2016-03-29

Libertarian confusions

Since I gave up on libertarianism, I have struggled to explain concisely why it doesn't work to people who still buy into it. This is an attempt to do so.

Incompatibility with desirable outcomes


Bluntly – libertarianism is a delusion that unconditional property rights can be had at the same time as some non-dystopian social outcome.

More specifically – we cannot have all three of the following:
  1. Unconditional property rights.
  2. Freedom of reproduction.
  3. Equality of opportunity. (Not of outcome!)
You can have any two of those, but not all three. The combinations that work are:
  • Unconditional property rights + freedom of reproduction: poor people give birth to more poor people, who do not have equality of opportunity and live and die in squalor.
  • Unconditional property rights + equality of opportunity: this combination has not been seriously attempted, but it means sterilizing poor people so they can't have children who would have unequal opportunity.
  • Freedom of reproduction + equality of opportunity: if you want to achieve this, you have to sacrifice unconditional property rights.
Not only that – but the following two are also not compatible:
  1. Unconditional property rights.
  2. Not letting people die in front of hospitals.
Here, you have only two options:
  • Choose unconditional property rights: this means you can't force hospitals to use their resources for poor people who lack insurance and can't pay for treatment.
  • Choose not letting people die in front of hospitals: this means you have to force hospitals to provide treatment; or force people to pay so that they provide it.
You can't insist on absolute, unconditional property rights, without basically being some type of Hitler.

But if you accept that property rights are conditional, then taxation is not stealing. It's how we work together toward agreed-upon common goals.

Applying business intuition to macroeconomy


Libertarian beliefs are often held by people with business intuitions. But business intuition does not account for that you can't do things as a country that you could do as a business, because they cause reallocations in the economy.

If you are a business, and you need more engineers or copper or doctors, you can spend more money, and get more engineers or copper or doctors. What you aren't seeing is that you're driving up the market price a tiny bit, and causing that resource to be less available to other business.

If you try to do the same thing as a country, it just falls completely flat. You can't increase the supply of engineers or copper or doctors in the short term. If you want to just "get more", all that happens is that you drive up the price, and end up paying more for about the same amount of the resource.

Another example is savings. Libertarians frequently rant against social security, as if it was some kind of scam. What is not being understood is that a country, as a whole, cannot save.

If a country attempts to save, what happens is what's going on in China. They have a centuries-old ethic of saving, rather than consumption. This causes an accumulation of bank deposits, which the banks then attempt to put to some use. But because everyone is saving, there is little consumption. Because there is little consumption, there is nowhere to invest the money that would pay off.

So what has happened is, they have built literal empty cities – whole new cities emulating Western places like Paris, with apartment buildings, factories, and stores. The only problem is, there is just no demand for these buildings and factories and stores. It's all overbuilt infrastructure that cannot be put to use because everyone is trying to save instead of consuming.

The only way for large-scale savings to work in a society is the way social security works. Any other way of saving that would actually work, would have to have the same practical effects. The people who are trying to save money have to somehow give it to people who are going to consume it, so the economy continues to function while you wait for your turn to collect social security from the next generation.

Your real investment is the next generation. Without it, your cash, stocks and bonds are useless, no matter how much you have.

For similar reasons, supply-side economics does not work. You can't just build things and expect people to buy them, when you haven't given them the bargaining power to buy your gadgets with.

You have to give people bargaining power. Then you can have an economy based on selling them things.

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