Can Government Really Be Limited?

Every several months it seems I end up debating anarchism/minarchism somewhere on the internet. It’s usually not the content of the opposing argument that draws me into the debate, but rather how it’s presented. As a piece of advice, always try to be civil when debating others, especially other libertarians. I find it very distasteful when people launch into personal attacks or label opposing ideas as “delusional”. There’s enough infighting already. Mocking people with alternative views only makes it worse.

With that out of the way I figured I’d share how I became an anarchist and why I believe minarchists in the libertarian movement are misguided. Unlike some people, I didn’t become an anarchist by suddenly realizing taxation is theft or that even a minimal government violates the NAP. Rather it was only after coming to the conclusion that government couldn’t be limited. It was kind of a depressing moment really. Here we have this great philosophy yet it will never be put into practice. It was only then that I started searching around for alternatives and decided to give anarchism a fair hearing.

Minimal Government, Maximum Problems

So why did I come to the conclusion that government cannot be limited? First let’s start with the observation that government does a pretty lousy job producing laws. Consider what is probably the best example of this ― the case of international trade. Throughout the 18th century most people believed that countries became wealthy by exporting more than they import. Adam Smith successfully refuted this fallacy in 1776 and it was completely destroyed by David Ricardo 40 years later when he developed the principle of comparative advantage. I use this example because this is one issue where there is an absolute consensus among economists across the entire political spectrum. The following quote comes from, of all people, Paul Krugman:

If there were an Economist’s Creed, it would surely contain the affirmations ‘I understand the Principle of Comparative Advantage’ and ‘I advocate Free Trade’.

So it has been well over 200 years since economists last opposed free trade, yet when you look around every single country on Earth has trade restrictions. And it isn’t just one or two, but all of them. This ought to suggest that the process that is being used to generate laws (ie. the political process) is not a good mechanism for generating the right laws.

The problem here is one that economists have been studying since at least the 1950’s. The traditional model of government is one where public spirited policy makers heed advice from experts and select the optimal public policy. Yet, real world governments look nothing like this model. They almost never select the optimal policy and are all too often caught up in graft, corruption, or cronyism. Within economics the field of Public Choice is devoted to using economic analysis to study the democratic decision making process. A core premise is that politicians, bureaucrats, and voters respond to incentives like the rest of us. Phenomena such as concentrated benefits/dispersed costs result in special interest groups regularly pillaging the public trough. Re-election seeking politicians have an incentive to pander to small, well-organized group. Regulatory agencies are often captured by industries they allegedly regulate via the revolving door, etc. You could spend years just reading public choice literature and only scratch the surface.

A core lesson to be drawn is that changing the identities of those who hold office will not change the outcome. As long as the incentive structure remains the same, the system will predictably fail.

Neither in this context will a constitution make much difference. It should go without saying that constitutions do not enforce themselves. Absent a viable enforcement mechanism, a constitution is little more than a wish list. We typically have to rely on public officials exercising self-restraint in avoiding violations of the constitution. For all the reasons mentioned above, such self-restraint is unlikely to be forthcoming.

And of course we have the major empirical blemish on minarchism ― the massive failure of the U.S. Constitution. It’s pretty clear the Constitution was written explicitly to limit government. Yet, it started failing on day one. George Washington signed a bill into law creating a central bank despite having no constitutional authority to do so. Since the Justices of the Supreme Court were all appointed by Washington, could they have reasonably been expected to strike down the law? Certainly not. The next President, Adams, signed a sedition act into law making it illegal to criticize the President despite it being a blatant violation of the first amendment. The sedition act was never struck down by the courts, but rather simply expired. In other words, noticeably missing during the heyday of “limited government” was the limited part.  And it only got worse from there.

The Myth of the Rational VoterNow when confronted with the mountainous theoretical and empirical evidence suggesting it very well may be impossible to limit government, minarchists will typically fall back on the notion that limited government ultimately requires well informed, vigilant voters to preserve it. The problem here is this argument bumps up against another phenomenon that public choice economists have been studying for decades ― voter ignorance and irrationality. In short, since the likelihood of influencing the outcome of an election is basically zero, the costs of acquiring political knowledge frequently exceeds the benefits. That is, the acquisition of political knowledge is classic economic public good. Therefore voters on the whole will remain ignorant.

Neither is it the case that uninformed voters will simply guess at the correct policy and get it right 50% of the time. As economist Bryan Caplan points out in his book (linked to on the right), uninformed voters systematically chose the wrong policies when compared to the community of experts. As an example, we already mentioned that there is unanimous support for free trade among economists, yet the majority of voters oppose it. So to sum up, if the political system requires informed, vigilant voters to restrain government, as does minarchism, then it will predictably fail.

Limited Government Is Utopian

The term ‘utopian’ is often applied to ideas that are too unrealistic or unachievable. A perfect example of this are the utopian socialists who believe in the “from each according to his ability, to each according to his needs” mantra. When you point out to them that people tend to act in their own self-interest and such a policy would likely result in mass underproduction/starvation, they will typically assume the problem away by postulating a society where everyone acts selflessly and does what’s best for society. Obviously such a policy is utopian because it requires a fundamental change in human nature to work and doesn’t offer any plausible proposals for brings about that change.

In a similar context many interventions proposed to cure various market failures could be considered utopian. It’s true that there are government policies that can, theoretically, improve upon the market outcomes. Government provision of public goods or Pigovian taxes on externalities come to mind. The problem here is that these solutions assume the existence of a benevolent social planner while completely ignoring the associated public choice problems. Once the assumption of beneficence is relaxed, it’s hard to argue government intervention will improve on market outcomes. As economist Pete Boettke put it:

An omniscient, omnipotent, and benevolent social planner should never be invoked in discussions of public policy — even to figure out so-called “first best solutions” before proceeding to another round. Institutions and the incentive structures and informational flows they provide can never be ignored in a proper economic analysis of the situation. To do so, is to commit the intellectual error that Friedman indicted Lerner with. Those administrative costs must be part of the comparative institutional analysis from the start. They are not footnotes, or afterthoughts, but a critical component to any economic analysis.

It’s in this context that I am going to charge minarchists with being overly utopian. Let us remember that minarchists aren’t suggesting that we maintain our current institutions exactly as they are now, rather they are suggesting that the government be radically reduced in size and then somehow kept there. As I already mentioned, the only way to accomplish this for there to be a radical change in human nature. Politicians, bureaucrats, and voters would have to stop acting in their self interest and stop responding to incentives. Without any realistic proposal for making that happen, limited government should be considered utopian.

It may seem odd that I’m characterizing limited government as utopian but not anarchism. But keep in mind, the fact that a proposal is radical or that it strays far from the status quo doesn’t make it utopian. It is only utopian if it requires a fundamental change in human nature to work. In a world of scarcity, populated by self-interested actors, there’s good reason to believe anarchism can indeed work.

From Minimal Government to No Government

Now we might ask, as libertarians who believe governments do a terrible job of producing say, healthcare or automobiles, why do we believe those same governments will do a good job of producing law or legal systems? The legal system is arguably the most important institution in society because if it is malfunctioning, most other institutions will be prevented from functioning properly as well.

What we would like to do is use the same mechanisms that allow the free market to produce healthcare and automobiles much more efficiently than government to generate law and the legal system. Not only should this system produce law that is much more in tune with people’s actual preferences, but it should serve to limit power much more effectively than a constitution.

Consider this thought experiment: Imagine there is no federal government, only 50 separate states. We wouldn’t expect the states to be libertarian in nature, certainly not minarchist. Still, we would expect those governments to be more limited in what they can do than a single federal government. Why? Because when the size of the territory controlled by a government decreases, the cost of leaving falls. What prevents most people today from leaving the United States for greener pastures is the cost of leaving is just so high. You have to put your house on the market, find a new job, take your kids out of their school, move away from your friends and family, etc.

As the size of the political jurisdiction decreases, so does the cost of leaving. If New Jersey decides to raise taxes for the millionth time, people can leave for Pennsylvania. If they raise taxes high enough, the state will actually bring in less revenue than if it hadn’t raised taxes. This creates a very real limit on how much a State can get away with. A limit that doesn’t exist when you have a (territorially) large government.

Anarchism takes this concept out to it’s logical conclusion. But rather than shrinking the size of the jurisdiction down to the town or city level, it simply de-territorializes it. People can switch jurisdictions voluntarily without changing residence. As soon as a provider of legal services tried to gouge you on the bill or dictate how you live your life, you simply switch. Just as easy as changing your car insurance company. This creates the ultimate check and balance on power that is sorely missing under minarchism.

Of course anarchism is not without objections, but honestly they just aren’t that compelling.

  • Since national defense is a public good an anarchic society will have no way to defend itself. Foreign countries will invade and people will be worse off than if they just created a government.
    This argument would have been much more plausible two thousand years ago. Today people have developed a strong aversion to wars of conquest. Certainly, by the time we are ready to abolish the state the opposition to war will be that much stronger. And I’m not going to list them here, but it’s not like an anarchic society wont have any means of defending itself.
  • Without a single institution setting the law, violence will break out between competing protection agencies with different conceptions of what the law should be.
    I’ve written about this before. Briefly, this same argument could be applied to democracy as well. Two different factions have different ideas about what the law should be. The party that loses the election attacks the winning party, etc. Obviously, this doesn’t happen. The reason is that most people are civilized enough to resolve disputes peacefully. Anarchism doesn’t require people to behave any differently than they currently behave under democracy.
  • Legal services are different than other services. It’s more efficient for them to be proved by a monopoly, hence the various protection agencies will merge and for a government.

    This argument has been surprisingly popular among minarchists since it was first articulated by Robert Nozik. I say surprisingly because it’s pretty obvious that there are almost no economies of scale in protection and arbitration. Far from merging into a single firm, economics would predict firms to be more numerous than in a typically sector of the economy.

  • You must have a government to set a single set of laws for everyone. Multiple legal codes can’t possibly work.

    I agree that multiple legal codes would be problematic, but there’s no real reason to expect this would be the outcome. Consider the English Common Law. Arising out of the feud system, people realized settling disputes through neutral parties was far less costly. Some of the rulings that were handed down had positive outcomes, some didn’t. The good rulings were remembered and repeated and the bad ones discarded. Over time, this created an expectation of how the judges would rule. The legal principles that were discovered through this process ultimately formed the basis of the common law that is still with us. The resulting legal code could be described as the byproduct “of human action but not of human design.”

  • Admittedly, much of the case for anarchism is theoretical. And I am willing to consider the possibility that I’m wrong. But the arguments against it just aren’t that compelling. Certainly not as compelling as the arguments against minarchism.

    Finally, we find that some libertarians reject anarchism because they view it as unlikely to be achieved in their lifetime. Anarchism isn’t “pragmatic”. But let’s not forget that minarchism is only one step behind in terms of radicalism. It’s not like we’re just one good election away from minarchist utopia. The odds that we will see an approximation of minarchy in our lifetimes are only marginally better than the odds that we will see anarchy. Given that, doesn’t it make sense to throw your support behind the system that actually has a chance of working? If your time preference is really that high that you dismiss anarchism on “pragmatic” grounds, then maybe libertarianism isn’t right for you.

    However, if you’re in it for the long haul, anarchism is definitely the way to go.

    3 thoughts on “Can Government Really Be Limited?

    1. Without any government you create a Darwinian system where only the strong survive, minimal government is needed but should be limited to the following:
      -Enforce Contracts made by two consenting parties
      -Protect its citizens by use of law enforcement and military for foreign conflicts
      -Create roads and infrastructure (including courts of law)
      -Protect against and prosecute fraud

      If you want to change government for the better do two things:
      1) Limit Terms for Congress and the Senate (prevents corporations from buying out politicians because eventually they’d go bankrupt from buying all the politicians, plus it keeps politicians more honest because they know they only have a short time to get what they promised achieved)
      2) Require any politician that votes for war to be shipped for combat on the front lines (this prevents corporations from buying out politicians for profiteering on war, because if the politicians knew their necks where on the line they wouldn’t risk it. Each politician would appoint a proxy to vote in their stead if they were shipped out, so basically they go do a tour of war while their proxy takes over, then when they return they can either approve or dispute their proxies’ claims and votes.)

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