Am I a Libertarian?

Am I a Libertarian?

One cannot read Ayn Rand’s “Atlas Shrugged” or believe in “the natural rights of man” without strong visceral support for individual liberties. But, does that qualify me as a “libertarian”? I don’t know, but those feelings lead me to believe that in evaluating potential government actions, the position of libertarian is a good place to start.

The rule of law is essential for capitalism to work. There must be a clear understanding of the law of contracts for two individuals to voluntarily enter into an agreement with the consequences of the deal known. Laws against stealing and killing are needed. Strong economies need predictability for entrepreneurs to invest and for lenders to lend. Any uncertainty depresses risk taking – both the business owners and the lenders need to factor in higher rates of return forecast in their business plan models before they will be willing to take the risks of either investing or lending. Uncertainty can come from many sources, including, but not limited to, corrupt officials, unpredictable Presidents (or dictators, governors, etc.), pending legislation that lingers on and on, foreign relations, and changing currency values. For example, many of the poorest African countries suffer from unstable governments, high corruption and dictatorships which may arbitrarily take away the fruits of one’s labor and investment.

What the rules are matter. Capitalism comes in many forms. It is not the same in many developed European countries as it is in the U.S. It is not the same in South Korea, and some of the other “Asian Tigers” which have had very rapid growth in recent decades. But just what the rules are in each of those countries matter, as the rules set up incentives or disincentives to act. For example, several of the European countries have strict rules on companies laying off workers. This discourages companies from hiring until absolutely necessary, and therefore depresses employment. The result is chronically higher unemployment rates in those countries than the U.S. This is somewhat the basis of many conservatives’ belief in the aphorism often erroneously attributed to Thomas Jefferson "That government is best which governs least..." (but which was actually found in Thoreau's "Civil Disobedience").

There are some “public goods” that must be provided by a government. The most basic is national defense. Other public safety efforts such as police and fire protection are similar. These must somehow be paid for, so some taxation is necessary, despite the appearance of unfairness of the government “taking” from the taxpayers. So, the question is not whether the government should tax the taxpayers, but how much, from whom, for what purposes, by what means (e.g., tariffs, property taxes, sales taxes, income taxes, “sin” taxes, value added taxes, etc.). Louis XIV’s Finance minister, Jean-Baptiste Colbert, is credited for saying “the art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.” An economist, however, looks at taxation as how to collect what is necessary with the minimum amount of distortion to the pricing system which encourages efficiency.

Some of the other problems, issues or weaknesses of capitalism listed my blog post “Free Market Economics: Problems and Solutions” also often require government action, which precludes the total “hands off” position of the Libertarians.

That being said, it is important to have a philosophical base from which to start when looking at an issue. As a person trained in economics, I start from a free market orientation, i.e., what best conforms to the assumptions of free markets, as that is what appears to have been most successful to bring prosperity to the most people. Although I am not a Libertarian, I have read “Atlas Shrugged” by Ayn Rand and one cannot read that book without getting a real visceral reaction to redistribution programs where those who work have income or property taken away from them and those who slough off receive what others have produced. So, to justify those programs, I see it essential that those programs which are aimed to reduce poverty be temporary and with the proper incentives for the recipients to work hard to get off those programs (with some exceptions for those people incapable of improving their condition). In other words, I believe that people who work hard or take a risk to earn money be able to enjoy the fruits of their labor, while still be compassionate for those who are truly needy.

I also strongly favor societies in which there is greater freedom of choice in what they do, where they go, how they live, etc.  That is, I believe in, and promote policies consistent with:

Economic freedom, property rights, separation of governmental powers, checks and balances within government, limited government, free trade, popular sovereignty, the use of reason, appreciation for science and education, tolerance of differences among people, non-discrimination, individuals’ liberty over the authority of the state, the “American Dream”, the accountability of individuals for their own condition, and civil liberties under the rule of law: freedom of religion, separation of church and state, freedom of speech, freedom of the press, freedom of assembly, the right to a fair trial and other restrictions of government contained in the Bill of Rights.

Further, in the USA, I believe in the restrictions that are written in the U.S. Constitution. I believe the words of the Constitution should mean something and that courts should not decide cases that conflict with the words of the document because they interpret the words to apply differently to changes in circumstances from what existed when the Constitution was approved in 1787. The appropriate way to change the constitution is by amendment, not court interpretation, otherwise the ideal of the “rule of law” is violated. When a public office holder swears to uphold the Constitution, I believe that should mean something.

Some of the problems with capitalism cited in my blog post “Free Market Economics: Problems and Solutions” have led to many people having been left behind. People who have lost jobs either because of the arrival of immigrants or because of innovation feel left behind. The policies of free trade, open borders and progress through innovation are all part of “classical liberalism” favored by those perceived as “elites” as well as economists. In the U.S., the effects of these problems may also have led to the identity politics discussed in “Against Identity Politics - The New Tribalism and the Crisis of Democracy”, by Francis Fukuyama. The feeling of being left out can now be quickly communicated and amplified through social media and other programs through the Internet.

In America, and in many other countries around the world, we are faced with many challenges to achieve prosperity for the masses. It is my hope that the readers of this paper take heart and seize the challenge to apply the concepts of “Thinking Like an Economist” (a course offered by Great Courses, i.e., “there is no such thing as a free lunch”) and the principles I believe in to achieve not only prosperity but individual freedom.