertarians have a majore issue with the third of Roosevelt's freedoms; so let's look at that one.

The U.S. Constitution states the purpose of this nation is to "form a more perfect Union," "promote the general Welfare" and "provide for the common defense." That's what "We the People" is about ... the collective (gasp) We. And government policies should support "Life, Liberty and the pursuit of Happiness" as described in the Declaration of Independence.

The federal government has outsourced monetary policy to a private corporation (the Federal Reserve) that depends upon, and actually promotes, worker insecurity to "control inflation." Its policies assure there are always greater than 10% more people that need jobs than there are jobs (not including the underemployed persons with degrees doing work that doesn't require a degree).

This means that Federal Reserve policies create a great excess labor supply compared to demand. It's not about the "freedom to never have to work", it's that too many never get the chance to work.

This is inconsistent with the Constitution. It depresses wages below a level that supports Life (that's the major cause of poverty and why there's even a need for a "minimum wage") and it violates the right to Life.

It violates the "pursuit of Happiness" to make persons insecure.

And it violates the right to Liberty to make persons so insecure that they're afraid to seek other employment.

Libertarians have never agreed with these aspects of the Constitution; they moan especially about how the right to the "pursuit of Happiness" was included, rather than "private property." But they should abide by the Constitution until they're able to get it changed.

There is simply no way uphold the Constitution without consideration of "the whole" and "the parts," not just "the parts."

A true "right" does not impose any positive obligation on someone else (including taxes)...only the negative requirement that they do not violate your rights. The terms "rights" and "freedoms" are almost interchangeable. Now I understand that without an agency of force (government...groups of individuals with guns and some sort of authority to use them)...without that government, the individual would be on his own in SECURING his rights. But if rights exist (and no one can prove that they do or do not exist) then those rights obviously precede any government and are superior to it.

Yes, it cannot be "proved" that rights exist. The Constitution declares that certain rights do exist. This Declaration defines our society and our reality.

Here scottlibertarian has at least a recognition that government is necessary because his exercising his "rights and freedoms" can impinge on the "rights and freedoms" of others. Below he recognizes "third party effects", using that term instead of "negative externalities."

I describe at Explaining Liberal Principles when government("collective action") is absolutely required to provide the balance to avoid, or at least compensate for, negative externalities. We're not either individuals or a collective, we're both (... that "both-and" thing again ...).

Those who really believe in using market forces (this includes liberals) understand that the costs of "negative externalities" must be internalized (that is, included in the costs of products & services) for "the market" to make valid choices.

Libertarians lose touch with reality when they say that "A true "right" does not impose any positive obligation on someone else (including taxes) ..." Imposing taxes, a positive obligation, on all is necessary for the system to work.

The Federal Reserve deems its policies are collectively necessary to stabilize the economy. They are currently being deemed necessary even though the vast majority of the population has no idea of this (I, by the way, don't share this belief). Given these policies and their extremely negative effects on a large percentage of the population, it's necessary to tax some to compensate those who carry the burden. The compensation is by way of unemployment insurance and imposing regulations like a minimum wage.

When developers and home builders sell their products there are burdens imposed on infrastructure outside the development proper. Unless impact fees internalize those costs, implicit developer subsidies distort the market and impose burdens on the whole of society. That's why there's a $1.6 trillion infrastructure backlog in the U.S. including collapsing bridges.

Privatized health insurance is doomed to fail ... and it is in a death spiral. Government-run health insurance is necessary to avoid adverse selection.

There is a natural law (path dependence) that leads to vast inequalities of wealth even when everyone starts out equal with equal ability. Read that again, even when everyone starts out equal with equal ability! Just because this is a natural effect doesn't mean our society should be run that way ... it's "natural" to live as "hunter - gatherers", but we can decide to not live that way.

The path dependence phenomenon leads to monopoly and oligopoly that destroy the competition that libertarians claim to worship. We require antitrust laws to support true free enterprise. Government regulation is necessary to even allow market competition and free enterprise. No competitive sport is without rules to make the competition fair. The same is true of the market.

Indeed the NFL, as I understand it, is a socialist organization because they've found it's necessary to keep one team from completely overpowering the others and keep the sport competitive. Otherwise, because of path dependence (also referred to as the systems thinking archetype, "Success to the Successful"), one team will eventually get all the good players and win all the games. Ever play monopoly? That game is an excellent illustration of path dependence.

So "lawless religion" would be a polygamist forcing a 12 year old to get married...a violation of individual rights. Yelling "fire" in a crowded theater (when there is no fire) would be an act of criminal aggression and therefore "lawless speech".

And if I have a contract with a health care insurance company and the company doesn't honor the contract, that would be a "lawless market". But in fact, these examples are of criminal behavior...not freedom. Many people on the left lump criminal behavior in with the "market".

I could just as easily say that criminal behavior involves the use of force and therefore is similar to government. As I am sure you realize, the definition of words is critical in any political debate. I define the free market as follows..."individuals and/or groups of individuals engaging in voluntary exchanges, free from coercion by government or criminals". Of course, this is a simplified definition...and could be refined further by explaining what government actions constitute coercion. Certainly if the activity was having "third party effects" ...also called "neighborhood effects" on others, it is legitimate for government (or the third parties) to respond to that. Keeping in mind that government actions ALSO have "third party effects" and therefore should be kept in check.

Clearly government today has gone way beyond this stage and needs to be drastically cut back. As Milton Friedman once said "there is a smokestack on the back of every government program". But when government gets too small, the criminal element begins to dominate. So government needs to be big enough to fulfill it "protection racket" role.

respectfully,
scottlibertarian

"Underlying most arguments against the free market is a lack of belief in freedom itself." Milton Friedman-economist

Date: Sat, 4 Aug 2007 15:02:47 -0700 (PDT)
From: scottlibertarian
Subject: More rebuttal
To: scuba@usa.net

I have said the same thing about liberals (so maybe we are both right or both wrong). I have said that many liberals believe that the way to solve whatever health care problems people have is to simply let the government handle it. So simple, so neat, so flawed. (actually that last part I copied from you...my wording was similar).

As for the repetition of the simple and false big goverment liberalism lie (just like the communists and Nazis)...well...we can play this game all day long.

I am reading your web site though. It is very interesting to hear someone on the left who is not cursing at me. When I go to the Thom Hartmannn radio show blog and ask questions or make comments...well, I am not treated very nice.

By the way, are you familiar with the "Nolan Chart"? It gives a different view of the political spectrum that you seem to subscribe to. But it might be worth checking out on the internet.

My impression of your site, so far, is that most of what you say is composed of fact, fiction and incorrect conclusions. But I will try to be more specific if I have the time to write you again. I am sure that you are a person of good will who honestly believes what you say.