"Whenever I go into a restaurant, I order both a chicken and an egg to see which comes first"

Sunday, October 9, 2011

Libertarianism; or Goldilocks and The Three Bears

Most of my liberal friends start off with the assumption that anything public is good and most things private are bad.  For years international development was crippled by the belief that governments were the guardians of civil society – only they had all the people in mind when it came to health, education, and social welfare.  Private enterprise, particularly that of multinational corporations, was predatory, exploitive, and interested only in the wealth of the few.  Exxon Mobil, Chevron, and the hated pharmaceutical companies were latter day carpetbaggers, descending on poor Third World countries and robbing them of resources while degrading the value of labor.  These progressives have overlooked the same predatory, exploitive, and venal actions of public officials, riding the backs of the poor to get into power, and beating them down to stay there.

Primary and secondary education should only be public, say liberals.  It is important because public education is the cauldron of civil society – where rich, poor; dumb, smart; black, white are mixed together and emerge annealed by the experience and bonded together to forge a more just and equitable society.  Educational achievement is important, they say, but not at the expense of the social model.  The means are just as important as the ends, if not more so.  Privatization of public education is anathema because it will destroy this model.  It will encourage inequality and unequal opportunity while enriching a few investors.  They overlook, however, the value of private education’s innovation, fostering of individual achievement, competitiveness, and social and economic success. 

The role of private, community organizations while important, serve to diminish the role of the state in social welfare programs.  As with education, public programs are expression of the public trust – we are all in the same social boat, and must all pull together so that we all succeed.  Individualized private programs are selective and therefore unequal.

My conservative friends start off with the assumption that anything private is good and anything public is bad.  They assume that privatizing international development is in all respects a good thing while conveniently overlooking the fact that wealth can be just as easily concentrated in private hands as it can in corrupt public ones with more dollars flowing up than down.  They assume that all education should be private, ignoring the growing trend of exploitive private institutions that skirt accreditation, charge high fees, and promise few returns.   They favor private institutional giving and private action to improve civil society, but overlook the years of corruption, venality, and criminal behavior of “empowered” local non-governmental institutions.

Libertarianism is often mistakenly thought of as a far-right political movement when in fact it is anything but.  There are two basic principles of Libertarianism: 1) individual freedom; and, as a corollary of the first, 2) limited government.  The emphasis in the latter is on limited.  Libertarians are not against government per se as most far right conservatives are.  They only insist on determining those programs or investments which truly belong in the public sector – i.e. cannot or should not be private. 

The key to this determination is cost-benefit analysis: a) what is the objective to be achieved; b) what are the measurements to determine achievement of objectives; c) what are the most cost-effective means of achieving that objective; and d) which sector (public or private) or institution is best placed or most appropriate for carrying out the actions which lead to stated objectives.

It is often argued that such an economic-based algorithm is too narrow, and it leaves out factors and outcomes to which I have referred above.  Not only should we have the goal of educating children, it is argued, but it is in the national interest to have a public-based system which fosters inclusion and integration.  While subsidies are usually wrong, there may be cases for which they are important.  Do we want to cede key agricultural staple production to the free market, with the possibility that we lose control?  How many actual combat forces – if any – should be privately contracted without losing the strategic and operational integrity of the military?  Although many municipalities are privatizing certain former police functions (like traffic control, parking enforcement, etc.), is it in the civic interest to privatize most or all of them?

The point is, these factors and variables must be included in the cost-benefit equation.  What, for example, would be gained and lost by privatizing the police force?  What do past data indicate?  If there is sufficient supervision, regulation, and monitoring of a private force – just as there is to a public – and if the force is answerable to civil authorities, as it is now, why shouldn’t a municipality privatize?  What are the real, measurable, and compelling reasons to keep it public?

There should be no investment off limits to this kind of analysis whether defense, education, social welfare, regulation, infrastructure, fire/police/security, etc.  The debate over the budget, deficit spending, and debt is a good thing for it focuses on this very subject – which are the public expenditures which are worthwhile or important to retain; and which are those that can be easily jettisoned.  Some are easy.  There are many unnecessary subsidies which carry already competitive industries.  A good case can be made for reducing support to the Departments of Energy, Education, and Health and Human Services.  A good case can be made that education belongs in the hands of the state; health and welfare in the private and/or non-profit sectors; and energy in the private sector. 

There is no doubt that the Pentagon budget can be trimmed, that pensions and health care be treated no differently than other employment, and that subcontracting be increased in selected areas.  Road transportation can be partially privatized (i.e. fee-for-travel), and maintenance and new construction subcontracted; but there seems to be a compelling need for overall network coordination which should be public.  Most airports are semi-governmental, with private operations and government oversight which appears reasonable.  The list goes on.

The main principle that underlies this argument is measurement.  Too few programs are subjected to objective analysis.  Do current publically-financed school, welfare, health programs work?  Do they meet the objectives and goals set for them?  Is student performance improving?  Are health indicators showing a positive trend?  Is local delinquency down?  Are our vast public expenditures in the military paying off and by what criteria?

There is no doubt that measurement is not easy.  Simply getting people to agree on the criteria for measurement is problematic, for such determination is fraught with political overtones.  Nevertheless using the difficulty of measurement as a reason or excuse not to scrutinize both public and private programs is wrong.  There will be no rational allocation of public resources until we agree to put everything under the microscope.

A complex and problematic issue in the debate over public-private influence in the delivery of products and services is regulation.  Most Libertarians would agree that some regulation is required.  History has shown that a totally unregulated banking industry has been a major cause of one depression and one deep recession.  However, too much regulation can stifle innovation; too little can lead to the most arcane and risky financial instruments.  Consumer protection can be useful.  Would drivers have worn seatbelts without government regulation and incentives?  Would smoking have dropped so significantly had taxes (a form of regulation) not been raised (smoking is very price-sensitive)? Can one wholly trust the pharmaceutical industry to regulate themselves in an environment where the populace is either uninformed or poorly informed through random Internet searches?

A third consideration is the rate at which services are privatized or deregulated; and this should be a function of the above-described cost-benefit analysis.  It may not be necessary to eliminate or privatize the entire Department of Education, but much of it; and objective analysis will determine which public educational expenditures at the national and local levels are justified.   Not all police or fire functions need to be privatized, nor immediately.  Both professional and political factors argue for progressive reform; and properly designed and implemented evaluation mechanisms can allow for the gradual change-over of investments.

Libertarianism, then, is neither conservative nor liberal when assessing the role of the private and public sectors.  It is neither too hot nor too cold, but just right.  Get the balance right, say Libertarians, by demonstrating the need for public investments in terms of results, and by showing the proper role of the private sector in assuring civic goals.

As a final note, not enough people realize how many liberal positions Libertarians take in the name of their first principle, individual liberty.  They favor a woman’s right to choose, liberalizing drug laws, limiting foreign adventurism and military intervention, ensuring free speech, protecting against the invasion of privacy, etc.

For more information on Libertarianism, please check the website of The Cato Institute www.cato.org  It is free from cant and partisan politics and in its events, publications, and statements, adheres to a classic Libertarian position as I have tried to express it above.

1 comment:

  1. Ron, like other "think tanks" that are funded by a few multi-millionaires, the Cato Institute is a propaganda mill. It is naive to think that they are balanced in their perspective. Surely you know that their classic "Libertarian" position is about making sure that the "right people" make money. Here's an article, which of course has its own bias, about the founders of the Cato Institute: http://www.newyorker.com/reporting/2010/08/30/100830fa_fact_mayer?printable=true
    Bridget Pieschel


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