How to Quickly Prove a Libertarian Wrong

Libertarianism: Provably ridiculous

Have an annoying Libertarian uncle who tells you that government is the source of all evil? Ever feel frustrated at a dinner party when a highly articulate free market ideologue lectures everyone on the virtues of free market capitalism?  As part of the battle to counter the myth that Randian, deregulated capitalism is the be all and end all of human existence, we thought it would be useful to have some quick-fire arguments in your back pocket to battle the 5 most common myths propagated by  Libertarians:

1. Free market capitalism is the greatest engine of economic growth in human history.

This myth is perhaps the most prevalent in Libertarian circles, and is easily disproved when you look at the history of economic development in the West and the level of government intervention in the economy. The stunning growth of the American economy in the 19th century had little to do with unregulated capitalism. As Cambridge economist Professor Ha Joon Chang notes, America was the most protectionist country in the world from 1830 up until World War Two. In fact, as Chang outlines in his book ‘Bad Samaritans’ every industrialized economy on the planet grew astronomically by strictly regulating markets, government investment and the protectionism of key industries through nascent stages of development. As former head of the World Bank Joseph Stiglitz points out, the countries that adopted free market reforms under IMF  ‘structural adjustment’ policies all failed miserably and poverty actually increased.

2. Private companies are inherently more efficient than government because there is a profit motive.

This is true only if you define profit as the only measurement of success. Take health care for example. The health care industry in the US is extremely good at creating profits, but extremely bad at delivering health care. In 2009, WellPoint Inc., UnitedHealth Group, Cigna Corp., Aetna Inc. and Humana Inc. covered 2.7 million fewer people than they did in 2008, but made 56% more in profits ($12.2 billion). Conversely, Britain has one of the most cost effective health care systems in the world according to a study (pdf) published in the Journal of the Royal Society of Medicine. From the Guardian:

The “surprising” findings show the NHS saving more lives for each pound spent as a proportion of national wealth than any other country apart from Ireland over 25 years. Among the 17 countries considered, the United States healthcare system was among the least efficient and effective.

The National Health Service (NHS) is not designed to create profit, it is designed to provide health care and it does it far better than a for profit model.

3. The rich need tax cuts to be encouraged to spend and create economic growth during times of recession.

The facts on this one are squarely against Libertarianism. While many rich people do indeed create economic growth, in times of recession they cannot be counted on to rescue the economy as Libertarians have forcefully argued. As David Cay Johnston reported in Reuters, during the peak of the recession in America, businesses held on to their money rather than spending it:

IRS data suggests that, globally, U.S. nonfinancial companies hold at least three times more cash and other liquid assets than the Federal Reserve reports, idle money that could be creating jobs, funding dividends or even paying a stiff federal penalty tax for hoarding corporate cash.

The Fed’s latest Flow of Funds report showed that U.S. nonfinancial companies held $1.7 trillion in liquid assets at the end of March. But newly released IRS figures show that in 2009 these companies held $4.8 trillion in liquid assets, which equals $5.1 trillion in today’s dollars, triple the Fed figure.

As the chart below shows, the recession was the major cause behind the rush to stash their cash, and the massive tax cuts passed by Bush and continued by Obama did nothing to reverse the trend.

4. The US has the highest standard of living in the world and everyone wants to be American.

Again, provably false. America is a great place to live for a lot of people, but the people who benefit from highest standard of living in the world are in Norway – a highly socialistic country. America has one of the greatest levels of wealth inequality in the West and has over 46 million people living in poverty – not exactly the best argument for American style capitalism.

5. America is a capitalist economy

While it is true that much of the population lives in a relatively free market economy in America, the overall structure of the economy is anything but free, and the higher up the wealth ladder you get, the more the government intervenes. As Noam Chomsky writes:

The whole economy’s been socialized since — well actually forever, but certainly since the Second World War. This mythology that the economy is based on entrepreneurial initiative and consumer choice, well ok, to an extent it is. For example at the marketing end, you can choose one electronic device and not another. But the core of the economy relies very heavily on the state sector, and transparently so. So for example to take the last economic boom which was based on information technology — where did that come from? Computers and the Internet. Computers and the Internet were almost entirely within the state system for about 30 years — research, development, procurement, other devices — before they were finally handed over to private enterprise for profit-making. It wasn’t an instantaneous switch, but that’s roughly the picture. And that’s the picture pretty much for the core of the economy.

The state sector is innovative and dynamic. It’s true across the board from electronics to pharmaceuticals to the new biology-based industries. The idea is that the public is supposed to pay the costs and take the risks, and ultimately if there is any profit, you hand it over to private tyrannies, corporations. If you had to encapsulate the economy in one sentence, that would be the main theme. When you look at the details of course it’s a more complex picture, but that’s the major theme.

The truth is that the middle class and poor live under the dictates of the market (if your small business fails, there’s no bailout), but the rich have a gigantic government structure designed to protect their wealth from competition.

——

Got any other rapid responses to Libertarian myths? Comments below and we’ll post them later today.

 

 

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  • McKinley

    The most basic argument that Libertarianism does not work?

    Libertarianism is, by its own definition, how everything, how all economies, STARTED, back in the caveman days… and look where we are now (which, according to Libertarians, is bad).

  • Greg Hills

    I think the person who wrote this is confusing anarchy with libertarian. If you measure success as, are patients satisfied with the care, Briton’s health services fail.

  • Allan Elliott

    It’s not Libertarians that are denying gay marriage and the use of marijuana. Libertarians are simply non-interventionists. It’s that simple.

    Go have your socialist utopia….if you can afford it.

  • KCMOfan
    • Vincent Blake

      THANK YOU!

  • Trepur

    In 1853 Admiral Perry of the American navy set fire to the Edo Harbour due to Japan’s overly protectionist economy and their refusal to enter in trade negotiations.

    I have a tough time believing that America was the most protectionist nation on the planet when they were attacking countries for protectionist policies.

  • Shawn Keeth

    Wow you have no idea what you are talking about, bravo on the amazing lack of research. Al your comparisons are of Republicans not Libertarians. When Republicans say free market they do not mean free market, they mean corporatism. Libertarian free market has government protection, to protect Liberty, Property, and you. Nothing can violate those unlike what we have now. Same with the tax breaks for the rich, no Libertarian says this. The entire argument you made for government involvement in the economy is that we did good with government intervention. I prefer better than good. The amount of Government intervention then and now is night and day. No Libertarian would say this is a capitalist system we have, we don’t. Or the whole higher standard of living thing, again Republican. Drives me nut this kind of misinformation is out there.

  • Thomas Goyette

    Go figure a Jew named Ben Cohen would only attack libertarianism on its fiscal ideology. I bet this Jew is perfectly ok with their desire to legalize all drugs, gay marriage, and prostitution. The Jews have always been at the forefront of turning society into a giant brothel.

  • Promontorium

    1. You didn’t remotely address, you just vaguely claimed other people disagree. 2. You worded in a weasel way, and then made one citation about British health care. It’s obviously a topic that should have a lot of consideration across a wide range of examples. 3-5 aren’t even “Libertarian” issues.

    You’re a moron.

  • cesium62

    Argument #2 would make slightly more sense if phrased as: “The private sector is more efficient than government because it is subject to competition, and hence evolves to be more efficient.” This is subject to many of the same counter arguments, but at least sounds plausible at first glance.

  • Dimitrios Nicolopoulos

    I would make the definition of Libertarianism simple. Mind your own biz. If the individual is not harming anyone else the gov’t should not regulate it. Want to smoke pot? none of your biz, want to marry a dude?none of your biz, want to start a biz? none of your biz, etc. Empty the jails, the courts,etc and watch gov’t shrink.

    • M’Quve

      That is not libertarianism. That is just anarchy!

  • Tee Bag

    “….Britain has one of the most cost effective health care systems in the world according to a study (pdf) published in the Journal of the Royal Society of Medicine. From the Guardian” Isn’t the Guardian a British Based Media??? A little biased me thinks. This writer is obviously coming from a very narrow angle of the libertarian debate. This was the equivalent of asking to explain the intricacies of Africa and the writer just talked about Capetown in South Africa. Kudos for being a dooshnozzle

  • Chad Jackson

    Have to agree with Mark Hilgenberg – your assertions have nothing to do with libertarianism. These five planks you set out appear to be taken more from the GOP and “conservative” movement.

    • Nanowired

      I disagree, every libertarian throws these around.
      Here is a quote from elsewhere on this matter.

      However, there’s a certain more aggressive, very American strain of libertarianism with which I do have a quarrel. This is the strain which, rather than analyzing specific policies and often deciding a more laissez-faire approach is best, starts with the tenet that government can do no right and private industry can do no wrong and uses this faith in place of more careful analysis. This faction is not averse to discussing politics, but tends to trot out the same few arguments about why less regulation has to be better. I wish I could blame this all on Ayn Rand, but a lot of it seems to come from people who have never heard of her. I suppose I could just add it to the bottom of the list of things I blame Reagan for.

      • Promontorium

        “I disagree, every libertarian throws these around.” – confirmed for idiot. “Every” libertarian argues America is the greatest nation? Where? “Every” Libertarian argues that America is capitalist? Have you ever met a libertarian? If this were the case, then they’d have nothing to complain about American corporatism.

        “I wish I could blame this all on Ayn Rand, but a lot of it seems to come from people who have never heard of her.”

        I agree, a lot of you people blame Ayn Rand without ever reading her. You have a few idiotic soundbytes you learned from an angry commie and that’s good enough for you.

        • Red the Fister

          When Americans, writing for an american audience, speak of “Libertarians” they are speaking of the American Libertarian, not the vastly-preferable-yet-still-deeply-flawed Classical Libertarian of european fame.
          Re-read the article and put “American” before every “Libertarian”.

          • Promontorium

            I am an American “libertarian”. I can defend all my positions morally, pragmatically, and logically. The first thing I would need to hammer in is that “libertarian” isn’t a philosophy, and can be as generic as “liberal”, so trying to pin down such exactness is contradictory. It is far more honest and effective to argue specific positions, not trying to lump people together, building a straw man and then arguing with it.

          • Red the Fister

            Have you heard of teh Libertarian Party Platform?

          • Promontorium

            The Libertarian Party is a political party. It is not the entirety of “libertarians”. That said, there’s probably not much in their platform that I don’t agree with.

            This article isn’t even worth college level political analysis. It’s a joke.

            “Take health care for example. The health care industry in the US is extremely good at creating profits, but extremely bad at delivering health care.”

            Extremely bad at delivering health care? Really? Compared to what? By all objective measures, Americans have some of the most cared for citizens on Earth. To call American health care “extremely bad” is idiotic, so incredibly idiotic this “article” doesn’t even bother citing any evidence to this claim. Further it is based on a false premise. This claim is made to prove how terrible capitalism is. But the health care industry is one of the MOST REGULATED INDUSTRIES IN THE COUNTRY. Completely destroying any point the author might have tried to make.

            This being the level of intelligence, research, and evidence used to make the argument, it’s hardly an argument at all. I could much easier use the health care industry to prove government involvement is beneficial using the exact opposite premise, that the health care industry being so completely regulated, has resulted in an “extremely” good health care system. One that includes FREE HEALTH CARE FOR ALL PEOPLE OF EARTH by simply walking into an ER, any human, regardless of legal status, may receive immediate care for any problems. This is unprecedented. Even Europe doesn’t offer this. America is in fact so flush with doctors and money, we send doctors and money to countries around the world providing free health care there too.

          • Red the Fister

            Yes, it is, indeed, a political party.
            And, in America, when we speak of “Libertarians” we generally refer to that very political party and its’ mindless supporters.
            Do you support the removal of Age of Consent Laws, Child-labor Laws and legalized prostitution? If so, then you support the conditions needed to legalize child prostitution. as such, you have no moral standing to speak of.

          • Sharon Presley

            What are you going on about? Show me some stats on your claim. Most libertarians I know [which is a LOT] believe that children can’t give informed consent and that there needs to be age of consent laws in the present context [or even in the future]. And we speak of “Libertarians,” we do not always mean the LP. There are a vast number of libertarians who are not members of the LP. I taught Developmental Psychology for many years but I’m only one of many who don’t believe that young children should be working. As for prostitution, if it is between consenting adults, there is no problem. Child prostitution is abhorrent to all libertarians. This fantasy “libertarian” only exists in your own mind

          • Red the Fister

            Thank you for your addition of the No True Scottsman fallacy to fail to bolster your untenable political assholery.

  • http://www.facebook.com/hilgi Mark Hilgenberg

    What does any of this have to do with libertarianism (AKA individual liberty?) BTW, why did you close the comments at HuffPo?

    “1. Free market capitalism is the greatest engine of economic growth in human history.”

    I hear conservatives say this but few actual libertarians.

    You are mixing “free markets” meaning markets absent of coercive power with capitalism meaning a top down hierarchical system usually with government created fictitious entities.

    As a Libertarian I could not imagine saying the above.

    “2. Private companies are inherently more efficient than government because there is a profit motive.”

    If you goal is efficiency over sustainability in some cases maybe. But most private companies are incorporated and the are privileged with government protections and perks/ Libertarians are not for corporatism.

    “3. The rich need tax cuts to be encouraged to spend and create economic growth during times of recession.”

    That is a conservative con line and nothing to do with individual liberty. Growth comes from families spending money.

    “4. The US has the highest standard of living in the world and everyone wants to be American.”

    Where do you come up with this stuff? LOL. Ya, we all want to live in a near police state controlled by crony capitalists with a bought and paid for army?

    “5. America is a capitalist economy”

    Totally false but your followup is correct. You need to read more anti-capitalist libertarians and stopping being conned into believing that Conservatives using the rhetoric of liberty have anything to do with libertarianism.

    • Ohioan

      Growth doesn’t come from money being spent but wealth being created, basic Austrian economics.

      • http://www.utahlp.org/ Mark Hilgenberg

        Hence why I am not an Austrian.

      • Nick Agriesti

        And how is wealth created but through the exchange if goods and services and the expansion of the industries and infrastructures supporting those services?

    • Roger Doit

      Many in the libertarian, laissez-faire, Austrian school, Chicago school and other neoclassical offshoots constantly tend to talk about how “state interference” is the problem today, such as with having protectionist import/export polices or the favoring of certain industries by the state. It is assumed that somehow the market can be “free” to operate without the manifestation of monopoly or the “corruptions” inherent to what has been deemed today “crony capitalism”, even though the entire basis of strategy is competitive or, in more direct terms, “warring”. Again, to assume the State would not be used as a tool for differential advantage – a tool for business – is absurd.

      The state, in its historical form, is an extension of the capitalist system itself. The government did not create this system. The system created the government or more accurately – they evolved as one apparatus. All socioeconomic systems root themselves in the basis of industrial unfolding and basic survival. Just as feudalism, being based on an agrarian society, oriented its class structure in relationships to the livelihood-producing land, so do the so-called “democracies” in the world today. Therefore, the very idea the state government is detached or without the influence of capitalism is a purely abstract theory with no truth in reality. Capitalism essentially molded the governmental apparatus’s nature and unfolding – not the other way around.

      So, when people argue that government regulation of the market is the root of the problem and that the market should be “free” without structural or legal inhibition, they are confused in their associative understanding. The entire legal system, which is the central tool of government, will always be “infiltrated” and used to assist in competitive tactics by business to maintain and increase advantage since that is the very nature of the game. To expect anything else is to assume that there are actually “moral” limits to the act of competition. Yet, this is completely subjective. Such moral and ethical assumptions have no empirical basis, especially when the very nature of the socioeconomic system is oriented around power, exploitation and competition – all considered to be, in fact, ideal virtues of the “good businessman”, as noted before.

      If a profit seeking institution can gain power in the government (which is the exact intent of “corporate lobbying”) and manipulate the governmental apparatus to favor their business or industry to gain advantage, then that is simply good business. It is only when the competitive attacks reach peak levels of unfairness that action is taken to preserve the illusion of “balance”. We see this with anti-trust laws and the like. These laws are, in reality, not to protect “free-trade” or the like – but to settle extreme acts of competitive intent inherent in the market place, with all sides jockeying for advantage by whatever means possible.

      Even the very constituents of all governments in the world today are invariably of the corporate-business class. Hence, deep business values are clearly inherent in the mindsets of those in power.

      So, to argue that the “free market” is not “free” due to intervention is to misunderstand what the nature of “free” really means with respect to the system. The “freedom” is not the freedom of everyone to be able to “fairly” participate in the open-market and all the utopian rhetoric we hear about today by apologists of the capitalist system – the real freedom is actually the freedom to dominate, suppress and beat other businesses by whatever competitive means possible. In this, no “level playing field” is possible. In fact, if the government did not “interfere” by way of monopoly/anti-trust laws or the “bailing out” of banks and the like – the entire market complex would have self-destructed a long time ago. In part, this inherent instability of the market is what economists like John Maynard Keynes basically understood, but arguably to a limited extent.

      The truth of the matter is that this polarizing, false duality between the “state” and the “market” is blind to the true root cause of what is actually causing problems, not realizing that the dyad of state and market synergy is, in reality, a single power system in play, at once.

      Irrespective of the merit of any specific argument as to the favoring of the “free market” vs. the favoring of “state regulation”, all business dealings have historically required some level of legal mediation. This is because all transactions are a form of competition and all competition invites the possibility of fraud or abuse, given the natural pressure of external circumstances and the nature of survival itself, within the bounds of the scarcity-based market. The fact is, any form of commerce that exists in this scarcity-reinforced worldview, will manifest so-called “corrupt” or dishonest behavior constantly. It is firmly incentivized. The degree of corruption itself even becomes a matter of opinion, in fact. The line between accepted business acumen and blatant dishonest persuasion is not an easy distinction to make today in the broad view.

      Therefore, some type of overriding decision-making power has always been granted to some group body to mediate conflicts and this is the seed of governmental power, as we know it. Yet, the punch line of the whole circumstance is that in a world where everything is powered by money; in a world where, in truth, everything is for sale, the rapid “corruption” of any such regulation or power establishment is also essentially guaranteed over time, to one degree or another.

      Put another way, there will always be a need for legal regulation of transactions in the market by some publicly sanctioned institution, and the market ethic will always corrupt such regulation to some extent with the influence of money because money and business are actually what make the world move. This is simply what is to be expected when the entire psychological foundation of existence is based on survival through acts of competitive self-interest, oriented by the universal assumption of empirical scarcity, with no real structural safeguards given to members of society for some reassurance in survival. To think any regulatory agency would not be susceptible to such corruption; to think state policy and hence coercion could not be ‘purchased’ like any other commodity is to deny the basic philosophical foundation inherent to the market’s notion of “freedom” itself.

      Therefore, complaining about state regulation or lack thereof is ultimately a moot issue in the broad scheme of long-term societal change. True social change will not come about by the illusive preference of one of these over the other. It will only come about by installing a completely different system which eliminates both the market and the state as we know it, elevating the entire framework out of the narrow, competitive focus of managing scarcity in the current “earn a living or suffer” system, to a focus on facilitating a sustainable abundance and the meeting of human needs directly.

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