I’m temperamentally inclined to embrace laissez-faire libertarianism and even anarchy. Commitment to limited or non-existent government was once so central to my identity that I tattooed the anarchy symbol (the infamous circle-A) on my forearm when I was 19 — something I don’t regret doing because I thought it was important enough at the time to commemorate permanently on my skin, but something I wouldn’t do again at 36.
At any rate, the ink now means symbolizes to me something more of a personal ethos than a political statement — a reminder to trust my own intuition and do whatever I think is right irrespective of popular opinion or social pressure. It’s not an easy ideal to live up to but one the Stoics taught and one I strive to emulate.
But even though I don’t necessarily embrace labels any longer — after concluding that the wisest political/economic/social approach to the world is too complex to be boiled down to a bumper-sticker encapsulation — I still generally subscribe to the idea that power should be as decentralized and localized as possible. I am skeptical of centralized authority, especially when it is accumulated outside of the constraints of a set of limiting principles, like the ones enumerated in the Constitution.
I recently elaborated more on anarchism and its relative merits and pitfalls as an economic ideology, in my estimation, elsewhere if you care to read.
One of the thorniest dilemmas, in my view, when it comes to good governance and stewardship of the Earth is what to do about a problem that economists call “externalities.”
“Externality” defined, via The Tax Foundation:
An externality, in economics terms, is a side effect or consequence of an activity that is not reflected in the cost of that activity, and not primarily borne by those directly involved in said activity. Externalities can be caused by either production or consumption of a good or service and can be positive or negative.
Obviously, everybody wins with a positive externality — for example, research and development (R&D) by private companies that end up in the public domain. Those aren’t the issue for society to grapple with; it’s the negative externalities, like environmental degradation from certain industrial activities, that cause the problem. Private companies primarily tasked (often legally compelled, in the case of publicly traded companies with fiduciary responsibilities to shareholders) do not have obvious incentives to spend precious resources mitigating negative externalities.
Technological advances, while in many cases vastly improving quality of life, have largely produced the kind of externalities that threaten the general welfare. There were much fewer when all, or nearly all, of human civilization was agrarian.
The standard Western solution to the challenges posed by externalities since the Industrial Revolution has been government regulation in the name of engendering the general welfare as the government is tasked with in the Constitution.
The free market advocacy organization Mises Institute offers an alternative perspective:
The notion of justifying economic intervention on the basis of welfare analysis was dealt a severe blow in 1956, with the publication of Murray Rothbard’s paper, “Toward a Reconstruction of Utility and Welfare Economics.”…
Nobel Prize-winner Ronald Coase further undermined interventionist welfare analysis with the publication of his paper, “The Problem of Social Cost,” in 1960. Coase demonstrated that as long as property rights are clearly defined and transaction costs are low, the individuals involved in these situations can always negotiate a solution that internalizes any externality…
Social pressure also plays a role in handling potential externalities. If I don’t paint my house, my neighbors will start to grouse. I may not get invited to the next block party. Hayek contends that those who value liberty should prefer social pressure against “deviant” behavior to outright bans. (“Deviant,” in this case, meaning simply behavior of which many people disapprove but which does not violate their right to life or property.) If I highly value having a house painted mauve, I can ignore my neighbors’ mocking glances and jeers. But if the government regulates house colors, I’m stuck…
The free market is not a panacea. It does not eliminate old age, and it won’t guarantee you a date for Saturday night. Private enterprise is fully capable of awful screwups. Both theory and practice indicate that its screwups are less pervasive and more easily corrected than those of government enterprises.
I’m still not sold on the “voluntary” internalization of externality costs by the individuals and groups that create them.
Who’s going to stop, as just one example, the companies that manufacture COVID-19 masks, the governments that mandate them, and the people who use them out of hysteria or compulsion from desecrating the oceans? None of the parties involved seem quite interested in internalizing their externality costs.
But I’m also highly skeptical of handing the government more power to remedy any issue — any government, but particularly the multinational corporate state that has largely taken over the levers of power in the U.S. and throughout the West.
So where does that leave us?