Practical "problems" with Libertarian and Austrian politics and economics

Economics Political Theory
1

OK, I need clarification about a few points. These are the ones which in my opinion make the Libertarian ideal and the Austrian school of economics less palatable to the masses than, say, socialdemocracy or Keynesianism and very hard to apply in the real world.

First and foremost problem: how do you get rid of government-sanctioned “freeloaders”? Any nation in the world has a sizeable share of population living completely on welfare and/or government pensions. How do you tell them that the party’s over and there will be no more free lunches? Even a slight decrease in the welfare machine is usually enough to send large numbers of persons (usually organized by incredibly powerful government-sponsored trade unions) protesting in the street and in many European countries retirees living on government pensions are one of the most powerful pressure groups and an immensely powerful force at the ballot box. There are millions of these persons and they are not letting go without a fight.

Second problem: how do you explain people that government should only concern itself with protecting life and personal property and not setting standard measures for bananas or playing the knight in shiny armour rescuing corporations in distress? People have come to expect that taxes will somehow entitle them to “getting something for nothing” while we all know that in reality modern taxation levels are deeply immoral and perhaps even worse than downright robbery and theft. People have come to believe that taxes will pay for “services” and high taxes entitle you somehow to high levels of services while the reality is completely different.

Third problem: explaining “speculation” and real world economics. While Libertarians and Austrians are on the average very intelligent and have very sound theories, they tend to be a bit too much theoretical in their approach. Gasoline and diesel fuel around here are nearing 1.60 Euro a liter : you cannot just go around and say that there’s no such thing as speculation and it’s the market working because people will a)think you are nuts b)come to believe that free market is evil and more government control is needed. You have to explain people that, yes speculation exists (I am ready for the rotten eggs) and it has been fuelled by cheap credit come crashing into the commodity market. You have to explain that fuel is not more expensive but government-issued money has lost value. You have to explain that regulations (often supported by companies themselves) are keeping the offer artificially low. You have to be patient. I know many Libertarians are fuelled by passion and that’s a great thing and I also know that the average Joe will not be able to saty very sitting quietly while you blast away his little world. It’s hard but it’s the only way to stop being considered “nuts”.

Fourth problem: do big companies really want less government in their lives? The answer is not. They’ve come to rely on the State as a trusted partner: it will give them cheap credit. It will bail them out or nationalize them when they are sinking. It will issue regulations effectively blocking the competition. It will negotiate with the workers’ unions. All it asks in return is a little “protection money” and hiring a few “good boys and girls”, just like the Mafia. Libertarian and Austrian enthusiasts and scholars should not focus on large business but on those who are forking the bill and are crushed under Leviathan’s weight: small businessmen and farmers, people who’d like to start their own business, professionals working as freelances.

More to come…

2

Yeah, I don’t think we’ll ever convince people about going libertian overnight. I personally think Milton Friedman did a lot of good work into providing pratical policies that would already reduce govermnent considerably and path the way to make a libertarian society an actual reachable goal.

In the case of welfare you mentioned, Friedman suggested a negative tax – poor people would get government money in the tax season, no strings attached. Instead of providing welfare services in kind which are very wasteful, poor people would buy their services in the general private market. You have school vouchers to privatize schools and stuff like that. For health care, you have the health savings system where people would be forced to put money there, and the state could fill the budget for kids and stuff. Introduce the choice to use a private provider for social security, etc. Allow people to have some choice into their money that goes into universities, museums and stuff so these institutions spent money in public relations instead of political relations. Eventually, you can remove more and more government controls…

With regard to oil, it’s just basic 101 supply and demand economics. This has nothing to do with Austrian or libertarian stuff. There’s of course oil speculation – airliners have worked with such groups for a long time in order that stabilize oil prices for them so they can calculate their costs and be more efficient. Nobody is keeping oil in storages to profit big time in a few years time; that would be stupid with all the migration to other energetic sources and the expectation of softer requirments on oil exploration. By the way, this is especially a problem in America because the dollars are worth much less than they used to. In the rest of the world, fuel isn’t going up by nearly the same amount – our fuel prices have been much more expensive than Americans, you guys will have to get used that oil isn’t cheap as well. :wink:

3

The answer to all your questions is “Get rid of government!”

  1. You prevent people from “freeloading” off the government by eliminating government. For example, the argument is that tax resisters are freeloading against everyone else. The reality is that the parasite class is freeloading off taxpayers.

  2. Once you accept any government at all, it increases in power to encompass everything. Once you give the State a monopoly of violence, it grows as large as it can.

  3. Commodity speculation and market speculation is a symptom of a corrupt monetary system. The Federal Reserve keeps interest rates at 2% while true inflation is 20%-30%. This makes it profitable to borrow at the Fed Funds Rate and buy tangible assets. When an individual does this, they risk bankruptcy during the next economic bust phase. When a large bank does this, they get a State bailout (Bear Stearns, Fannie Mae, etc.)

  4. Big corporations like big government. State restrictions of the market eliminate competition. For example, suppose it costs $10M to comply with a regulation. For a large corporation, this is a negligible cost. For a small business or indvidual, it’s a huge burden.

4

By eliminating government.

The “free rider” problem exists in all systems. People who do not pay, yet enjoy the benefits of the system being in place. Like people who live in a low crime area, yet abhore gun ownership.

How does a taxi service deal with free riders? It lets them off, and gets back to work making money. There is no “free rider” problem in the private sector, because each organization or firm deals with it themselves. There is no over-arching “problem” because there is no over-arching “system” for the free riders to exploit.

“Should” is the problem in of itself. “Should” is opinion. There are lots of people who think that government “should” make sure that diapers work so thatno one is defrauded by buying disfunctional diapers.

Does that make them right?

The problem with justifying government at all is that once coercion is justified it is justified for everything.

Rather than try to justify coercion at all, try pointing out that there is nothing that government provides that cannot be provided, cheaper and better, by private individuals. Individuals interact voluntarily. Only government can impose themselves and their “should” on people at gunpoint, and get away with it.

For a private individual, such actions are called “crimes”.

I heartily recommend http://mises.org/mp3/MU2004/Long2.mp3 Roderick Long’s “Answers to 10 objections to Anarchy”. His argumentation may be very useful for people who think that government “should”.

Ask them if they would buy a collector’s plate with Star Wars on it, expecting the price to go up in the future to make a profit. If they say “no”, point out that someone would do so, and they are called “speculators”. Since it’s possible to by and sell anything and everything, there’s your real-world explanation.

“Real World” economics is what happens every day. If they need to have it explained, there are lots of texts such as “Economics In One Lesson” for them.

Again, big business is going to government because that is where the power is. They couldn’t get tax relief and special favors if those taxes and favors were not available to the highest bidder already.

The answer is to reduce government involvement, so that abusers will be subject to the very real dangers of pissing off their customers and stockholders.

Must you? Seems the answers are rather self evident.

5
  1. 2 options for the freeloaders - subsidize them or fight them. Likely, we will do both. Legitimate cases of welfare (such as disability to produce or receiving social security payments after paying payroll taxes all one’s life) must be picked up by private charity. If not, there will be some sort of conflict. for the true parasite class, just stop paying them. If they attempt to revolt in the streets, stop them with force. The streets, like all property, should be private. If the street owners want to let them revolt, that’s their perogative. But they would more likely get men with guns to remove them so business can go on as usual.

A good analogy would be New Orleans, where I live. How do we have private flood walls without free loaders? You have to group property together. Rather than have this whole city surrounded by one giant flood wall, you’d have smaller communities with joint ownership with their own flood walls. Then, as renter or co-owner of a house in this community, your property is insured against flood damage due to failure of the flood walls. Yes, no one is going to build giant flood walls to protect property that he doesn’t own and must rely on donations to fund. But as we’ve seen, the socialized solution fails without liability - we could hardly call that free-loading, even if we had failed to pay taxes.

  1. Ask them if they feel the government has widely expanded provided services since 1998, because if we got rid of the income tax today, we’d still be spending that amount of money. Would they prefer those additional services (if they can even figure out what they are), or no income tax? Ask them how their lives are better when government bails out corporations or subsidizes Ted Turner’s unfarmed land to the tune of 6 figures. Ask them if their lives are better from paying to jail 1 million + non-violent drug criminals. Ask them if they feel confident that the police will protect them from crime and find the responsible parties if they were injured in some manner. Ask them why private security exists. Ask them why most tort cases are resolved in private arbitration. Everything is cheaper when producers must compete for your dollar - if they and many others want what the government does, at any level, they can probably find someone to do it for cheaper than one’s share of taxes. and claiming that we can just put the burden on the rich simply means there’s less money for the rich to either spend or invest, which makes everything that much more expensive.

  2. who doesn’t speculate? what people typically dislike is “bigger fool investing” which means buying something not to sell it for consumer use or using it to produce something, but to sell it at a higher price to another speculator. Ultimately, this activity is risky for the speculators, not the market. An investor risks not being able to find a bigger fool and selling at a loss. The market can switch to or develop alternate goods, which will bid down the price and ruin such speculators investments. Plus, its nearly impossible to corner some range of investments This kind of thing does not generally run rampant except in the presence of government forces that distort prices and risk, especially an inflationary currency that distorts economic calculation. For example, people may say holding gold is just bad speculation, yet they won’t make this claim about people holding cash. If gold were able to be used as money, this would clearly be nothing more than saving.

  3. Ford doesn’t want a protective tariff on steel or aluminum, while it may want subsidies and bail-outs. everyone wants more for less. a free market is the only system that can make this happen universally.

6

As for being practical and actually getting people to switch to a true free society, there are no easy or simple answers. Of course those who benefit the most and the most directly from government and government intervention won’t want to give it up. Getting them to do so is a process of putting them into a weak minority, opposed by a signifcant number of others who do want freedom.

It’s largely a matter of education for the more intellectual, and a cultural process for “the masses” who aren’t interested in theory. Politics follows culture. Music, television, movies, even sports could be used to get across libertarian/Austrian ideas. The main problem I see is in making subtle distinctions that are specifically libertarian/Austrian, and not just general or basic freedom or simplistic good vs. evil points.

7

Frankly, I believe that welfarists and anarchists are actually overrating the institution of the state/government vehemently. It’s not the state that is so powerful as “to change” things to any direction. It’s us the people that allow it to happen and our weaknesses may be of service to those trying to exercise control. The state, it’s advocates and proponents, are just exploiting on that situation. Instead of guns and bureaucrats, it is actually greed, lazyness, cowardice and other freakishness that upholds state control.

Good Point - Indeed it is people’s ideas that count. These need to be influence thoroughly. This can only be happen via informal leaders, the ten percent that informally control society, because others listen to them and align their opinions. And ye’re right it’s a process and the inputs need to be considered to gain the desired outputs. Perhaps libertarians should study Gramsci, Metapolitics and the institutionalists like Cooley a bit.

8

As a first thing allow me to offer my excuses for the delay in answering this topic. To say that this week I’ve been busy would be a strong understatement.

I’ve read all your responses carefully and what can I say. Everything is absolutely right (with the possible exception of the energy “market”: this sector is so tightly regulated and controlled that in my opinion doesn’t even deserve the definition of “market”) but I still see what it’s the main problem for “our causes”. Perhaps we are very enthusiatic about what we believe in, perhaps we are just angry to be herded together with the willing flock towards the full triumph of Socialdemocracy, the fact is that we need better ways to communicate with the masses. I’ve already related the secessionist cause being hampered by well-meaning but overenthusiastic supporters scaring away possible converts and generally not doing much good to the cause. Personally I’ve also met considerable resistance from the people itself. On the face they may appear to be anti-State and to have a good “leave me alone I am not a crook” attitude but deep inside they greatly fear disappointing their step-parent and Great God, the State. For example you have no idea how hard it is to explain that gun-ownership is not simply the whim of some crazed yahoo but one of the original guarantees against government abuse (“the King knew there was a bow and bill in every cottage and acted accordingly”) or to explain that even in countries where even hunting guns are almost impossible to obtain for the ordinary law-abiding citizen criminals always seem to be able to obtain military-grade equipment. Surely compulsory schooling is to blame, but in my opinion the damage it causes is nowhere near as catastrophic as what is done by television and other State-controlled mass medias.