Big Government Libertarianism

by Henry on March 12, 2007

Tyler Cowen has a pretty interesting essay.

The more wealth we have, the more government we can afford. Furthermore, the better government operates, the more government people will demand. That is the fundamental paradox of libertarianism. Many initial victories bring later defeats. I am not so worried about this paradox of libertarianism. Overall libertarians should embrace these developments. We should embrace a world with growing wealth, growing positive liberty, and yes, growing government. We don’t have to favor the growth in government per se, but we do need to recognize that sometimes it is a package deal. … We need to recognize that some of the current threats to liberty are outside of the old categories. I worry about pandemics and natural disasters, as well as global warming and climate change more generally (it doesn’t have to be carbon-induced to be a problem). These developments are big threats to the liberty of many people in the world, although not necessarily Americans. The best answers to these problems don’t always lie on the old liberty/power spectrum in a simple way. … Intellectual property … Another major problem – the major problem in my view – is nuclear proliferation … In short, I would like to restructure classical liberalism, or libertarianism — whatever we call it — around these new and very serious threats to liberty. Let’s not fight the last battle or the last war. Let’s not obsess over all the interventions represented by the New Deal, even though I would agree that most of those policies were bad ideas.

The essay seems to me to glom together two, quite different theses – that the demand for government increases along with wealth, and that new, complex global problems require more government intervention than most libertarians would care for. Even so, his call for a pragmatic libertarianism seems on target to me (I’d vastly prefer a political debate in which smart libertarians acknowledged that global warming was a major problem in need of a political solution, and contributed insights from their own perspective, to a debate in which many libertarians either minimize the problem or suggest that no real political solution is possible).

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03.12.07 at 8:34 pm



aaron_m 03.12.07 at 3:55 pm

When a libertarian calls for using political institutions to ensure not only negative liberty claims but positive ones as well, how is the theoretical perspective distinct from liberalism?


engels 03.12.07 at 4:04 pm

We should embrace a world with growing wealth, growing positive liberty, and yes, growing government. … In short, I would like to restructure classical liberalism, or libertarianism — whatever we call it — around these new and very serious threats to liberty.

Yes, I call that progress. Tyler Cowen almost seems to have caught up with mainstream liberals at the beginning of the twentieth century.


Hidari 03.12.07 at 4:11 pm

I thought the fundamental paradox of libertarianism was first stated by (of all people) Sir Karl Popper, who pointed out that if the government is ‘rolled back’ then all that happens is you create a power vacuum which will inevitably be filled by someone (or something) else. So instead of freedom what you get is the power is wielded by someone (or something) else which might be even harder to make accountable.

The other major problem with libertarianism is that, after reading quite a lot of what they have to say, I still have absolutely no idea what sort of society they would like to live in. For example, Hayek’s view of pre-WW1 European society is a complete fantasy, bearing absolutely no relationship to the way things actually were. The fact is that before WW1 the state in European societies was far stronger than we can now conceive of, because almost all European states were Imperial powers, and had to have a huge and powerful state to run their Empires (not least, to organise and promulgate the official Imperial ideology). Hayek also ignores the extent to which society (refracted through the lens of religion (i.e. the accepted religious bodies)) in association with the state, acted as an agent of social control in a way we would now find totally unacceptable: for example in the way people treated the ‘mad’, the deaf, sexual minorities, certain religious minorities (e.g. Jews in Austria, Catholics in Britain), women etc. etc. etc. I think if any one of us was put in a time machine and zoomed back to, say, the 1850s, the ‘high point’ of ‘classical liberalism’ we would find it closer to a modern totalitarian state than any sort of a Utopia.

Incidentally, it’s not true that as peoples get richer the ‘state’ becomes more powerful in any way I understand. Is Tyler Cowen actually and seriously arguing that the State is more powerful in contemporary China than it was in the late ’60s? Or that the state is more powerful in contemporary Russia than it was under Stalin (or under the Czar for that matter?).

However the fundamental problem with libertarianism is their strange belief that there ever have been (or ever could be) ‘free markets’.


Matthew Gordon 03.12.07 at 4:33 pm

Out of curiosity, if global warming is not ‘carbon induced’, what can we do about it? Build a giant space lens?


Larry M 03.12.07 at 4:40 pm

A rather stunning article.

Oddly enough, as a fairly conventional liberal (in the contemporary, as opposed to classical sense) in most respects, I am making something of a journey in the other direction. This has little to do with domestic affairs, but is more a response to the international arena and related domestic responses thereto. Essentially, I think that “big government” in the United States currently provides a far greater threat to liberty than ever before.


aaron_m 03.12.07 at 4:42 pm


I guess Cowen is thinking of non-human induced forms of ‘climate change’(i.e. as opposed to human induced global warming) and maybe even other kinds of human induced ‘climate change’ other than global warming.


Tim Worstall 03.12.07 at 5:14 pm

Well, as someone who self-describes as a classical liberal I don’t see anything objectionable, or even all that surprising in that extract above. Sure, there are problems that only government intervention can solve. My only difference with modern liberals (as I see it) is that I think there’s a smaller set of such problems than they do.
I certainly don’t want several different competing sets of the criminal law in one territory for example: perfectly happy for government to hold a monopoly there. Same with the military: we tried competing ones and didn’t like it all that much.
I’d be extremely hesitant to describe myself as “smart” around here and I think I also fail another part of that libertarian test. I do think global warming is a problem (yes, even though I write for and like TCS) and one that needs a solution. However, my cynicism about the political process means I do not think that it needs a political solution. Any such would end up just like the ethanol farce in the US, an orgy of rent seeking. The EU seems to be going down the same road, with the recent insistence that 10% of fuel should be bio-diesel: there’s serious doubt (David Pimental for example) that this is actually any less emitting than oil itself.
My own belief is that we need a technological solution to climate change rather than a political one and I think it’s coming quite nicely. My day job is on the fringes of the fuel cell and lighting fields (the recent bans on incandescents will be just great for business, thank you) but I still don’t think that we need to change the tax rules, the subsidy rules, pass more power to politicians nor those who suck from the public teat nor even ban certain technologies, however much they might benefit me.
I certainly don’t think there will ever be “one” technology that solves the problem but I can see a mix and match set coming through development that will.


Slocum 03.12.07 at 5:32 pm

I’d vastly prefer a political debate in which smart libertarians acknowledged that global warming was a major problem in need of a political solution, and contributed insights from their own perspective, to a debate in which many libertarians either minimize the problem or suggest that no real political solution is possible.

Well, I guess I’d describe myself as a ‘pragmatic libertarian’. With respect to global warming, I acknowledge it’s probably a real problem. Though I’m not going to be totally shocked if it turns out that the anthropomorphic component is minor or the effect is much milder than predicted — not because of particular problems with the science, but because all the political incentives right now seem aligned to produce an exaggeration of both the level of certainty and extent of the problem.

But let’s assume the warming is anthropomorphic and the effects are right in the middle of the predicted range — does that imply a political solution is the only way? No. In fact, technical solutions would obviously be preferable in that if it were possible to produce energy cheaply enough that it wasn’t worth extracting the hard-to-get oil or coal as fuel, then there would be no need to hammer out and then enforce difficult global treaties — the cheaper, cleaner energy technology would be adopted universally because it made economic sense. Such technical solutions may not turn out to be possible, but I think it would be a grave mistake to conclude now that political agreements are the only possibility.

As for the viability of political agreements, I’ve yet to hear any practical proposal for squaring this circle:

1. Why would India and China agree to freeze their per-capita carbon emissions at a small fraction of current western levels?

2. If India and China don’t agree, their increases will swamp any decreases in the in west.

Europe has promised to cut emissions by 20% by 2020. Given the track record of missing targets so far, I have little confidence that this will actually happen. But even if it does, it won’t matter very much given the trajectory that China and India are on.

But here, how about this — how about a western consortium that promises to build and operate greenhouse-gas-free power generating plants (nuclear, wind, solar) in developing countries and deliver the electricity at a price less than what could be achieved with locally mined coal. No need to twist the arms of developing countries, just supply them clean power in the place of dirty power at a low price. How much would this cost? More or less than global Kyoto-style restrictions?


novakant 03.12.07 at 6:18 pm

I don’t get the dichotomy between technical and political solutions. There haven been plenty of technical solutions around which were not adopted widely until their usage was enforced politically simply because business didn’t see any profit in it and/or consumers were too lethargic to embrace them en masse. An example would be the 3-way catalytic converter: in europe business was proclaiming the end of the automotive industry and consumers didn’t care until it was made mandatory by governments and, alas, the industry was doing fine and consumers had a slightly better conscience. It’s a bit different in the case of the recent EU lightbulb decision, but suffice it to say that these lightbulbs have been on the market for ages and nobody bought them.

So it is not guaranteed that superior technical solutions are adopted by the markets, indeed they are often neglected for a long time, until people get a kick in the butt from the government. Also most of the ethical consumerism seems to be rather ineffectual until such behavior is enforced by law for the masses.


Robin 03.12.07 at 6:35 pm

“(of all people) Sir Karl Popper”…

Huh? Didn’t Popper hold up Swedish social democracy as an exemplary instance of the virtues of “piecemeal engineering”?


radek 03.12.07 at 6:45 pm

“The more wealth we have, the more government we can afford…I am not so worried about this paradox of libertarianism.”

If you’re a liberterian then whether you should worry or not depends on what the Engel curve for government looks like. I.e. not the total amount of government people demand as their wealth goes up, but its share in overall income.

Otherwise agree.


Stuart 03.12.07 at 6:46 pm

To back up #9, I worked at the place that originally developed the car catalyst, which was essential complete and ready for market in the seventies. Without government intervention no doubt the urban atmospheric lead concentrations would still be 10-100 times higher than we now have.


MQ 03.12.07 at 6:48 pm

“Furthermore, the better government operates, the more government people will demand.”

An easy way out of this is to sabotage government, so people will be disgusted by its incompetence and not trust it for anything. Mission accomplished!


Hidari 03.12.07 at 7:04 pm

‘Huh? Didn’t Popper hold up Swedish social democracy as an exemplary instance of the virtues of “piecemeal engineering”?’

Did he? I didn’t know that. Interesting if true.

However, Popper also said to Hayek: “I think I have learnt more from you than from any other living thinker, except perhaps Alfred Tarski.”


Shelby 03.12.07 at 7:15 pm

An easy way out of this is to sabotage government

Fortunately for the libertarian-inclined, government appears to be self-sabotaging.

Isn’t Tyler’s point re wealth and gov’t growth that as we become wealthier we have more surplus, and it is this surplus that funds government? Plus the fact that government has both incentive and means to extract that surplus; the more surplus there is, the less incentive taxpayers have to resist the taxation. (Speaking at the broadly social, not individual, level.)


c.l. ball 03.12.07 at 7:31 pm

Libertarians need not be anarchists or absolute anti-statists. The questions are how far should one go in compelling people to achieve positive liberties and to contribute to the achievement of positive liberties for others. For example, that parents should be compelled to educated their children (provide them positive liberty) does not require that the public must pay to educate all children in state-owned schools.

Global warming poses a harm, and to the degree that individuals or firms harm others by excessive carbon emission, then their activities can be restricted, consistent with libertarian principles for the same reason that my neighbor has no right to pollute my aquifer or spray sarin from his yard onto mine.


radek 03.12.07 at 7:47 pm

Just regressed government share in gdp on gdp per capita. I did linear and some non linear and also log gdp. Either way that sucker’s downward sloping. Of course there’s issues of causality and plenty o’ omitted variables but just to see what’s up at first glance it works (and the R2 are sort of respectable).

So liberterians need not worry much. As a country gets richer, yes, we spend more money on government, just like we spend more money on pretty much everything else. But the share of our income we spend on government seems to fall. Maybe more efficient government means that you can do more with less so the (relative) demand actually goes down (i.e. the income effect dominating the substitution effect)


Henry 03.12.07 at 7:52 pm

radek – that is interesting; but I think that it doesn’t necessarily get at the causal relations that I imagine Tyler is interested in here. My mental model of Tyler (which is no good substitute for Tyler himself) would reply that he’s more interested in what happens in advanced industrialized democracies – there are a whole host of reasons why the state is likely to play a much more dominant role in the economy in other parts of the world.


aaron 03.12.07 at 8:05 pm

I’d like a debate that acknowledges that climate change will happen regardless of CO2 concentrations and that figuring out how to adapt is a much more practical and effective “solution”.


LogicGuru 03.12.07 at 8:10 pm

Is what we’ve got here efficient–the ideologically-driven agenda of privitazing everything, then shelling out to middlemen who provide overpriced, inferior services?

Of course, advocates of downsizing government can’t lose. If the program works, people will be happy and vote them in again. If it doesn’t work that will just be further confirmation that government is the problem not the solution, vote them in again, and support further privitazation until all the institutions of civil society are run by corporations and the military is a mercenary force supplied by contractors.

Maybe at that point citizens will demand cheaper, better services, the firms that run these enterprises will get together and try to coordinate their efforts for greater efficiency, and will re-invent government.


DRR 03.12.07 at 8:46 pm

I always hated the idea of “Libertarians” as the true heirs of classical liberalism. I think the differences between John Stuart Mill’s “On Liberty” and listening to Neal Boortz bloviate for 2 hours about the tyranny of public sidewalks are greater than the similiarities. To be fair though, Tyler isn’t that kind of libertarian.

As for more money = more government, aren’t we ignoring the potential role “government” plays in helping to create wealth? That strong economies & strong governments often grow side by side is a correlation that ought to be noticed, or at the very least the idea that government is the antithesis of economic growth should be discarded.

A basic philosophy of “Liberty Good” is one I can get on board with. I’m basically sympathetic to the libertarian world view excepting that I don’t care about high taxes so long as they aren’t so high as to pose economic harm (and we’re aways from that) and the size of government as an abstract concept doesen’t concern me.

“Liberty Good” that should be the new motto.


Patrick S. O'Donnell 03.12.07 at 9:06 pm

The two different theses fused together here (had never heard of the word ‘glom’ before, hence my reluctance to use it) remind me of John Finnis’s counterintuitive comment in Natural Law and Natural Right (1982 ed.), namely, ‘the greater the intelligence and skill of a group’s members, and the greater their commitment and dedication to common purposes and common good, the more authority and regulation may be required, to enable that group to achieve its common purpose, common good.’


Walt 03.12.07 at 9:07 pm

Radek, what did you use? PennWorld?


radek 03.12.07 at 9:21 pm

Henry, yeah I’m well aware of the causality problems, as well as the fact that there are many other factors which may play a role. I just wanted to take a quick look at what the data look like rather than carry out a full investgiation.

But ok, industralized countries only. Regressed that too. Pooled data for the industrialized countries since 1950. Bit of bias because some were not industrialized in 1950, like Japan, Korea, Greece, Portugal and Spain. But whatever. Excluded Eastern Europe for obvious reasons. The relationship is if anything stronger and looks roughly the same – a curved “l” shape – which would suggest that the government share levels off and eventually further increases in income don’t do anything to it. (Data from the Penn World tables, R2 between .05 and .15, depending on specification which ain’t bad for a univariate regression, t-stats on income between 7 and 35)

I’m sure there’s a literature on this but since it’s not my area, I don’t know what it is.


Jim Harrison 03.13.07 at 2:57 am

Why would you think that an abstract political ideology would result in the best outcome in specific cases? How do you know in advance that privatization is a good idea? What kind of a universe must we live in if simple-minded answers automatically suffice?

I’m under the impression that we’re pretty much stuck with trying to learn from experience because we just aren’t smart enough to predict results from first principles.


John Quiggin 03.14.07 at 6:54 am

Radek, there’s a large literature on this topic, beginning with Wagner’s Law, which postulates that higher income leads to higher public spending (the opposite of your empirical claim). Unfortunately, as is so often the case, the literature is inconclusive.

Still, it’s pretty clear that for the developed countries as a group, government spending relative to GDP rose dramatically after WWII, and then levelled out, despite a generally dominant political view that spending should be cut. Looked at sector by sector (health, education and so on) the income elasticity story looks pretty good.


MQ 03.14.07 at 6:19 pm

“Maybe at that point citizens will demand cheaper, better services, the firms that run these enterprises will get together and try to coordinate their efforts for greater efficiency, and will re-invent government.”

Also known as the gated community.

“Fortunately for the libertarian-inclined, government appears to be self-sabotaging.”

Hence no harm, no foul, when we elect anti-government ideologues who actively trash it, right?


Virginia Postrel 03.14.07 at 7:18 pm

Here’s an Organizations and Markets post from my husband (who is much more skeptical of global warming than I am but puts aside his skepticism for the post) that essentially does what you ask:


radek 03.15.07 at 12:21 am

John, thanks for the reference.

Still, it’s pretty clear that for the developed countries as a group, government spending relative to GDP rose dramatically after WWII

Well, I’m looking at Penn World Tables data so that’s 1950 till 2000 which I guess includes right after WWII and I don’t really see that, at least not the “dramatically” part – unless it happened 45-50. Some countries have a fairly steep decline, like France (going from 23.79 share in 1950 to 18 in 1977, then dropping to 8.4 or so in 1978) (what happened in Australia in 1989? It goes from 16.34 to 7.6). Most have a roughly constant share – at a time when incomes are rising, hence the negative correlation.

I don’t know. Government basically has three functions, rent seeking, providing public goods (provision of non public goods goes in rent seeking), and redistributing income. I haven’t thought about the first two but theoretically the last one would depend on the difference between the median and the average income (if you believe in the MVT) which could go either way with growth.


Brian 03.15.07 at 5:40 am

Jim Harrison,

In regards to your query (my paraphrase): Why do these intellectually detached libertarians believe they can derive policy from a simplistic principle of privitization? We need pragmatic solutions, not policy derived from first principles.

I believe the _support_ for privitization and free markets proceeds from precisely the fundamental problem you identify. It doesn’t matter how subtle or complex any particular ruling group’s model is, or how sincerely they wish the best for everyone. All proposals that attempt to set forth a unitary preference (i.e. figure out the best way for everyone to do something; take money from them; then do things that way) are inherently simplistic. They all suffer from the defect of vastly inadequete intellegence and information to make such decisions; as well as the assumption that people share a ‘best’.

‘Privitization’ is not itself a unitary preference choice – it is the attempt to leverage each person’s own body of information about their life, their needs, and their preferences. There certainly may be better or worse ways to go about leveraging this information (money works well to describe value hence markets), but privitization or market plans are inherently less simplistic and more accepting of limitations on human intellegence than the most subtle or complex centrally directed plan.

Support for markets grows from humility about mental capacity, not from arrogance; from a respect for complexity and difference, not insistence on unitary solutions for 300 million people.



Henry 03.16.07 at 3:52 pm

Thanks Virginia – that’s interesting.


TGGP 03.18.07 at 4:40 am

We have not elected “anti-government ideologues who actively trash it”. Although Bill Clinton famously said “the era of big government is over”, government continued to grow under his tenure, and GWB said “when somebody hurts, government has got to move“, bemoaned the negative view his party had posessed toward government in the past and increased spending more than any President other than LBJ, including on non-defense areas. To call him an “anti-government ideologue” would be like calling Attila the hun a pacifist, which is why this claim is so frequently asserted without any actual evidence. Bush doesn’t share the beliefs of Goldwater and unlike Reagan he doesn’t pretend to either.

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