Arnold Kling  

Libertarians Living on Subsidies

PRINT
Cap and Trade: Be Afraid... Fixing Medicare with Vouchers...

Thomas Frank writes,


Almost by definition, our young libertarian's job is to celebrate the profit motive from the offices of a not-for-profit organization. He is subsidized, in other words, to hymn the unsubsidized way of life. Rugged individualism may be his creed, but a rugged individual he ain't.

Just as an aside, rugged individualism is not my creed. I call myself a civil societarian (trying to Google the essay where I coined the term, I find that I made wikipedia).

Where Frank is wrong is in putting the moral onus on those who are subsidized rather than the subsidizers. In fact, I would argue that there is nothing morally wrong with receiving a subsidy, even from government. The moral corruption in government subsidies is not in the recipients, except insofar as they deliberately pressure legislators for money. The moral corruption is in the subsidizers, who are taking money involuntarily from A to give it to B.

With private charity, funds are collected voluntarily. In civil society, I see the subsidizers as inherently less corrupt, because they are not using the power of the state to fund the subsidy. Still, anyone involved in charity has an obligation to ask whether the funds are being used for good purposes.

For libertarian foundations and the like, it is the subsidizers who should constantly be questioning the worth of what they are doing. One question to ask is whether it is more valuable to preach against the state or to compete with it. Should the marginal dollar go to support a libertarian scholar or toward a private school scholarship fund?

For individuals, I offer the same advice that I give to my daughters, which is to heed the market. Market signals tell you where you are most valuable. The highest-paying job is likely to be the job where you contribute most to general welfare. Having said that, you are certainly encouraged to take other quality-of-life considerations into account. Location matters (cue Richard Florida). So does the set of people you interact with on a day-to-day basis. You should learn from your colleagues. Interpersonal stresses are inevitable, but break away from situations where they become overwhelming.

Generally speaking, it's morally safer to work for money than to work for a cause. People who are fanatical about causes do much more damage.


Comments and Sharing


CATEGORIES: Political Economy



COMMENTS (17 to date)
brian writes:

You say that there is nothing morally wrong with receiving a subsidy, and that the moral onus lies on the subsidizers, who are at fault because of their theft.

That argument naturally leads to the following question: Is is morally wrong to purchase or receive stolen goods?

For example, if your brother robs a house, are you at fault if you accept as a gift a TV that he stole? How about if you purchase that TV from him? If the answers to these two questions are different, why?

Arnold Kling writes:

Anything that encourages people to steal is wrong. I don't think that applies to taking money from the government. If you think that getting a subsidy from the government encourages them to steal more, then would you suggest that donating to the government is morally good because it might get them to steal less? That can't be right.

To say that a non-profit organization is subsidized is like saying that the muggers and thieves are subsidizing people who they are not stealing from -- as though the money were actually the mugger's and not yours. You are not being subsidized just because the government is not taking your money from you -- a subsidy takes place when you take money from someone else and give it to another. Heck, what is more libertarian than figuring out a way to legally not pay taxes? I'm looking forward to my own Emerson Institute for Freedom and Culture getting to that point. Of course, you can't tax negative income, so we should be good until we get out 501(c)(3) status.

reason writes:

So you want your daughters to work as call girls?

Alex J. writes:

I think donating to public tv/radio encourages them to take less gov't money on some level.

Lance writes:

Wouldn't the rugged individual seek every way to better his life, even if it did 'cramp' his moral philosophy. It seems it would be simple, a rugged pursuit of your self-interest using the social apparatus available.

If there is a tax credit, or deduction, available, it would be in one's interest to take it. Because people are rugged individualists, and pursue their own self-interest, it may be considered foolish to subsidize certain activities because then you may have a case where you have too much of an unproductive activity.

In a letter to William F. Buckley, Milton Friedman tried to deflate the claim that one couldn't take a subsidy: "The United States is in a way a club to which I belong, not indeed voluntarily but by reason of birth. However, I have not seceded from it. I bear the burdens it imposes. I am equally entitled to receive the benefits. I do not believe that either the one of the other should inhibit my urging upon public the policies that I believe desirable."

liberty writes:

"Anything that encourages people to steal is wrong. I don't think that applies to taking money from the government. If you think that getting a subsidy from the government encourages them to steal more, then would you suggest that donating to the government is morally good because it might get them to steal less? That can't be right."

This is very witty, but the problem with the logic is that it assumes government is responding only to market signals and not to voter signals.

If receiving subsidies from government can encourage them some other way (i.e. by implicitly indicating that they are desirable or required in order to function) then they may encourage (a) voters to vote for them, including those who also donate to the non-profit and (b) politicians to campaign on them and then follow up by expanding them.

As an example, is Hillsdale college doing something especially moral or positive by refusing government subsidies for education, and depending solely on private funds? If so, why? Does it send a signal? What would happen if more private universities followed this example?

aaron writes:

I thought libertarians were supposed to admire rugged individualism, but take any oportunity they get.

Still, nobody has said how nonprofits are being subsidized, short of being excused form paying taxes.

bjk writes:

"Market signals tell you where you are most valuable. The highest-paying job is likely to be the job where you contribute most to general welfare"

Casinos? You'd be fine if your daughters ended up as strippers? Fortune teller can also be very lucrative. I suppose that all of these industries could be described as a tax on the stupid, and a transfer of wealth to those who would make a better use of it, but that's not a compelling argument for most. There are plenty of otherhigh-paying industries that prey on people's worst instincts and do not contribute in any way to the general welfare. Economists have a truly religious conviction in providence.

bjk writes:

Actually, I'd go further and say that there is an inverse relationship between pay and economic value. Stock brokers are selling lottery tickets and, in the main, destroy value for their clients. Lobbyists are collect a toll on rent seeking. Lawyers often engage in economic blackmail. I could go on and on.

liberty writes:

"Stock brokers are selling lottery tickets and, in the main, destroy value for their clients."

Sure... investment funds could be better allocated if profit wasn't used to help determine it on a market. In fact, that explains why the Soviet Union made better investment decisions by centralizing them than any market economy with a stock exchange ever has.

Ethnic Austrian writes:

There is no such thing as a non-profit organisation. It is just that profits remain within such organisations instead of being distributed to the owners. But NPOs usually have an incentive to raise more money and grow.

So this doesn't necessarily show a hypocrisy of the professional libertarian. But Thomas Frank is on to something that I have noticed before.
If the personal is at least somewhat political, shouldn't the lifestyle of the professional libertarian reflect his alledged enthusiastic love for markets? I don't see it. Think tank libertarians and tenured economics professors don't appear to engage with markets any more intensely than marxist thinkers, environmentalists or radical feminists. Heck, they might as well start to work for the politburo and you probably couldn't tell based on their daily routine.

They've got job security, are consumers and sell books to each other and that is about it. At least that is how it appears to me.

"Think tank libertarians and tenured economics professors don't appear to engage with markets any more intensely than marxist thinkers, environmentalists or radical feminists."

The most interesting libertarians these days seem to come out of the software world. I certainly find Arnold Kling, Mencius Moldbug, and Nick Szabo to be the best reads.

Arnold, I love the concept behind Civil Societarian. I might start using it to start describing myself to friends. I only wish the label rolled off the tongue a bit easier.

R. Richard Schweitzer writes:

Lets us exam the Klingon phrases:

Non-profit does not mean "charitable," nor does it imply eleemosynary (other than for the IRC).
It does not necessarily mean tax exempt.

A major reason for being so organized is to limit avenues of gov't intervention and pressures through that route - though most are subject to "supervision" (or oversight)of at least an Attorney General's Office.

Let us consider the case of most of what T F cavils; probably "Think Tanks," Cato and Liberty Fund spring to mind. These arose in response to the capture of Academe by the rising, adroit political class. With these these organizations came not only a response to, but many defeats of, the accepted "accredited" academic opinions, supported by taxpayer funds.

The universities are dominated by specific viewpoints. Their staffs and faculties are supported by the political class. That the contra should come from where it can find support outside the political class's powers of taxation should not overwhelm T F or Arnold.

What other "bulwarks" are there against the propagation monopoly of views with the academic " Imprimatur?" Are they found in the public media formats?

As to the "signals" that tell one where one may be the most "valuable," markets or prices may indicate one's "value" to others (by some measure). But that "value" may well be based on a false perception - even intentionally purveyed as it is by the members of the political class.

Spend more time at home.

R. Richars Schweitzer
s24rrs@aol.com

Kurbla writes:

I agree, idea that the best contribution to the society is in the same time most profitable is obviously wrong. Numerous examples can be given as refutation.

Just one example, consider discoveries like one that tobacco smoking causes cancer. That discovery saved lives of numerous people, however, one who made it was unable to earn any significant money on the market - because he had nothing to sell to anyone.

Comments for this entry have been closed
Return to top