Paradox of Libertarianism

As part of this month’s exchange Cato Unbound, Tyler Cowen argues that libertarian ideas have, paradoxically, led to a substantial increase in the size and scope of the federal government.

I am not so worried about this paradox of libertarianism. Overall libertarians should embrace these developments. We should embrace a world with growing wealth, growing positive liberty, and yes, growing government. We don’t have to favor the growth in government per se, but we do need to recognize that sometimes it is a package deal.

The old formulas were “big government was bad” and “liberty is good,” but these are not exactly equal in their implications. The second motto — “liberty is good” — is the more important. And the older story of “big government crushes liberty” is being superseded by “advances in liberty bring bigger government.”

Cowen doesn’t explain this paradoxical “package deal,” except to assert that “human beings have deeply rooted impulses to take newly acquired wealth and spend some of it on more government and especially on transfer payments.”

I’m far from expert in economic psychology but suspect a far simpler explanation would suffice. More economic freedom yields more economic growth at the macro level but also more inequality and disruption. Wealthy societies try to maximize the former while minimizing the effects of the latter.

As advanced societies develop, formerly cutting-edge technologies become obsolete. Whole economic sectors either die off entirely or are transferred to less developed countries as part of the natural processes of creative destruction and comparative advantage. While this almost invariably makes the society richer, people in individual sectors of the economy are often suddenly far worse off.

Over time, most of those people will shift to other sectors and be better off, too. Some won’t. A 25-year-old whose job in a textile mill is replaced by a robot or shipped off to Pakistan may well use this sudden “opportunity” to go back to school and improve his lot; a 60-year-old in the same situation may well be irreparably harmed. Wealthy societies often enact transfer payments to assist the former in making that leap and cushioning the fall of the latter.

UPDATE: Cowen is getting some good comments at his own site, Marginal Revolution.

FILED UNDER: Economics and Business, US Politics, ,
James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. Bithead says:

    The problem with all of this, it seems to me is that libertarians do not operate in a vaccum. To survive, some level of compromise is required. By definition, any degree of compromise on the part of libertarians, or anyone taking up a position against government growth, means some growth in the size and scope of government.

    To suggest, therefore, that libertarians bear the blame for growth is a bit of a stretch.

  2. MikeT says:

    What bothers me as a libertarian is the positivity that many libertarians have toward the way things are going. The cultural libertarians at places like Reason, and especially in their comments section on their blog, often only see the trees, refusing to even acknowledge that a forest exists. It’ll be “oh look, how free we are becoming, gay marriage is more acceptable!” When in reality America is marching headlong toward a future of unprecedented social control, surveillance, coercion from the state and a terrible power disparity between the weaponry wielded by the state and that of the population.

    To put it bluntly, we are moving toward a soft 1984, a world where social control can be managed through comfortable campaigns that make dissenters sound like paranoid lunatics. It is the sort of future where most people won’t even know they’re being controlled because their wealth will give them the illusion that they are free.

  3. fiskhus jim says:

    You say, “More economic freedom yields more economic growth at the macro level but also more inequality and disruption. ”

    Not only is your comment “paradoxical”, it is also oxymoronic and self-exclusionary.

    These erroros of logic can be remedied by using facts to convey information rather than merely to disseminate propaganda. I know that the one is too Democratic for you – but really, consider…

    More economic freedom for whom yields…more inequality for whom?

    Clearly, the two blanks cannot be filled in with the same answer and there lies the key to solving the paradox.

    Or, as Jesus put it, the rich must give up their riches to the poor to ever gain entry to heaven.

  4. James Joyner says:

    Or, as Jesus put it, the rich must give up their riches to the poor to ever gain entry to heaven.

    Not that I’d cite Jesus in a discussion about economics, but I’m pretty sure he said no such thing.

    More economic freedom for whom yields…more inequality for whom? Clearly, the two blanks cannot be filled in with the same answer and there lies the key to solving the paradox.

    I’m not sure I follow. Economic freedom in this formulation is societal, as is the resulting inequality.

  5. Bithead says:

    Not totally, James. Some of it is simply the luck of the draw.

    And by the way… you’re quite correct. Christ was misquoted.

  6. fiskhus jim says:

    Actually, I did NOT misquote Jesus – I paraphrased ( Portion of comment in violation of site policies deleted.) Jesus’s advice to the rich, young ruler, where he actually said that it is easier for a camel to go through the eye of a needle than for a rich man to enter into heaven. And that comment was made in the context of Jesus’s instruction to the RYR to give up his riches and follow Jesus.

    Clearly, the lesson to take away is that the rich must give up their riches in order to follow Jesus. Portion of comment in violation of site policies deleted.

    Editor’s note: Future violations along these lines will result in the comment being deleted and the commenter banned.

  7. fiskhus jim says:

    Commenter in repeated violation of site policies deleted and banned.

  8. Bithead says:

    (Sigh)
    I’m not going to get into debating theology with you, here but, when you paraphrased, you changed the meaning. That to my mind, constitutes a misquote.

    Points in response, for the benefit of the remaining readers and clarity:

    *The comment was not about the rich being evil, and not getting into heaven while bring rich, it was about Priorities, in the context of “seek first the kindom of God” ….an adjacent phrase in that narative which most people with the worldview you apparently espouse, tend to ignore.

    * You go further astray on the specifics, when you seemingly equate the Rich giving up their riches, as having the snot taxed out of them, to support some moron’s idea of ‘the greater good’.

    Did Jesus say we should give all our money to the government? No, he drew a rather distinct line between the two saying ‘give unto Ceaser which is Ceaser’s, and unto God which is God’s. Government isn’t even remotely involved in the process he’s speaking of.

    out.