Libertarianism Calls for Bigger Government

Or so a libertarian argument I just ran across implies!

The argument was against supporters of Keynes. I ran across it in private correspondence, so I can't point you to where to find it, but it runs as follows (Argument A):

1) Keynes's supporters say that his policies don't necessarily call for bigger government; instead, Keynes said governments should run surpluses in good times and deficits only in bad times, a recommendation which is entirely size neutral.
2) However, Keynes's advice was unrealistic; knowing public choice theory, we can see that, in fact, governments will love running deficits and hate running surpluses, and so will only pay attention to half of his advice.
3) Therefore, in fact, Keynes's prescription calls for more government.

So, let us apply this to a libertarian policy stance (Argument B):

1) Libertarians say that the market should decide both when a firm should grow large and when it should fail. No one should step in to bail out market losers, no matter how big they are nor how many people they employ.
2) However, their advice is unrealistic; knowing public choice theory, we can see that, in fact, governments will happily allow businesses to make profits and grow large (profits can be taxed and large businesses are great campaign contributors, etc.), but will be very reluctant to allow them to fail.
3) Therefore, in fact, libertarians' prescription calls for larger government.

Folks, it is the exact same argument with closely analogous specifics filled in differently in each. I don't see how anyone can buy A and not also buy B. (Well, except for the fact that they like the conclusion of argument A and don't like the conclusion of argument B!)


  1. Isn't a pretty important difference between the two, that in the first the Keynesian is calling for the government to do something, whereas in the second, the libertarian is calling for the market to do something?

    If you had concluded the second by saying, "And so the libertarian ironically calls for an ever-growing market!" then I would agree the two arguments are analogous.

    Let me put it this way: One way of recasting the critique of Keynesian policy is to say there's a slippery slope. But there's no such slippery slope when it comes to the libertarian advice to rely on markets in all cases.

  2. What the arguments have in common is that in both cases he state finds a self-serving way to expand its role whatever ideological cover it needs to adopt.

    My conclusion therefore is that only good state is a non-existent one.

  3. Rob, since the tendency towards self-aggrandizement is a general human tendency, we can extend your argument to be more general: the only good human is a dead human.

  4. I think Gene has the right of this one, Bob Murphy.

    Input = Advice to policy makers
    Output = Public Choice applied to Input = Size of government.

    So the libertarian argument against the other guys here is "public choice applied to your advice leads to big government" and Gene is saying "well, public choice applied to *libertarian* advice also leads to big government"

    So the conclusion is if you want to discriminate between the validity of the advice you're not gonna be able to do it by applying public choice.

    Now Gene Callahan being himself couldn't just make a blog post title saying "Public choice suggests libertarian and keynesian policy has the same outcome" as any normal person would, but must instead say "Libertarianism calls for bigger government!"

    And then he wonders why libertarian people are initially hostile to what he is saying: Gene, you do against libertarian ideas what Bob Wenzel does against non libertarian ones.

  5. Bob, re slippery slopes: How about, for B, by allowing greater concentrations of private power, the libertarian launches us onto a slippery slope that that makes it more and more likely that those with that power will be able to capture the state and use it to extract rents from the rest of us?

  6. I'm not Bob but that's a slippery ascending slope.

  7. A) is from Democracy in Deficit by Buchanan.

    (B) is cute but Buchanan is also the guy who said we need constitutional rules to stop bailouts from happening.

  8. Ryan, Buchanan is cute, but DeJasay showed that the exact same public choice problems that apply to legislation apply to constitutional restraints. There just is no real barrier provided by a constitution.

  9. Then I'd like to know why internal barriers to free trade arose almost immediately under the Articles of Confederation but have been non-existent (to my knowledge) under our current Constitution.

  10. I'll try one more time on this. I'm still not seeing it, but presumably if Alex Tabarrok had made an analogous observation about Matt Yglesias' hypocrisy, I wouldn't have been bothered...

    Anyway, Gene it seems like your trick here, if correct, could be deployed against anybody who ever raises a slippery slope argument. For example, you could make a blog post like this:


    I heard an argument from one of my buddies who's a big civil libertarian. He said that even though social conservatives claim that they don't want to ban books with "bad ideas," in practice these social conservatives are being very naive. Once we give the government the power to ban pornographic books, then the politicians will ignore the advice to allow books with heretical ideas. In practice, we will get much more censorship than anybody initially wanted.

    So, I am here to point out that the exact same reasoning could be used to show that my friend and the whole ACLU are calling for a ban on all books. I mean, they are telling the government to leave decisions about books up to private citizens. Yet they should know that the politicians will never listen to them.

    It's the exact same argument, and only civil libertarians who work for the ACLU could fail to see how I just caught them in their own contradiction.

    I don't even dream of convincing Gene on this one, but Avram, did I at least sow some doubt? I actually had trouble even writing the above analogy, because the "conclusion" was so obviously a non sequitur. And yet, that's what I think Gene has done in order to blow up the libertarian opposition to deficit spending.

  11. "Then I'd like to know why internal barriers to free trade arose almost immediately under the Articles of Confederation but have been non-existent (to my knowledge) under our current Constitution."

    Huh? You're saying that if there is one single bit of the original constitution that is still followed (perhaps because the powers-that-be *like* it?) that proves de Jasay wrong and Buchanan correct? Where is this on your scale of 10 levels of evidence... number 23?

  12. Bob: "I'll try one more time on this."

    Eeeh. You should have stopped while you were ahead!

    Here is the structure of the two arguments I presented:

    1) Anti-Keynes:
    You, Keynes, advise governments that:
    A) They should run deficits during a downturn, but
    B) Should run surpluses when times are good.

    But, given how much they will like doing A, it is predictable that they will fail to do B. So, by recommending A, you are in effect endorsing not-B.

    2) Anti-libertarian:
    You, libertarian, advise governments that:
    A) They should allow firms to grow as large as the market will allow, but
    B) Don't bail them out if they are failing or grant them any special privileges.

    But, given how powerful firms will grow given policy A, it is predictable that they will capture the legislative process and ensure that B doesn't happen. So, by recommending A, you are in effect endorsing not-B.

    And here is your "analogy":

    ACLU, you recommend A) no book banning. But the government won't listen. So by recommending A, you recommend not-A!

    That might make the ACLUs recommendation otiose, but it doesn't actually defeat itself. But in the first two cases, the argument runs that if your recommendation A is followed, you will predictably get not-B, i.e., one of Xs recommendations actually ensures the other one won't be implemented. Your case has nothing remotely like that.

  13. Gene, your argument is very sensitive to how you frame the position of the libertarian. I note with irony, for example, that in your original blog post, you didn't frame it the "right" way. That's what prompted my original reaction.

    Anyway I can do a similar reconfiguration with the ACLU example. Now you say, "Ah, but if the government doesn't restrict pornographic sales, then Hugh Heffner will get really rich and then use the government to start banning books on Mormonism, since they hurt his revenues. Thus the ACLU implicitly supports banning religious books, a la Public Choice theory."

  14. OK, that last ACLU argument has the right form.

    Note: I was trying to show that Buchanan et al. are using a *bad* argument against Keynes, not that I had a *good* argument here against libertarianism!

  15. "I note with irony, for example, that in your original blog post, you didn't frame it the "right" way."

    I have no idea what you are talking about here, Bob. I believe you *read* it wrong the first time!


Post a Comment

Popular posts from this blog

Central Planning Works!

Fiat Currency