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Correcting Kinsley on Libertarianism

February 1, 2008

Tags BiographiesFree MarketsEntrepreneurship

I have always liked Michael Kinsley, ever since he was the "liberal" on Crossfire. It's true, sometimes I enjoyed reading or listening to him in the same way I like to play with a canker sore, but nonetheless, I like Kinsley. Far more than other commentators, Kinsley seems to really believe in what he's writing, and to actually consider the views of his opponents.

Longtime readers know that when I start an article praising someone, it's because I'm getting ready to attack. Well, Kinsley recently wrote a piece criticizing extreme (I would say consistent) libertarianism, and I have a few bones to pick with him. Walter Block has already written a sweeping response, so in the present article I want to focus on just three of Kinsley's missteps.

PRIVATE MILITARY DEFENSE

The first concerns the alleged necessity for government provision of military defense:

So what is wrong with the libertarian case for extremely limited government? Economics 101 teaches some of the basic justifications for government interference in the economy. Some things, such as the cost of national defense, are "public goods." We can't each decide for ourselves how much defense we want.

After this quick point, Kinsley moves on. This is unfortunate, because an American liberal like Kinsley should (after 6+ years of the "War on Terror") be aware of the great downside to a government monopoly of the military. Everything that is wrong with government control of, say, automobile production, carries over into the arena of defense. For example, costs are vastly inflated, and inefficiency abounds, because there is no direct link between the customer and the service provider.

Notice that the typical argument for government provision of military services doesn't explain why the government would do a good job here (as opposed to the horrible job that everyone knows the government would do in computer, TV, or book production). Rather, the argument is always, "The market can't do it, so the government has to."

It turns out that the free market could indeed provide adequate military defense. There have been plenty of articles and books written on the topic; for free starters, try this article, then this pamphlet,Download PDF and finally this book,Download PDF depending on your appetite.

Before moving on, there's one bit of advice I have: When thinking of the pros and cons of government military services, don't restrict your musings to the case of the United States. Because of our relative wealth and geographic position, it is very easy to defend the continental states from foreign conquest.

Consider instead a country such as France. Here it makes perfect sense for French citizens to ask, "Would our history have been different had we allowed the market to provide military defense, rather than entrusting the government?" For example, would an industry of competing firms have unanimously sunk all of their resources into building a string of fortifications along the German border — and then not finishing it? Say what you will about free-market military defense; it would not have yielded the Maginot Line blunder.

PRIVATE ROADS

After dealing with private defense by a quick reference to public goods, Kinsley "blows up" road privatization through an argument from definitions:

Sometimes libertarians end up reinventing the wheel. My favorite example is an article I read years ago advocating privatization of highways. This is a classic libertarian fantasy: government auctions off the land, private enterprise pays for construction and maintenance, tolls cover the cost, competition with other routes keeps it all efficient. And what about, um, intersections? Well, markets would recognize that it is more efficient for one company to own both roads at major intersections, and when that happened the company would have an incentive to strike the right balance between customers on each highway. And stoplights? Ultimately, the author had worked his way up to a giant monopoly that would build, own, and maintain all the roads, and charge an annual fee to people who wanted to use them. None dare call it government.

Walter Block is the expert on private roads, and Kinsley is possibly referring to one of Block's earlier pieces. (Incidentally, I doubt that Block or any other libertarian actually said that a "giant monopoly" would own "all the roads.") However, it is entirely possible that for those goods termed "natural monopolies" in mainstream textbooks — including roads but also water and electricity provision — a single company would provide the service for large areas of customers.

So if I am conceding Kinsley's pragmatic argument (i.e., that one large company might own and operate all of the roads in a certain region), how can I possibly object to the government running the roads instead? Isn't it just a matter of one monopolist versus the other?

No, there is a crucial difference between the emergence of a sole supplier on a free market, versus a state-imposed monopoly. For one thing, if a private company achieved a temporary de facto monopoly through outcompeting its rivals, there would always be the possibility of new entrants coming in, should it become sloppy. In contrast, when the city government gives a de jure monopoly to electricity utilities, they have little incentive to keep costs down. Even if a rival utility company in Arizona has much lower costs per kilowatt-hour, the utility company in New Jersey doesn't need to worry about those outsiders setting up shop and trying to lure away customers, because this is literally illegal.

There is another major difference between private de facto monopolists and "public" de jure monopolists. We have already explained that the former have incentives to cut costs, but they also have the incentive to increase the quality of their product and raise revenues. In the realm of roads, this would mean an end to the ridiculous underpricing of roads maintained by the government. In short, traffic jams would disappear overnight. If you have never been to a major city, and seen the snarl of traffic during rush hour everyday — with extremely talented doctors, accountants, lawyers, and engineers moving along at a snail's pace — then you don't truly realize how wasteful government roads are.

If the government auctioned off (or simply gave away) its roads to private owners,[1] one immediate change would be a rise in toll rates to the level that "the market would bear." Indeed this is what proponents of road socialism fear. Yet these price hikes would eliminate traffic jams immediately — can you possibly imagine? And in the longer run, the high profits in the road industry would lead to the construction of additional roads, bridges, tunnels, etc. We can't imagine all the improvements that would occur, and that's exactly why we need the free market to allow all innovators a shot.

Before moving on, I should clarify that this isn't simply an issue of smart private owners versus dumb government bureaucrats. It doesn't necessarily benefit Mayor Bloomberg to double the toll on the the Brooklyn-Battery Tunnel during rush hour. He can't pocket that extra money, for that would constitute embezzlement of public funds. Sure, he can spend it on programs to garner votes, but he will also anger poorer motorists. Yet if Bloomberg — a sharp businessman — were the private owner of the Brooklyn-Battery Tunnel, his incentives would be entirely different. We can be sure that traffic would flow much more smoothly on his property after the switch.

Oh, one last point about roads: Why does Kinsley say, "And what about, um, intersections?" He makes it sound as if government ownership magically solves this "problem." So does that mean Kinsley thinks that the United Nations owns all the roads in the world? Of course not. Adjacent road owners — whether two city governments or, say, the Canadian and US governments — can get along just fine, without thirty-car pileups on the border of their respective jurisdictions. So if politicians can figure out the answer to, "And what about, um, intersections?" I don't see why private shareholders of competing road companies would be stumped.

GOVERNMENT PROHIBITIONS ARE SO EASY!

Last, we turn to a particularly interesting argument against market solutions:

[Libertarians] are quick to see hidden costs of ignoring libertarian principles and slow to see such costs in adhering to them. For example, Tucker Carlson reports in the Dec. 31 New Republic that Ron Paul wants to end the federal ban on unpasteurized milk. No one should want to drink unpasteurized milk, and almost no one does. Paul himself doesn't. But it bothers him that the government tells people they cannot do something they shouldn't do. Libertarians would say that if most people want pasteurized milk, the market will supply it. Firms will emerge to certify that milk has been pasteurized. These firms will compete, keeping them honest.

So yes, a Rube Goldberg contraption of capitalism could replace a straightforward government regulation. But what if you aren't interested in turning your grocery shopping into an ideological adventure? All that is lost by letting the government take care of it is the right of a few idiots to be idiots. That right deserves respect. But not much.

This is simply incredible. To second Walter Block's response (who was in turn aping Giuliani's response to Ron Paul on foreign policy), I don't think I've ever heard that before, and I've heard many attacks on capitalism.

Normally what happens is that the critic concedes yes, it would be great if the government didn't have to violate property rights, and that we really meant it when we said that people owned their businesses, their money, their bodies, etc. However, the "realist" continues, there are certain things that the free market just can't do for us, like military defense, widespread literacy, and pasteurized milk. So because the market can't do it, it's up to the government to violate some abstract rights and get the job done.

Yet this isn't Kinsley's argument. He is admitting that the market can achieve the same outcome, but it's oh-so-complicated. Better to have a "straightforward government regulation." I christen this novel argument coercion-for-convenience.

There are several problems with Kinsley's coercion-for-convenience. First, there is the slippery-slope principle of the matter. Normally liberals are big on this. For example, they are (usually) horrified if the government prevents someone from writing books with bad ideas, since it is then a small step to tyranny. To adopt Kinsley's language, all that would be lost from a ban on neo-Nazi tracts is the right of a few white supremacists to be idiots. So is Kinsley on board?

Another problem is that, once in place, these "obvious" government regulations are difficult to change. For example, relatively new research suggests that airbags may injure not only petite women and children, but even large male drivers. If we had let the free market — through car companies, insurance companies, and consumer groups — "regulate" this issue, then the new information would quickly filter through the various voluntary channels. For example, if insurance companies had previously given steep premium discounts for those with airbags, this policy would be quickly revised in light of the new information. Any bets on whether the National Highway Traffic Safety Administration is receptive to the new study?

CONCLUSION

Michael Kinsley is a thoughtful writer, and libertarians should be grateful that he is at least reading their views and honestly (in his mind) trying to list their pros and cons. However, I think Kinsley has to do some more reading and thinking on these issues.

C'mon Mr. Kinsley, you know we shouldn't trust the government with military affairs after the Bush administration! And you know the importance of individual rights — versus alleged public necessities — when it comes to criminal defendants.

Stop fighting your instincts and admit it: freedom works. Respecting rights is not only moral, but also productive. There is no tradeoff between principles and pragmatism.

NOTE

[1] The purist might object to particular privatization schemes as unfairly benefiting special interests. Indeed, it is true that real-world examples of government "privatization" efforts have often been corrupt and far from libertarian — just look at Russia. However, the best method for determining which particular citizens should be recognized as the owners (of roads, housing projects, state-run businesses, etc.) is outside the scope of this article.


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