Small and/or Limited Government: Some Distinctions

I feel the liberaltarianism discussion is often muddled because of confusion over a number of different ideas. I’m going to try to clear my own head here. Maybe it will be useful to others.

I think it’s important to distinguish “small government” from “limited government,” and to distinguish between a couple different senses of “limited.”

Let’s say government is small when government spending as a percentage of national economic output is relatively low. Small government, in this sense, will tend to have relatively low taxes. But the overall tax take tells us little about how the tax burden is distributed. It doesn’t tell us what the money is spent on. And it doesn’t tell us much about economic liberty.

Which society is freer? One with a smaller government where the very rich pay all the taxes (90 percent of the population pays no taxes! 90 percent libertopia?) or one with a slightly larger government with a relatively low level of taxation spread more or less evenly over the whole population? (Should we do a poll on this?)

The fact that a government is small doesn’t rule out the possibility of egregious restrictions on non-economic liberties or of incredibly burdensome economic regulation. Suppose it takes two years to fill out all the paperwork, get all the licenses, etc. to start a small business, but once you do that, your profits aren’t taxed all. Suppose many forms of exchange are simply prohibited. You might have small government, low taxes, and very little economic freedom. Of course, a small government can ban abortion, prostitution, drugs, a free press, etc. just as well as a big one. Such a government may need to spend a lot of its modest budget on police and prisons instead of on genuine public goods. The size of the budget as as percentage of output doesn’t tell you anything about the composition of spending. This is a really important point. The United States spends a lot on prisons, the military, drug law enforcement, border patrol, etc. A lot of this is the opposite of rights-respecting, and a lot of it is downright wasteful. The composition of spending is important both as a matter or morality and a matter of economic growth (which I happen to think is also a matter of morality.)  Which is all to say, the fact that a government is small logically implies almost nothing about either liberty, justice or efficiency.

(Also, as a technical tangent, there may be economies of scale in the provision of certain public goods. So a smaller country whose government provides precisely the same goods as a bigger country may turn out to have a bigger government, simply because it costs them a little more to provide the goods. Slightly weaker economic performance relative to the bigger country may result, but a cutback in spending on those goods won’t improve performance if they are growth-enabling.)

Limited government is really what matters, but “limited” is also a bit ambiguous. The most important sense is “rights-respecting.” Bills of rights are meant to declare that legitimate (and legal) government is limited to activities that do not violate rights. Many disputes between classical and modern liberals turn on their theories of rights. For example, if the collective action problems inherent in the provision of certain public goods justifies taxation, then a state that collects taxes for this purpose does not violate property rights. If you think there is no such justification for taxation, you’ll tend to see the taxing state as violating rights and thus overstepping its proper limits. If you think there is such a justification for taxation, and believe there is an abundance of collective action problems that may be resolved only by government action, then you may think that a quite high level of taxation and government spending is perfectly consonant with limited, property-rights respecting government. 

Here’s an aside about libertarian theory that I think helps transition to another, related, idea of “limited.” Though most libertarians are not anarchists, the outsized influence of property-rights-focused anarchists within the broader libertarian community somehow seems to create a lot of confusion, when it ought to help clarify the issue. The so-called “minarchist” or “minimal government” view accepts the public goods justification of the state, while the anarchist rejects it. The anarchist argues either (1) that the protection of rights is an individual good and that individuals can successfully protect their rights by going to the market and contracting with private rights-protection agencies or (2) all public goods, including the protection of rights, can be successfully provided using markets and other forms of voluntary association. Anarchists often argue that if the public goods argument for state protection of rights (and the system of public finance it implies) is sound, then there is no principled basis for stopping at “minimal” government. The scope of legitimate government will be however wide the logic of the public goods or market failure argument happens to take you. There are a number of possible minarchist replies here (the specialness of the use of coercion in the rights protection business, etc.), but I basically think the anarchist critique is correct. If there is something especially unstable in private markets for rights protection, and that fact justifies public provision of that service, then there might be other kinds of market failures that justify the public provision of those markets’ services. 

I think this takes us to another sense of “limited government” as “limited to what non-government alternatives cannot do better.” An obvious implication of market failure arguments for state provision of certain services is that the state should not be in the business of providing services where markets or other voluntary mechanisms are superior. There’s no justification for the coercive tax-financing of state enterprises when those goods and services would be provided (usually with higher quality and a lower price) with no state coercion. Also, state enterprises will tend to crowd out private enterprises both by (a) absorbing capital and using it badly and (b) by virtue of its inherent advantages in securing anti-competitive subsidies and barriers to entry, which is all the more reason to limit government to the things we actually need it for.

Let me wrap it up. The “size” of government is not a good proxy for either economic or non-economic liberty or for economic performance. Advocates of “small government” need to worry more than they do about the moral and economic dimensions of the composition of spending, and they need to realize that they care more than they think they do about questions of “distributive justice,” which is pretty obviously manifest in enthusiasm for reforms, like the “flat” and “fair” tax.

I think our real concern ought to be limited government. But whether you think an ideally limited government is also small will depends on lots of things including your account of rights, your beliefs about the relative efficiency and reliability of state vs. market provision of various goods, your beliefs about the necessity of public spending to facilitate growth, and more. The claim behind my version of  “liberaltarianism” is that there is a principled position between classic night-watchman “minarchism” and full-on modern liberalism. If you’re not an anarchist or totalitarian, then you think that it’s possible for the state to do either too little or too much. Minarchist libertarians seem to be a bit embarrassed by the concessions they do make on the way to arguing for a state, and so stick as close as they can to their anarchists friends without going all the way stateless. But the anarchists are right that the minarchists have, in some sense already “given away the store,” and that it would be pretty surprising if the logic of the minarchist argument allowed them to stop where they do. On the other side of the equation, modern liberals need to get more credit from libertarians in desiring and defending limited government. The governments of the successful liberal democracies are in fact remarkably limited relative to the possibilities, both in terms of respect for rights and in refraining from crowding out the efficient private provision of goods and services–which explains their success. That said, it would be pretty surprising if either the modern liberal state or modern liberal theory (which often looks suspiciously like ad hoc apologetics for the modern liberal state) gets the limits of government right as either a matter of morality or efficiency.  

There’s lots of other stuff to talk about: the paternalism of modern liberalism as a failure of limited government; the consistency of social insurance and poverty-mitigating redistribution with a principled account of limited government; and other stuff–but those are separate posts.

Missing the Point of Liberaltarianism

Over at The Corner, Jonah Golberg and John Hood have been taking poorly aimed shots at “liberaltarianism.” I’ll try to reply to some of what they say, and maybe Brink will jump in. Jonah writes:

As I read Brink Lindsey and Will Wilkinson these days quite a bit, I think I’m on safe ground when I say they are suitably vexed by the stimulus bill and its chief defenders.

Which gets me wondering: Whatever happened to liberaltarianism?

[…]

[I]t seems to me that the stimulus debate clearly puts the lie to the idea that liberals and libertarians can see eye to eye on the large questions of political economy, at least for the foreseeable future. The first principles simply aren’t aligned. The theoretical arguments in favor of the stimulus amount to rubbing the libertarian cat’s fur backwards. And the so-called “libertarian center” hardly seems to be decisive or even relevant to the public debate. In the most important and fundamental debate about the role of government in a generation, the libertarians are lining-up with, and even marching out in front of, the conservatives.

Jonah here is guilty of a common mistake about the “liberaltarian” or what I like to think of as the “liberal” project. I’ll let Brink speak for himself, but I’m not that interested in short-term partisan politics. I’m interested in a much longer-term project. I want to help create the possibility of a popular political identity that takes the value of human liberty, in all its aspects, really seriously. As I see it, this project involves an attempt to reunify the separate strands of the American liberal tradition. I’m not sure what it is about that project that would that lead Jonah to think Brink or I should be vexed by the behavior of the Democratic Party and its operatives. The stimulus bill vexes me not at all. It’s what you’d predict knowing the current extent of Democratic power, the opportunity that the perception of crisis creates, and the composition of the Democratic coalition. As a student of James M. Buchanan, I’m no romantic about democracy.

Moreover, what is it about the era of George W. Bush that makes Jonah think that conservatives and libertarians see eye to eye on the large questions of political economy? I understand it is now politically expedient for Republicans to oppose whatever Obama is trying to do. But, frankly, the recent performance of the Republicans in Congress has been pathetic, managing to do little more than fight to get a bit more for their constituencies and a bit less for the majority’s. I do not remember hearing a plausible, principled alternative powerfully articulated by the Congressional Republicans. Maybe that’s because the great success of the GOP over the last eight years has been to destroy the reputation of free markets and limited government by deploying its rhetoric and then doing the opposite. Partisan Republicans choke on the truth that the emerging shape of the Obama era is the aftemath of the GOP’s successful, if unwitting, campaign to destroy the political economy they proclaimed. 

There’s a lot of diversity within libertarianism. And the most common forms of libertarianism are, I think, still pretty well shot through with conservative reflexes bred by the long Cold War alliance between libertarians and the right. For many libertarians, hating the left just feels like home. So many libertarians will indeed come running home when called to service by the organs of partisan conservativism. Well, good luck to y’all, but I was never on the team, and I’ve never wanted less to be on it. I’d rather work the long angle.

I think Obama and the Democrats are already in the process of screwing it up. The romance of transformative hope is going to wear off pretty quick as all-but-uncontested Democratic policy deepens and lengthens the recession. There’s a lot of culturally and psychologically liberal people out there who are, and are going to be, interested in a liberalism that actually works. I want to use this time of ferment to work on developing the missing option in American politics: an authentically liberal governing philosophy that understands that limited government, free markets, a culture of tolerance, and a sound social safety net are the best means to better lives.

So “whatever happened to liberaltarianism” is that it’s an ongoing project to change who talks to whom, to freshen the stale dialectic of American politics, and to create new possibilities for American political identity.

Jurisdiculous

Some libertarianish and conservatives types sometimes like to think of the territory of the U.S. as a big piece of real estate over which citizens have a kind of shared property right. There are lots of things that are wrong with this way of thinking, especially for people who think their philosophy is grounded in a strongly moral conception of property rights. Perhaps the primary flaw in the national-territory-as-collective-property schema is that very little U.S. territory was gained legitimately. Mostly it was gained in the way political territory is generally gained: war, theft, and purchase from thieves. Some worry about the fact that the Louisiana Purchase was unconstitutional. But why not worry instead about the far more troubling fact that the French state could not have been the legitimate owner of large swathes of land already owned by natives? Can James Polk’s brinkmanship really be principle that determines that I have a stake in what happens in in Portland, but not in Vancouver?

I understand that this is the way the territories of kingdoms, principalities, and states are formed. Colonial criminality drew the map. That’s the way it is. No turning back. But shouldn’t we be long past the idea that these traces of regrettable history have truly weighty moral significance–that the Treaty of Guadalupe Hidalgo or the Gadsden Purchase somehow create deep moral facts about where some human beings should and should not be able to go?

Coercion

Bryan Caplan’s summary of Chapter 2 of Murray Rothbard’s classic For a New Liberty reminded me of one of the reasons I’m not that kind of libertarian. It starts with the fact that I can’t grasp how fraud counts as a violation of the “non-agression principle” while other ways of manipulation of another’s will don’t. I can’t grok the conception of coercion that includes lying to someone in order to get something but leaves out, say, the threat to withdraw intensely valued affection in order to get something. A credible threat of emotional distress seems a lot closer to a paradigm case of coercion (a threat of physical harm, e.g.) than does a misrepresentation of facts.

Even when I was a believer in Rand/Rothbard-style libertarianism, I found the ‘or’ in the “no force or fraud” formulation of the non-coercion principle a bit vexing and suspect. It seems too frank an admission that fraud isn’t force or agression at all. It’s another morally questionable way to get someone to do something they might not otherwise choose to do. But there are yet still other morally questionable ways to get people to do things. Why not add more ‘or’s?

Now it seems to me that non-coercion libertarians tend to reason backwards. You start with a list of kinds of action considered impermissible, struggle to classify them all instances of coercion, and then say that your philosophy is based on non-coercion and not on whatever principle (if there was one) that led you to try to include some classes of actions (that are not intuitively coercive) but not others (that seem pretty coercive) under the coercion rubric.

I guess this is just another way to make my complaint about fake libertarian clarity. Let me just say that because I think emotional coercion is coercion doesn’t mean I think the state should try to stop it. And just because I think fraud isn’t coercion doesn’t mean I think the state shouldn’t try to stop it. What I think is that some coercive actions (emotional blackmail, e.g.) should be legal and some non-coervice actions (fraud, e.g.) should be illegal. Which is to say, I don’t think the notion of coercion can be made to do the work many libertarians want it to do.

What's Fair?

In a fascinating guest spot over at The Atlantic’s new Brave New Deal blog, my friend Bart Wilson — an actual economic scientist — digs deep into the question of the meaning of a “fair” distribution in the experimental economic games he studies. Drawing on the work of linguist Anna Wierzbicka, Bart reports that the English word ‘fair’ doesn’t really translate one-to-one into any other language. I did not know that! And he argues that fairness judgments are made relative to an implicit or explicit set of customary rules: 

No matter how much we may feel that fairness is a pure principle, it’s really a regular social rule, a custom.   (Another surprispingly revealing word:  you have probably seen the words “customary rates” applied to gratuities and sales commissions).  Fairness really boils down to an issue of agreement: can we agree on what rules this particular context calls for? In a future post, I’ll expand on what this means for markets and public policy.

Remember, Bart’s not riffing from the armchair. He’s run a mindnumbing number of experimental games meant to elicit judgments of fair distribution. If he’s right, this is pretty interesting. One thing it seems to me to  imply is that a “theory of justice” built on intuitions about fairness is likely to be pretty conservative, echoing the conventional rules underlying fairness judgments, and at best ironing out their inconsistencies. Whether that’s a feature or a bug depends on what kind of work you would like a theory of justice to be do. 

Anyway, Bart’s work is an outstanding example of what economics looks like when it is also science.

How Not Metaphorical Is "Countries as Clubs"?

I confess that I agree with the Drunken Priest/Steven Pinker here:

Will Wilkinson has raised a fair amount of sand with a post on immigration.  Borrowing a page from George Lakoff, he attempts to recast the frame of reference: instead of nation states, now we will speak of clubs and membership.  The rhetorical aim is that such a reframing will put a downward pressure on moral inclinations involving xenophobia, in-group out-group biases, and other forms of patriotic fervor.  But as much I support Wilkinson’s moral views–I would prefer to abolish passports–I think Steven Pinker’s criticisms of Lakoff apply here as well. You see, clubs have membership fees; states have taxes. I can choose not to pay a membership fee. The club may fine me. They may even throw me out. But if I don’t pay my taxes, I am harassed, pilloried, fined, incarcerated. As Pinker said

If you choose not to pay a membership fee, the organization will stop providing you with its services. But if you choose not to pay taxes, men with guns will put you in jail. And even if taxes were like membership fees, aren’t lower membership fees better than higher ones, all else being equal? Why should anyone feel the need to defend the very idea of an income tax? Other than the Ayn-Randian fringe, has anyone recently proposed abolishing it?

It had even occurred to me that I was taking a page from Lakoff. Horrors. Anyway, I agree that the big difference between a country and a club is, as Pinker observes, the coervice nature of the “public finance” of  distinctively political communities. Unlike Lakoff, I obviously disapprove of the “country as club.” Like Lakoff, I suppose, I’m urging that we pause to note the very close schematic similarities in actual political discourse and theorizing between (here using the convention of mentioning concepts by capitalizing the words that express them in English) COUNTRY and CLUB, CITIZEN and CLUB MEMBER, LEGAL RESIDENT ALIEN and GUEST OF THE CLUB, etc. Leftwingers like Lakoff want to draw attention to commonalities in these shema so that we confuse state coercion — the fact that creates problem of political legitimacy, the foundational problem of political philosophy — with the fair reciprocity of paying dues for services. He wants to use the similarities to efface the essential difference, which I guess seems pretty slimy. 

My intention is to draw attention to the fact that people do tend to confuse the COUNTRY and CLUB schemata in order to challenge the terms of ordinary and theoretical political discourse. I want people to think of COUNTRY[GEOGRAPHIC] as LARGE PUBLIC GOODS JURISDICTION and COUNTRY[POLITICAL] as LARGE PUBLIC GOODS PROVIDER. When we see countries or nation states as public goods providers covering big jurisdictions, we open the possibility of seeing the United States of America as a very big version of Iowa that can itself be embedded within, or overlap with, other public goods jurisdictions. Jurisdictions need boundaries, but they can be a lot more porous than national boundaries tied up with club-like notions of national identity and sovereignty.

Certain kinds of liberals, conservatives, and libertarians all take the idea that a country is a big piece of real estate jointly “owned” by its citizens way too far. My complaint is that none of them say much at all about the justification of the principles that determine who becomes a citizen — becomes a legitimate part “owner” of the huge plot from which others may be excluded — and who does not.

Bop: More Utopia Tennis

Roderick Long returns serve from my “Utopia Tennis” post. I think our disagreement is really nothing more or less than the fundamental disagreement between liberals and anarchists. This will emerge pretty clearly in my reply below. Here’s Rod:

I’ve never claimed, and do not think, that moderate reductions in state power are impossible. What I do think is that merely moderate reductions in state power are not an adequate solution to corporatism. After all, although the popular notion of the nineteenth-century U.S. as a laissez-faire free-for-all is a fantasy (even if we exclude, as we shouldn’t, legal restrictions on the economic activities of women and nonwhites), it’s still true that the interventionist policies that fueled corporatism in that era are by many measures significantly less extensive than those we have today.

To reiterate my earlier post, I argue for fairly large reductions in state power. I argue that this is quite realistic because large reductions have actually occurred in the recent past, and moderate reductions are ongoing in many places. I don’t know enough to question Rod’s history. My question is: “adequate solution to corporatism” relative to what? If nothing but anarchy or quasi-anarchy is going to count as “adequate,” then, yes, a Hayek-Buchanan generality amendment will be inadequate. But if something like anarchy is infeasible, as I believe it is, then it’s hardly an adequate solution either.    

Wilkinson further describes as “obviously false” my contention that “achieving benign outcomes via the state is a chimera”; for Wilkinson, “[m]any states evidently succeed in achieving relatively benign outcomes.” But I don’t see how this is supposed to be “evident”—unless the claim is just shorthand for the claim that “many states are evidentlycompatible with the existence of relatively benign outcomes,” which is certainly true. But if people who drink small doses of poison are healthier than those who drink large doses, that doesn’t make it “evident” that small doses of poison can achieve relatively benign outcomes. Any measure that shrinks the scope of voluntary cooperation by expanding the scope of compulsion thereby makes things both a bit less just and a bit less efficient.

I’m pretty sure Rod’s guilty of Tyler’s “libertarian vice” here. Rod doesn’t think some states are better than others? That some governments are more effectively limited than others? That people are more free in some places than in others? If he doesn’t think that this is evident, then all I can do is ask him to look again, because it’s true.

The poison metaphor suggests that any state action is like poison. But I think that some state action is like medicine. I think there is legitimate state coercion. When it’s just, it’s usually because it reduces compulsion and enhances efficiency relative to the relevant non-state baseline. And I deny that that baseline is Rod’s anarchist utopia. My claim in my prior post was that anarchy is an inferior means of reducing corporatism than is further limiting government because anarchy is not stable. In that context, it’s rather brazenly question-begging to characterize government action “compatible with relatively benign outcomes” as “poison.” 

Of course, my idea is to shrink the scope of compulsion by limiting illegitimate government action. Rod is coy, but seems to agree that this is possible. But he seems unhappy about it. The question was, What can be done about corporatism? I gave an answer: limit government. If he agrees that limiting state power is possible, which of course it is, then he’s pretty much lost the debate unless he can show that his alternative is actually more likely to successfully reduce corporatism. And that’s a heavy burden, because then he’d need to establish the feasibility of his happy anarchism. So I can see why he avoided actually addressing my original point about the feasibility of anarchism.    

Finally, Wilkinson is puzzled at my claim that (1) is less unstable than (2). “If (2) is unstable because people will demand state interference in the economy given a state,” he writes, “then (1) is unstable because people tend to demand states.”

But the crucial difference between (1) and (2), as I see it, is not that under (2) people demand more statism, but rather that under (2) people are able to socialize the costs of such demand.

This is just nonresponsive. My point was that you can’t get anything out of (1) — anarchy or near-anarchy — that you can’t get out of  (2) — keeping the state and limiting it — because there’s no plausible way to not have a state. The point is that (1) isn’t on the table as an alternative to (2). We’re going to have a state. So limiting it is the only game in town. I thought it was clear that this was the claim I was making, but I guess I made a hash of it. 

Anyway, I doubt we’re going to resolve the great anarchism v. liberalism debate soon. But why did a discussion originally about libertarianism and corporatism lead here? My best guess is that Rod thinks that the corporatism issue is a smart place to mount an argument for his favorite libertarian ideal theory, freed-market anarchism. So I can see why the idea that effectively limited government is the best realistically available solution to actually-existing corporatism would seem inconvenient. But I think it remains that effectively limited government is the best realistically available solution to actually-existing corporatism. So… bop.

Shorter Kenneally

The greatest gift Culture 11 has given the world is the dazzling thought of RIT political theorist Ivan Kenneally. I think I’ll make Kenneally translation an occasional feature. On the subject of Thanksgiving

Thanksgiving is a holiday devoted to the virtue of gratitude which, one could argue, finds less than hospitable ground in the modern world. The Lockean position on nature, that it furnishes only worthless materials that gain value through an imposition of labor, could not be more inconsistent with gratitude; in fact, Locke specifically undermines any conception of nature that would inspire reverence for the evidence it gives us of God’s providence. Instead of gratitude for what nature provides Locke encourages pride in our mastery and possession of nature—we take pride in ourselves as the only part of nature that can refashion nature. It is hard for beings who fancy themselves as radically self-sufficient or autonomous to be grateful for anything.

Translation:

In the modern world, there is so much more to be grateful for. Therefore, we are less grateful.

Evaluate!

Getting the Numbers Right

My farseeing sister points me to this AP report which helps clarify the matter of accounting for GM’s labor costs:

GM, which negotiated the four-year deal that serves as a template for UAW deals with Chrysler and Ford, says its total hourly labor costs dropped 6 percent this year from pre-contract levels, from $73.26 in 2006 to around $69 per hour. The new cost includes laborers’ wages of $29.78 per hour, plus benefits, pensions and the cost of providing health care to more than 432,000 GM retirees, GM spokesman Tony Sapienza said.

The total cost will drop to $62 per hour in 2010 when the linchpin of the contract — a UAW administered trust fund — starts paying retiree health care costs.

But that’s still $9 more than the $53 per hour that GM estimated Toyota now pays in the U.S., and the gap could be even wider. Toyota spokesman Mike Goss said the company’s total labor costs at its older U.S. plants are around $48, with about $30 per hour in wages.

The remaining difference largely is due to “legacy” costs, the cost of a 100-year-old company paying its retiree pensions, Sapienza said.

So there you go. I completely agree that it is deceptive to present the numbers in the way GM does in the document I link below. That GM would try to make its health and pension obligations look crushing makes sense from a driving-a-hard-bargain-with-the-UAW pespective. But if you want to get bailed out, it makes no sense to make yourself look like a complete basketcase, which exactly what the $73 number does. I would expect GM to be doing what its spokesman is doing here: trying to make the company look like it is in fighting trim, just one giant infusion of taxpayer money away from not losing massive quantities money. For that reason alone, I’d be surprised if the remaining gap between GM and Toyota, even after legacy costs are taken into account, isn’t “even wider,” as the Toyota spokesman suggests.

Now, it bears emphasizing that Casey Mulligan’s point, that a bailout would benefit mostly relatively wealthy workers and shareholders is true, even if we go with the the $30/hour wage figure. According to the BLS, the median hourly wage in 2007 was about $15 and the mean was about $20 (and the averages in assembly and production work are lower than that). But GM (and as far as I know, all the other car companties) pays a lot for overtime and so forth, which is where you get GM’s estimate that the “average annual cash compensation for hourly employees in 2006 was $39.68 per hour.” Autoworkers who end up jobless because their company and union are run by doofuses deserve our sympathy. The fact that they’re so much richer than the average American worker doesn’t change that. The point is that subisidies to relatively rich shareholders and workers are basically the opposite of distributive justice, and that’s true whether the right number is $70, $40, or $30.

Utopia Tennis

The conversation on corporatism and free(d) markets at Cato Unbound continues to be fascinating. I do have to say I found this bit of Rod Long’s reply to Yglesias a little peculiar.

The chief question at issue between Matthew Yglesias and myself is how best to remedy this situation. There would seem to be three possible options:

1. Either abolish or radically diminish the power of the state.

2. Keep the state as it is but demand that it remain neutral and noninterventionist.

3. Use the state actively as a tool against corporate power.

Yglesias seems to think that the libertarian solution is (2), which he rejects as unrealistic. The “concept of a state apparatus that simply sits on the sideline watching the free market roll along” is “impossibly utopian,” Yglesias argues, because people will inevitably “try to manipulate the state to advance their own ends.” Hence Yglesias favors (3) instead.

But of course the libertarian—or at least the radical libertarian—agrees with Yglesias that a passive bystander state is utopian, and so favors (1) rather than (2). But for the libertarian, (3) is impossibly utopian as well; the incentival and informational perversities that beset the state are inherent in its monopolistic nature, so that the hope of achieving benign outcomes via the state is a chimera. (1) may be difficult to achieve given the prevailing political climate, but unlike (2) and (3) it poses—or so we libertarians claim—no inherent, ineradicable tendency to instability, and so is the least utopian option of the three.

I favor something between (1) and (2). I say “something between” because the diminution of power I have in mind probably isn’t “radical” in Rod’s book. But, unlike (1), (1.5) I think it quite feasible. It’s feasible because (2) is. The argument that (2) is feasible is that successful liberal democracies are already relatively limited, neutral and noninterventionist. Theirs are by no means Rod’s “freed” markets, but they are also a very long way from maximally unfree markets. Indeed, some of the most successful existing societies such as Denmark, Ausralia, and New Zealand have come a long way over the past several decades in a freer market direction. We have an existence proof of the possibility of doing better. Rod’s case seems to be based on the claim that “achieving benign outcomes via the state is a chimera,” but this seems obviously false. Many states evidently succeed in achieving relatively benign outcomes. Further, the claim that (1) has “no inherent, ineradicable rendency to instability” strikes me as completely conjectural. If (2) is unstable because people will demand state interference in the economy given a state, then (1) is unstable because people tend to demand states. Perhaps Rod has some account of how we get from here to (1), and an account of how (1) tends to generate it’s own popular support, such that demand for a larger state does will not tend to reemerge. But until I see that account, the claim that (1) is especially non-Utopian strikes me as weird.