Monday, January 6, 2014

Response to Michael Lind on Libertarianism

Michael Lind wrote a piece last year critical of libertarianism (here). I respond in full here:
"Why are there no libertarian countries? If libertarians are correct in claiming that they understand how best to organize a modern society, how is it that not a single country in the world in the early twenty-first century is organized along libertarian lines?

Lind starts out with a seemingly reasonable premise. However, it is not a correct premise. I can think of a number of countries that are basically "libertarian". Hong Kong is perhaps the most libertarian country. Singapore is fairly libertarian economically (thought not in other respects). 
It also strikes me as incorrect to assume that an absence of countries pursuing a certain policy regime discredits said policy regime. Entrenched interests, for example, could be a blockade to popular libertarian reforms that are obviously good for the population as a whole. Occupational licensing reform strikes me as a fairly obvious libertarian reform that is hard to achieve because of such interests.
Does the fact that occupational licensing is fairly widespread discredit arguments for weakening occupational licensing or speak to the power of special interests?
To me, it seems fairly obvious that it is the latter. Lind's logic suggests he may disagree.

It’s not as though there were a shortage of countries to experiment with libertarianism. There are 193 sovereign state members of the United Nations—195, if you count the Vatican and Palestine, which have been granted observer status by the world organization. If libertarianism was a good idea, wouldn’t at least one country have tried it? Wouldn’t there be at least one country, out of nearly two hundred, with minimal government, free trade, open borders, decriminalized drugs, no welfare state and no public education system?

All of these "libertarian" policies can be found in numerous countries. However, there are not any countries that pursue all of these policies. That, it seems Lind is arguing, discredits libertarianism.
This is simply Lind setting a bar too high and too arbitrary for libertarianism. We do have examples of virtually all libertarian policies being tried to some degree somewhere. Instead of looking at the success or failure of those policy experiments, Lind suggests that the fact that libertarianism isn't more common automatically discredits it. No other ideology has ever been measured by that standard.

When you ask libertarians if they can point to a libertarian country, you are likely to get a baffled look, followed, in a few moments, by something like this reply: While there is no purely libertarian country, there are countries which have pursued policies of which libertarians would approve: Chile, with its experiment in privatized Social Security, for example, and Sweden, a big-government nation which, however, gives a role to vouchers in schooling.

I don't know any well informed libertarians who would give a "baffled" look to a fairly easy question. It is true that most libertarians would explain that, like all modern ideologies, there is no purely "libertarian" country. On the same note, there is no "purely" centre left country.
However, there are countries that are more libertarian than others, and there are countries that are very libertarian in certain respects. The success of these countries and policies are the basis for how libertarianism should be evaluated.

But this isn’t an adequate response. Libertarian theorists have the luxury of mixing and matching policies to create an imaginary utopia. A real country must function simultaneously in different realms—defense and the economy, law enforcement and some kind of system of support for the poor. Being able to point to one truly libertarian country would provide at least some evidence that libertarianism can work in the real world.

This is just Lind setting the bar unusually high for libertarians. There are no purely "anything" countries.
There is something close to a spectrum that countries are on politically. No country is 100% libertarian or 100% social democratic. Lind is essentially saying that the absence of a 100% libertarian country is a huge blow to libertarianism. That just strikes me as a silly excuse for Lind to write off libertarianism.

Some political philosophies pass this test. For much of the global center-left, the ideal for several generations has been Nordic social democracy—what the late liberal economist Robert Heilbroner described as “a slightly idealized Sweden.” Other political philosophies pass the test, even if their exemplars flunk other tests. Until a few decades ago, supporters of communism in the West could point to the Soviet Union and other Marxist-Leninist dictatorships as examples of “really-existing socialism.” They argued that, while communist regimes fell short in the areas of democracy and civil rights, they proved that socialism can succeed in a large-scale modern industrial society.

We had experiments in communism and socialism that failed quite miserably. Lind also fails to mention that socialism and communism ultimately proved unworkable economically. It was not just a matter of civil rights and democracy. Communism and socialism impoverished the people of the nations they were tried in. Not mentioning this in any discussion of these topics does a disservice to all of those who lived in poverty under these systems.
So, we have the failure of these economic systems and the relative success of market based economic systems. It seems that, in this case, the closer a society came to the libertarian ideal economically, the better.

While the liberal welfare-state left, with its Scandinavian role models, remains a vital force in world politics, the pro-communist left has been discredited by the failure of the Marxist-Leninist countries it held up as imperfect but genuine models. Libertarians have often proclaimed that the economic failure of Marxism-Leninism discredits not only all forms of socialism but also moderate social-democratic liberalism.

What if I told you that I know of a country that has no death tax, no wealth tax, a partially privatized social security system, high amounts of free trade, a falling government share of the economy, increasing presence of markets in the health care sector, and universal school vouchers. This sounds pretty close to the libertarian country that Lind says doesn't exist.
Actually, there is a real country like that: Sweden. That's right, Lind's example of the purely "liberal welfare-state left" country has all of the policies I mentioned above in place. 
I don't know what kind of liberals Lind knows, but the liberals I have met would go nuts if Republicans proposed doing some of the things Sweden has already done. To be fair, Sweden is also much less libertarian than the USA in some ways.
But, Lind literally just said that, in order for an ideology to be successful, there has to be examples of it being practiced "purely".

But think about this for a moment. If socialism is discredited by the failure of communist regimes in the real world, why isn’t libertarianism discredited by the absence of any libertarian regimes in the real world? Communism was tried and failed. Libertarianism has never even been tried on the scale of a modern nation-state, even a small one, anywhere in the world.

I wonder if Lind realizes that, at some point in history, all ideologies have not been tried yet. It is absurd to say that an ideology doesn't work because it hasn't been tried yet.
Still, libertarianism has been tried. Hong Kong and Singapore have libertarian economic policies. Netherlands has libertarian social policies. Numerous countries have free trade. From where I stand, libertarianism seems to be doing pretty well from a practical point of view.

Lacking any really-existing libertarian countries to which they can point, the free-market right is reduced to ranking countries according to “economic freedom.” Somewhat different lists are provided by the Fraser Institute in Canada and the Heritage Foundation in Washington, D.C.

Lind is just getting frustrated at this point. Ranking countries based on how free their economy is not an act of frustration. Economic freedom is a vital component of economic development. Measuring it is a good thing.

According to their similar global maps of economic freedom, the economically-free countries of the world are by and large the mature, well-established industrial democracies: the U.S. and Canada, the nations of western Europe and Japan. But none of these countries, including the U.S., is anywhere near a libertarian paradise. Indeed, the government share of GDP in these and similar OECD countries is around forty percent—nearly half the economy.

Just like there is no purely progressive country, there is no purely libertarian country. But, the more libertarian a country is economically, the higher they are on these lists. 

Even worse, the economic-freedom country rankings are biased toward city-states and small countries. For example, in the latest ranking of economic liberty by the Heritage Foundation, the top five nations are Hong Kong (a city, not a country), Singapore (a city-state), Australia, New Zealand and Switzerland (small-population countries).

Just because these countries happen to be relatively small does not mean there is a bias. Also note that all of these countries are fairly prosperous. 

With the exception of Switzerland, four out of the top five were small British overseas colonies which played interstitial roles in the larger British empire. Even though they are formally sovereign today, these places remain fragments of larger defense systems and larger markets. They are able to engage in free riding on the provision of public goods, like security and huge consumer populations, by other, bigger states.

Without saying it, Lind seems to be conceding that the small, relatively libertarian countries are fairly prosperous. But, he argues, this is only because they free ride.
This is silly. All of these countries were relatively poor (except Switzerland) until they moved to pro market, libertarian economic policies. It was not until after these reforms that these countries became wealthy. 
At the same time, most countries in the developed world, including northern Europe, free ride off of defense and innovation from the USA. For whatever that is worth.

Australia and New Zealand depended for protection first on the British empire and now on the United States. Its fabled militias to the contrary, Switzerland might not have maintained its independence for long if Nazi Germany had won World War II.

All of this is entirely beside the point. Australia, for example, was in economic stagnation until it moved towards a more neoliberal economic model with lower taxes and more private sector involvement.
It is now basically an economic success story as a result. The fact that they didn't need a strong military didn't change over time. The fact that they switched from an unsustainable, statist economic model to a freer economic model made all of the difference.

These countries play specialized roles in much larger regional and global markets, rather as cities or regions do in a large nation-state like the U.S. Hong Kong and Singapore remain essentially entrepots for international trade. Switzerland is an international banking and tax haven. What works for them would not work for a giant nation-state like the U.S. (number 10 on the Heritage list of economic freedom) or even medium-sized countries like Germany (number 19) or Japan (number 24).

Again, excepting Switzerland, all of these countries went from poor, statist economies to rich, free market economies. The switch from statism to free market came first in all of these cases.
This is a point that Lind needs to deal with, but he seems to ignore.
Furthermore, if anything, larger nations would need even less government. This is because it is harder to run a large state in a big nation like the USA than a small, homogeneous nation like Singapore.

And then there is Mauritius.
According to the Heritage Foundation, the U.S. has less economic freedom than Mauritius, another small island country, this one off the southeast coast of Africa. At number 8, Mauritius is two rungs above the U.S., at number 10 in the global index of economic liberty.

This is probably the main reason that Mauritius is wealthier than many other African nations.

The Heritage Foundation is free to define economic freedom however it likes, by its own formula weighting government size, freedom of trade, absence of regulation and so on. What about factors other than economic freedom that shape the quality of life of citizens?

The key thing to remember here is that economic freedom is necessary for a high quality of life but not sufficient. That is to say that all countries with high standards of living, with very few exceptions, have economic freedom. But, they also have open cultures and institutions that are conducive to a high living standard.

How about education? According to the CIA World Fact book, the U.S. spends more than Mauritius—5.4 percent of GDP in 2009 compared to only 3.7 percent in Mauritius in 2010. For the price of that extra expenditure, which is chiefly public, the U.S. has a literacy rate of 99 percent, compared to only 88.5 percent in economically-freer Mauritius.

The USA has a much longer history of economic freedom than Mauritius as well as a very different culture. Economic freedom has been good for Mauritius, but it cannot fix all of the problems. 

Infant mortality? In economically-more-free Mauritius there are about 11 deaths per 1,000 live births—compared to 5.9 in the economically-less-free U.S. Maternal mortality in Mauritius is at 60 deaths per 100,000 live births, compared to 21 in the U.S. Economic liberty comes at a price in human survival, it would seem. Oh, well—at least Mauritius is economically free!

Again, absent economic freedom, Mauritius would be a good deal poorer and almost certainly have even higher mortality rates for infants.

Even to admit such trade-offs—like higher infant mortality, in return for less government—would undermine the claim of libertarians that Americans and other citizens of advanced countries could enjoy the same quality of life, but at less cost, if most government agencies and programs were replaced by markets and for-profit firms. Libertarians seem to have persuaded themselves that there is no significant trade-off between less government and more national insecurity, more crime, more illiteracy and more infant and maternal mortality, among other things.

This is where Lind really goes wrong. He gets the tradeoff wrong. The best, and only way, to improve the standard of living is to increase wealth.
The only system conducive to building wealth is a free enterprise system that is, at its core, libertarian. 
There is a tradeoff between government and the things Lind mentions, but, contrary to what Lind says, it is smaller government that leads to better outcomes in these areas. That is because it is smaller government that leads to the wealth creation that makes improvements possible.

It’s a seductive vision—enjoying the same quality of life that today’s heavily-governed rich nations enjoy, with lower taxes and less regulation. The vision is so seductive, in fact, that we are forced to return to the question with which we began: if libertarianism is not only appealing but plausible, why hasn’t any country anywhere in the world ever tried it?"

In fact, the experience of the past few centuries have been an overwhelming rejection of socialism, state meddling, social engineering, and all forms of statism. Libertarianism has been the victor.
Libertarianism isn't a seductive vision, but a practical policy regime that actually has a proven record of success.

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