What it feels like to be a libertarian: Cassandra's Curse

[Jon]

What It Feels Like To Be A Libertarian
by John Hasnas, Associate Professor; McDonough School of Business

Political analysts frequently consider what it means to be a libertarian. In fact, in 1997, Charles Murray published a short book entitled "What It Means to Be a Libertarian" that does an excellent job of presenting the core principles of libertarian political philosophy. But almost no one ever discusses what it feels like to be a libertarian. How does it actually feel to be someone who holds the principles described in Murray’s book?

I’ll tell you. It feels bad. Being a libertarian means living with an almost unendurable level of frustration. It means being subject to unending scorn and derision despite being inevitably proven correct by events. How does it feel to be a libertarian? Imagine what the internal life of Cassandra must have been and you will have a pretty good idea.

Imagine spending two decades warning that government policy is leading to a major economic collapse, and then, when the collapse comes, watching the world conclude that markets do not work.

Imagine continually explaining that markets function because they have a built in corrective mechanism; that periodic contractions are necessary to weed out unproductive ventures; that continually loosening credit to avoid such corrections just puts off the day of reckoning and inevitably leads to a larger recession; that this is precisely what the government did during the 1920's that led to the great depression; and then, when the recession hits, seeing it offered as proof of the failure of laissez-faire capitalism.

Imagine spending years decrying federal intervention in the home mortgage market; pointing out the dangers associated with legislation such as the Community Reinvestment Act that forces lenders to make more risky loans than they otherwise would; testifying before Congress on the lack of oversight and inevitable insolvency of Fannie Mae and Freddie Mac to legislators who angrily respond either that one is "exaggerat[ing] a threat of safety and soundness . . . which I do not see" (Barney Frank) or "If it ain’t broke, why do you want to fix it? Have the GSEs [government-sponsored enterprises] ever missed their housing goals" (Maxine Waters) or "[T]he problem that we have and that we are faced with is maybe some individuals who wanted to do away with GSEs in the first place" (Gregory Meeks) or that Fannie Mae and Freddie Mac are "one of the great success stories of all time" (Christopher Dodd); and arguing that the moral hazard created by the implicit federal backing of such privately-owned government-sponsored enterprises is likely to set off a wave of unjustifiably risky investments, and then, when the housing market implodes under the weight of bad loans, watching the collapse get blamed on the greed and rapaciousness of "Wall Street."

I remember attending a lecture at Georgetown in the mid-1990s given by a member of the libertarian Cato Institute in which he predicted that, unless changed, government policy would trigger an economic crisis by 2006. That prediction was obviously ideologically-motivated alarmism. After all, the crisis did not occur until 2008.

Libertarians spend their lives accurately predicting the future effects of government policy. Their predictions are accurate because they are derived from Hayek’s insights into the limitations of human knowledge, from the recognition that the people who comprise the government respond to incentives just like anyone else and are not magically transformed to selfless agents of the good merely by accepting government employment, from the awareness that for government to provide a benefit to some, it must first take it from others, and from the knowledge that politicians cannot repeal the laws of economics. For the same reason, their predictions are usually negative and utterly inconsistent with the utopian wishful-thinking that lies at the heart of virtually all contemporary political advocacy. And because no one likes to hear that he cannot have his cake and eat it too or be told that his good intentions cannot be translated into reality either by waving a magic wand or by passing legislation, these predictions are greeted not merely with disbelief, but with derision.

It is human nature to want to shoot the messenger bearing unwelcome tidings. And so, for the sin of continually pointing out that the emperor has no clothes, libertarians are attacked as heartless bastards devoid of compassion for the less fortunate, despicable flacks for the rich or for business interests, unthinking dogmatists who place blind faith in the free market, or, at best, members of the lunatic fringe.

Cassandra’s curse was to always tell the truth about the future, but never be believed. If you add to that curse that she would be ridiculed, derided, and shunned for making her predictions, you have a pretty fair approximation of what it feels like to be a libertarian.

If you’d like a taste of what it feels like to be a libertarian, try telling people that the incoming Obama Administration is advocating precisely those aspects of FDR’s New Deal that prolonged the great depression for a decade; that propping up failed and failing ventures with government money in order to save jobs in the present merely shifts resources from relatively more to relatively less productive uses, impedes the corrective process, undermines the economic growth necessary for recovery, and increases unemployment in the long term; and that any "economic" stimulus package will inexorably be made to serve political rather than economic ends, and see what kind of reaction you get. And trust me, it won’t feel any better five or ten years from now when everything you have just said has been proven true and Obama, like FDR, is nonetheless revered as the savior of the country.

[Hawker]

Um - it was Krugman and the Keynesians accurately predicted the 2008 crash and who accurately predicted the aftermath.  Libertarians predicted it too, but they have been predicting total social collapse since 1932 as well as demanding a return to the gold standard.  Sooner or later they were bound to be half right.

[Jon]

Um - it was Krugman and the Keynesians accurately predicted the 2008 crash and who accurately predicted the aftermath.  Libertarians predicted it too, but they have been predicting total social collapse since 1932 as well as demanding a return to the gold standard.  Sooner or later they were bound to be half right.

Wasn't it Krugman and the Keynesians that created the Housing Bubble? Wasn't it Ron Paul that predicted that Krugman's supported policies are what would cause collapse?

[Hawker]

Um - it was Krugman and the Keynesians accurately predicted the 2008 crash and who accurately predicted the aftermath.  Libertarians predicted it too, but they have been predicting total social collapse since 1932 as well as demanding a return to the gold standard.  Sooner or later they were bound to be half right.

Wasn't it Krugman and the Keynesians that created the Housing Bubble? Wasn't it Ron Paul that predicted that Krugman's supported policies are what would cause collapse?

No.  Most responsible economists spent the years 2003 to 2007 at least warning that the US housing market was being over-inflated.  I can google for Krugman quotes which is why he is useful.  Ron Paul has been predicting social collapse and race wars since the 90s.  Sooner or later he was going to be a little bit right.

The point here is not that Krugman and his ilk were right.  Who cares if they were?  The point is that libertarians don't have any special claim to have been right so can't complain that they are being treated like Cassandras.

[Jon]

Um - it was Krugman and the Keynesians accurately predicted the 2008 crash and who accurately predicted the aftermath.  Libertarians predicted it too, but they have been predicting total social collapse since 1932 as well as demanding a return to the gold standard.  Sooner or later they were bound to be half right.

Wasn't it Krugman and the Keynesians that created the Housing Bubble? Wasn't it Ron Paul that predicted that Krugman's supported policies are what would cause collapse?

No.  Most responsible economists spent the years 2003 to 2007 at least warning that the US housing market was being over-inflated.  I can google for Krugman quotes which is why he is useful.  Ron Paul has been predicting social collapse and race wars since the 90s.  Sooner or later he was going to be a little bit right.

The point here is not that Krugman and his ilk were right.  Who cares if they were?  The point is that libertarians don't have any special claim to have been right so can't complain that they are being treated like Cassandras.

I am not finding a single non-Austrian economist that predicted the 2008 collapse. One did, but he used Austrian principles. Feel free to refute me with citations at any time.

[MoonShadow]

Um - it was Krugman and the Keynesians accurately predicted the 2008 crash and who accurately predicted the aftermath.  Libertarians predicted it too, but they have been predicting total social collapse since 1932 as well as demanding a return to the gold standard.  Sooner or later they were bound to be half right.

I can point to quotes by Krugman and others that imply exactly the opposite.  krugman is and was a prolific writer, and was bound to get a win every now and again.  Paul, by comparison, hasn't changed his views since 1971, as you mentioned.  And yes, eventually he was bound to be correct, but not because the end results were unavoidable.  But because his warnings were not considered at all.

Krugman, like many politicos, has changed his position on such matters on several occasions.  I challenge you to find variation in Paul's own written or spoken words.  Any variation at all.

[Rassah]

Heh, that was my second choice of business schools, and I'm still glad I decided not to go there, this article notwithstanding.
I somewhat disagree with the premise, though. I believe people will get what they deserve by their stupid actions, and don't fret over the collapse. They have all the information they need to survive and avoid problems. If they stay ignorant, lazy, or fearful, why should I care that their financial situation crashes around them? I pick the right choices, so I'm not really affected.

And, to be fair, it wouldn't have matter if the election was won the Obama or McCain. The only difference would have been whether the government stimulus went to the auto industry, or whatever industry McCain supports.

[Maged]

If you’d like a taste of what it feels like to be a libertarian, try telling people that the incoming Obama Administration is advocating precisely those aspects of FDR’s New Deal that prolonged the great depression for a decade; that propping up failed and failing ventures with government money in order to save jobs in the present merely shifts resources from relatively more to relatively less productive uses, impedes the corrective process, undermines the economic growth necessary for recovery, and increases unemployment in the long term; and that any "economic" stimulus package will inexorably be made to serve political rather than economic ends, and see what kind of reaction you get. And trust me, it won’t feel any better five or ten years from now when everything you have just said has been proven true and Obama, like FDR, is nonetheless revered as the savior of the country.

Interestingly enough, a war is was stopped the Great Depression. Meanwhile, Paul is warning us that we're going to go to war with Iran. If he's right, history will repeat itself.

[Hawker]

Um - it was Krugman and the Keynesians accurately predicted the 2008 crash and who accurately predicted the aftermath.  Libertarians predicted it too, but they have been predicting total social collapse since 1932 as well as demanding a return to the gold standard.  Sooner or later they were bound to be half right.

I can point to quotes by Krugman and others that imply exactly the opposite.  krugman is and was a prolific writer, and was bound to get a win every now and again.  Paul, by comparison, hasn't changed his views since 1971, as you mentioned.  And yes, eventually he was bound to be correct, but not because the end results were unavoidable.  But because his warnings were not considered at all.

Krugman, like many politicos, has changed his position on such matters on several occasions.  I challenge you to find variation in Paul's own written or spoken words.  Any variation at all.

We've had this conversation before when you made a thread saying Krugman lied about the Iceland crisis.  You weren't able to back it up at all while I was able to google what looked like a very consistent set of predicitions from Krugman. 

In any case, the issue is not whether or not Krugman was right.  There are libertarian economists (Tyler Cowen for example) who got it right too.  The issue is whether or not libertarians were UNIQUELY right and thus justified in comparing themselves to Cassandra.

[bb113]

Krugman in 2006 saying there is a housing bubble and it will be terrible:

http://www.youtube.com/watch?v=qo4ExWEAl_k

Now, the real question is what he attributes this housing bubble to, and what he recommends to avoid this type of thing.

[bb113]

I spoke to soon, at the end he recommends (if he had the keys to the kingdom): fewer tax breaks, health insurance reform, raising minimum wage, and pump priming.

[MoonShadow]

Um - it was Krugman and the Keynesians accurately predicted the 2008 crash and who accurately predicted the aftermath.  Libertarians predicted it too, but they have been predicting total social collapse since 1932 as well as demanding a return to the gold standard.  Sooner or later they were bound to be half right.

I can point to quotes by Krugman and others that imply exactly the opposite.  krugman is and was a prolific writer, and was bound to get a win every now and again.  Paul, by comparison, hasn't changed his views since 1971, as you mentioned.  And yes, eventually he was bound to be correct, but not because the end results were unavoidable.  But because his warnings were not considered at all.

Krugman, like many politicos, has changed his position on such matters on several occasions.  I challenge you to find variation in Paul's own written or spoken words.  Any variation at all.

We've had this conversation before when you made a thread saying Krugman lied about the Iceland crisis.  You weren't able to back it up at all while I was able to google what looked like a very consistent set of predicitions from Krugman. 

In any case, the issue is not whether or not Krugman was right.  There are libertarian economists (Tyler Cowen for example) who got it right too.  The issue is whether or not libertarians were UNIQUELY right and thus justified in comparing themselves to Cassandra.

I doubt I used the word "lied", I believe that Krugman does actually think that he's correct in most of what he says, although sometimes I have to wonder if he says some of these things knowing he's likely wrong.  I don't remember the Icelandic debate, but I don't make a habit of trying to disprove those who disagree with me with facts.  I find that most people on the Internet don't actually believe in facts, and in the end I just waste my efforts.

[Hawker]

Um - it was Krugman and the Keynesians accurately predicted the 2008 crash and who accurately predicted the aftermath.  Libertarians predicted it too, but they have been predicting total social collapse since 1932 as well as demanding a return to the gold standard.  Sooner or later they were bound to be half right.

I can point to quotes by Krugman and others that imply exactly the opposite.  krugman is and was a prolific writer, and was bound to get a win every now and again.  Paul, by comparison, hasn't changed his views since 1971, as you mentioned.  And yes, eventually he was bound to be correct, but not because the end results were unavoidable.  But because his warnings were not considered at all.

Krugman, like many politicos, has changed his position on such matters on several occasions.  I challenge you to find variation in Paul's own written or spoken words.  Any variation at all.

We've had this conversation before when you made a thread saying Krugman lied about the Iceland crisis.  You weren't able to back it up at all while I was able to google what looked like a very consistent set of predicitions from Krugman. 

In any case, the issue is not whether or not Krugman was right.  There are libertarian economists (Tyler Cowen for example) who got it right too.  The issue is whether or not libertarians were UNIQUELY right and thus justified in comparing themselves to Cassandra.

I doubt I used the word "lied", I believe that Krugman does actually think that he's correct in most of what he says, although sometimes I have to wonder if he says some of these things knowing he's likely wrong.  I don't remember the Icelandic debate, but I don't make a habit of trying to disprove those who disagree with me with facts.  I find that most people on the Internet don't actually believe in facts, and in the end I just waste my efforts.

I'm sorry it was hugolp's thread not you.  And I completely understand your frustration at people who not are not satisfied with their own opinions and want to have their own facts as well :@

[bb113]

I spoke to soon, at the end he recommends (if he had the keys to the kingdom): fewer tax breaks, health insurance reform, raising minimum wage, and pump priming.

Bolded are the issues to discuss. The last is the most controversial yet least discussed by the media of the Keynesian ideas.

[Hunterbunter]

What libertarians fail to realize is that the modern world is the exact result of the human mind, body and liberty. If you don't like something, you're free to garner support and revolt, destroy your opposition, and install whatever you think is more appropriate instead.

If you can remove the human coercive spirit out of us...somehow...you may, ironically, have a chance of achieving this peacefully.

[wachtwoord]

I think history shows that revolutions are never peaceful. (curious if you come up with a counter example)

[Hunterbunter]

I think history shows that revolutions are never peaceful. (curious if you come up with a counter example)

India kicking out the British was relatively peaceful (the whole Gandhi thing), but people were still killed before the sitdown and after separation. In this particular case I think there was a combination of disobedience, sheer volume of opposition, a collapsing empire, strong leadership, a generally peaceful culture plus a few other things that let them get away with it.