Tyler Cowen responds to a typical straw-man argument against libertarianism.
I am more likely to think — or should I say admit — that human beings are irrational, even when the stakes are high (see the self-deception chapter in Discover Your Inner Economist). But, relative to social democrats, I tend to think that politicians are irrational actors trying to pander to irrational voters and that it can’t be any other way.
There is an old joke about two men who discuss what they would do if they were to encounter a bear in the woods. One of the men says that he would run. The other one says, “You know, you can’t outrun a bear.”
The first man replies, “No, but I can outrun you.”
Similarly when someone says to me that “markets fail,” I say that “markets can outrun you,” meaning that government intervention will tend to make matters worse.
And when someone says, “Individual consumers are not rational,” I say that “individual consumers can outrun you,” meaning that…well, what Tyler said.
READER COMMENTS
Gary Rogers
Jan 22 2008 at 3:04am
That is exactly why we need to limit the damage they can do by reducing government.
spencer
Jan 22 2008 at 4:23pm
That is exactly why per capita real gdp growth in the US has been about 50% higher since we started having large scale government intervening then it did in the era of small government.
The evidence is overwhelming that despite government inefficiencies that free-market capitalism has performed much better in partnership with government then it did in the absence of large government.
We have numerous examples of countries (economies) shifting from small government to large government
and I can not think of a single example of such a shift leading to a slower growth rate of the economic well being of the population.
The communist countries were not mixed-capitalist economies.
Show me a single example of a mixed economy country shifting from small government to large government that has been accompanied by a significant downward shift in the growth rate of the economic well being of the population.
John Fast
Jan 24 2008 at 4:26am
I’m politely skeptical of that, and the other claims in that post.
Spencer, would you agree that “large scale government intervening” started with the New Deal in 1933, and “the era of small government” was everything before that?
Or would you prefer to put the dividing line at 1965 with the Great Society?
Either way, I believe you’re greatly mistaken when you say that GDP/capita grew at a rate 50% higher after the period than before it.
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