Read a column from an individual who is allegedly a PhD student at UMass. You can read the column here. My response is below.
More broadly, I notice a consistent problem where people who believe they disagree with alternative world views seek to turn those world views into monolithic beasts. Almost no philosophy is so lacking in nuance, but forcing ourselves to learn more about that philosophy is tedious and makes us vulnerable to conceding ground on our subjective tribal beliefs. This is a problem…
Not going to take too much of your time, but as an economics major and former opinion editor of a college paper I’m intrigued by your column. Mainly, I’m a little shocked that you are looking to Ron Paul, who is neither an economist nor necessarily broadly representative of libertarian thinking on all issues, as the clearest articulator of economic thinking by libertarians. There are also a few quotes that stuck out to me as misguided or disingenuous.
“It’s a joke about how not to do economics. Bad economists engage in circular reasoning; they assume what they want to prove.”
I’m guessing you know this isn’t how economics works at all (hence, “bad” economists), and isn’t how the vast majority of libertarian economists think either. Assumptions inform models, not conclusions, and I know of no libertarian economists guilty of this fallacy. The assumption that people engage in mutually beneficial voluntary exchanges is really an assumption about instrumental rationality, which informs all economics models, including ones you work with, I’m sure.
In paragraph four you extrapolate from saying that voluntary exchange increases the personal happiness of both parties to saying that it is “a good thing.” That is not the same thing. I know of no living libertarians, and especially no well-regarded libertarian economists who deny the existence of market failures, especially negative externalities, which are perfect demonstrations of why what’s good for private parties in a single transaction can be detrimental in aggregate. In fact, the numerous examples you cite in the following paragraph are also great articulations of transactions that people actually are personally happier post facto but can be arguably bad on a social level (normative considerations aside). Economists generally believe that voluntary exchange, which is the foundation of the market system, is on average good for maximizing social welfare.
Did free markets lead to bad outcomes? That was an accident. Did government intervention lead to good outcomes? That was an accident too. Thus, any kind of historical experience that disproves libertarian economics can simply be dismissed as a coincidence – such as the great success of the American economy when government intervention was at an all-time high from about 1945 to 1975.
I don’t agree with the Austrian school, but there is a coherent Austrian narrative about business cycles under government intervention and fiat currency that is not entirely unpersuasive on the surface. A standard Austrian charge against central banking is that unnaturally low interest rates distort all transactions and lead to malinvestment, which fuels asset bubbles. Sound familiar?
Crucially, libertarian economists in general aren’t even trying to make the Austrian case. Friedman was a Monetarist (“we’re all Keynesians now”). Scott Sumner
is a rather libertarian neoliberal, and is currently leading the charge for an extremely aggressive central bank that pursues NGDP level targeting. The Cato Institute, the most visible libertarian public policy organization, also tepidly supports central banking and AD management through monetary intervention. The gang at George Mason: same story.
So the basic assumption of libertarian economic theory, or subjective value, leads to the conclusion that redistribution of wealth from the rich to the poor is good, and thus contradicts libertarian views on the free market. But don’t expect them to notice the irony.
I don’t even know if I agree about your analysis prior to this, but your characterization on the safety net is simply wrong. To cite an early libertarian:
There is no reason why, in a society which has reached the general level of wealth ours has, the first kind of security should not be guaranteed to all without endangering general freedom; that is: some minimum of food, shelter and clothing, sufficient to preserve health. Nor is there any reason why the state should not help to organize a comprehensive system of social insurance in providing for those common hazards of life against which few can make adequate provision.
That’s Hayek. Many libertarians believe in a minimum standard of income necessary for individuals to be able to effectively realize their liberties. You won’t find that in Ron Paul, but this really my point about the pitfalls of singling out one person, especially a radical person. Many modern libertarians are against the current structure of the safety net, but support policies like a national minimum income (Charles Murray).
To support Paul or his libertarian ideas, one must put blind faith in the absolute perfection of the free market and resist the temptation to look at the historical evidence or even just to consider the lessons of one’s own life experience. As such, it is no wonder why most of Paul’s support comes exactly from those people who have the least experience of struggling to survive in a market economy.
I very much agree with this paragraph. Sadly, I wish you would have made this case without launching a disingenuous, wholesale indictment of libertarianism and all of the ideas that libertarians have forwarded. Like most philosophies, libertarianism is not monolithic.