Krugman on Libertarian Fantasies

In a recent piece in the New York Times, Paul Krugman arraigns libertarians for “living in a fantasy world,” telling us that there is usually a “very good reason” for bureaucrats to substitute their judgment for our own. When one asserts that he is opposed to an untrammeled free market, all he is really saying is that he wants to be able to decide which perfectly peaceful exchanges and cooperative forms will be deemed permissible. Since I don’t think that some special group of people should have the arbitrary right to boss around or lord over all other people using violence, I naturally don’t believe in restricting voluntary exchanges that benefit all interested parties and leave everyone else unharmed. We are, however, supposed to unthinkingly embrace the Rule of Experts, and so I must be unenlightened or just plain antisocial to the extent that I don’t accept some “reasonable” (itself defined, of course, by supposed expert bureaucrats) limits or regulations on trade between consenting adults.

Paul Krugman, unconsciously I’m sure, makes an interesting move whenever he articulates his view of what it is that drives the acts of government agents as opposed to market actors. When he’s talking about the latter group, he assumes, perhaps quite rightly, that they are motivated by unalloyed self-interest, by greed and the bottom line, regardless of who gets trampled on, whether it means polluting cherished, shared natural resources or hawking unsafe products to consumers. Well, all right, so when we’re considering the motivations of DC bureaucrats, the same assumptions ought to hold, right? Not exactly. You see, in the Krugman worldview, there is just no reason to fear that the public choice scholars actually made a meaningful contribution to our understanding of political machinations, that we should look at politics “without romance” and consider the motivations of the powerful in government just as we do the powerful in business. Never mind the work of people like Butler Shaffer, who has shown that big business has long agitated for regulation as a way “to obtain benefits it has been unable to secure by its own efforts.” For a firm or any other market actor, lack of flexibility and responsiveness to changing conditions means entropy.

Shaffer demonstrates that for entrenched and well-connected firms that don’t want to change themselves, it is often easier to attempt to change their competitive environs, to pass their entropy onto their competitors. Legal and regulatory means present themselves. In Krugman world, however, a world in which the cherubic state was given to us from heaven by Immaculate Conception, it is inconceivable that regulators could be anything but pure of heart in their altruism. In his mind, since we already have close to an unfettered free market today, what we need is more benevolent intervention from our moral betters in DC. For Krugman, ideological blinders occlude the fact that we already have his progressive, centrist corporate-statism (i.e., fascism), and that it has utterly failed to do anything remotely like what he wants it to do.

Krugman, then, is the utopian fantasist that he’s so worried about, his faith in the benevolence of centralized power overriding everything he claims he believes about the tendencies of unchecked self-interest. The Krugmans of the world haven’t learned that government bureaucrats are actually committed to a way of thinking almost identical to that of their private sector counterparts, the corporate middle managers who are the villains in a mainstream liberal’s morality play. Large bureaucratic institutions, whether “public” or “private,” whether for profit or not, inculcate an essentially hierarchical orthodoxy, a deference to centralized decision making and to the supernal judgment of experts. In his 1859 work Bureaucracy, Richard Simpson explained the bureaucratic mind:

[T]he idea of a bureaucracy is not fulfilled till we add the pedantic element of a pretence to direct our life, to know what is best for us, to measure out our labour, to superintend our studies, to prescribe our opinions, to make itself answerable for us, to put us to bed, tuck us up, put on our nightcap, and administer our gruel. This element does not seem possible without a persuasion on the part of the governing power that it is in possession of the secret of life, that it has a true knowledge of the all-embracing political science, which should direct the conduct of all men, or at least of all citizens. Hence any government that avowedly sets before its eyes the summum bonum of humanity, defines it, and directs all its efforts to this end, tends to become a bureaucracy.

Our overlords rely on the earnest apologetics of people like Paul Krugman, the public intellectuals who really mean it, and quite sincerely won’t ever understand the criminal nature of political authority. As decentralists and libertarians, we cannot expect to convince them. But we can demonstrate that the fantasies aren’t coming from libertarians, the ideas of whom haven’t ever actually been given a chance. For all his perturbed warnings about libertarians, it is the ideas of authoritarians like Krugman and David Brooks that have been winning the day in the U.S. for a long time, with bureaucracy engulfing every area of life. Left wing individualists and decentralists understand that no person or organization can possess “the secret of life.” We therefore resist granting arbitrary, coercive power to the State, which by nature can never be genuinely public-spirited or altruistic.

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