Bryan Caplan  

EconLog Book Club: For a New Liberty, Chapter 4

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Confidence and the Wrong Map... Economics does not equal Macro...
Summary
This is the shortest chapter of the book, just six pages long.  Rothbard makes a laundry list of what he calls "the major problem areas of our society" and argues that government is central to every one of them.  The list is uncharacteristically random, almost "ripped from the headlines": high taxes, urban fiscal crisis, blackouts, pollution, public schools... 

When the government directly supplies a service, such as public schools, Rothbard's assignment of blame is straightforward - government does it, and does it poorly.  He also goes out of his way to argue that government directly supplies more than it seems.  Take "crime in the streets":
Consider: the crime in question is being committed, by definition, on the streets. The streets are owned, almost universally, by government, which thereby has a virtual monopoly of street-ownership. The police, who are supposed to guard us against this crime, are a compulsory monopoly of the government. And the courts, which are in the business of convicting and punishing criminals, are also a coercive monopoly of the government. So government has been in charge of every single aspect of the crime-in-the-streets problem. The failure here, just as the failure in Vietnam, must be chalked up solely to government.
In other cases, Rothbard just faults government for failing to protect property rights.  Take air pollution:
Again, the government, as owner of the public domain, "owns" the air. Furthermore, it has been the courts, owned solely by the government, which, as an act of deliberate policy, have for generations failed to protect our property rights in our bodies and orchards from the pollution generated by industry. Moreover, much of the direct pollution comes from government-owned plants.
The chapter ends on a high note, with amusing ridicule of Galbraith:
John Kenneth Galbraith, in his best-selling The Affluent Society, recognized that the government sector was the focus of our social failure--but drew instead the odd lesson that therefore still more funds and resources must be diverted from the private to the public sector. He thereby ignored the fact that the role of government in America--federal, state, and local--has expanded enormously, both absolutely and proportionately, in this century and especially in recent decades.  Unfortunately, Galbraith never once raised the question: Is there something inherent in government operation and activity, some thing which creates the very failures which we see abounding?
Critical Comments
This is the weakest chapter of the whole book; as written, I doubt it could persuade even a friendly critic.  The big questions:

1. How exactly does Rothbard identify "problem areas"? 

2.  When government and markets interact, why does government get blamed for all shortcomings? 

3.  What about all the things that were going right in the world when he was writing? 

Elsewhere in the book, Rothbard casually mentions that:
In 1976, after four decades of the greatest boom in American history... we had reached the status of having the highest standard of living in the history of the world with a relatively low level of unemployment...
If you evaluate the package of (four decades of boom + the chapter's laundry list of "problem areas,") isn't the natural inference that overall, things are peachy?  No doubt Rothbard would retort that "It's the free market that gave us that boom."  I agree.  But if economic performance had been worse, isn't it plain that Rothbard would have just blamed the government for "crippling" the economy?

From a slightly different perspective, my complaint about this chapter is that it pretends to be naively empirical ("Let's just look at the problems and see if there's a common cause"), when it's actually heavily theory-driven.  But Rothbard doesn't defend his theoretical presuppositions until chapter 10.

If I'd had been the editor for this book, I would have asked him to put chapter 10 before chapter 4 - or better yet, to seamlessly splice the two chapters together.  The new chapter 4 could then discuss the intrinsic failures of public ownership, and use the laundry list to illustrate Rothbard's thesis.


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COMMENTS (6 to date)
Jayson Virissimo writes:

I am hoping we can read 'The Machinery of Freedom' by David Friedman for our next book.

Alex J. writes:

I'd love a discussion of chapter 29, but I'm not sure the rest of the book is consistently interesting enough to be worth going over in a book club.

kebko writes:

I think the schools issue is interesting, because while I agree that competitive schools would perform better, I think the public's disappointment in public schools is actually a feature, not a bug. In a public institution, people feel a common ownership, which creates a sense of control, and so regardless of the actual performance, public discussion will tend to be among disgruntled groups trying to implement their own perceived fixes over the objections of the groups that oppose them. This is a much more emotionally satisfying context for many people to live in than one where independent institutions meet your needs so effortlessly that you take them for granted, which is how most private services are encountered. For instance, I have never had to attend an angry public meeting about how many grocery stores are in my town, how much they pay the help, or what percentage of their revenue they spend on administration. But, I can buy reasonably priced produce from around the world 24 hours a day. In fact, the cost tends to be sharply pro-rated based on my demand elasticity (via coupons, time sensitive markdowns, etc.).
So, even though the sense of control is misguided, the performance is poor, and the perception of performance is even poorer, these factors favor public demand for public institutions, IMHO.
In the case of grocery stores, most people would feel much better about them if they did get to have shouting matches with their neighbors about whether they should sell grapes from Chile, etc. Self-righteous indignation provides self-righteousness, even if there is a small payment of indignation involved.

Zac writes:

I fully agree with the commentary for this chapter. It is definitely the weakest chapter in the book.

Many of the examples of government failure are relevant to the discussion, though; I especially like the "crime in the streets" issue. Why aren't the streets of Baltimore more like the streets of Disneyland? Public vs private ownership explains it all.

But it all falls flat at this stage of the book. I suppose he put it there as a "hook" - some real world examples of government failure that entice you to read more about the theory.

Arare Litus writes:

Fired up by a rousing pseudo-history of libertarian telling, armed with an axiom in each hand, and with our arch-nemesis the state revealed, we are ready to do battle with leviathan. But first, a debriefing on the landscape of the battlefield.

With overstatement, such as “a once unthinkable impeachment” (so unthinkable that the mechanism to impeach was at the ready for use?), and oversimplification the underlying commonality of the evils of modern society are made clear via a random walk. The government has its hand in all of the bads that we see. From boring TV to crime in the streets. Despite the unpleasant taste imparted by the Paul Krugman style rhetoric, the overt manipulation and distain for the readers intelligence, Rothbard is pretty good here – it is hard to overwhelm a clear point with virulent speech, which I am becoming to grow accustomed to hearing from Rothbard (he must have been “fun” at parties).

Sure one can pick at various points (is private money really illegal, as Rothbard implies?), but the “red thread” stands: government monopoly is widespread, and not a good thing. Common sense can tell us why – monopoly means that if something goes wrong or off track we have no alternative: since things invariably go wrong this failure to allow competing approaches essentially guaranties poor outcomes. Simple logic that even products of shoddy public schools can follow.

Leviathan is looking like a giant boa constrictor, entwining society and slowly crushing it. Inefficiency is a clinical term for the wasted dreams, dashed hopes, misery, and poverty of pocket and spirit that ensues. Okay Rothbard, you are a mean, bitter, simplistic general. But we have our eyes open to the immensity of the battle before us. We see why you are so twisted – you have been scarred by war, and horrified that your brethren believe that feeding and strengthening and joining forces with the beast is wise. The battles before us are going to be big, ugly, and it is for the sake of our children, souls, and quality television. Lead on.

P.S. I see I am in the minority (so far) in seeing value in this chapter, perhaps due to my being under whelmed with Rothbards shoring up his axioms and with his view of history. I see this chapter as being a brief sketch laying out how broad the problems are, and his random selection of topics as a useful rhetorical tool to highlight the widespread nature of government’s delivery of bad: he is essentially saying, look at this laundry list of stuff, look how the government has negative effects on them, I can randomly pick stuff and suggest the government is not as good as portrayed. Simple motivation to get the reader interested in hearing more, “Is this guy for real? How is he going to back this up?”. I am actually more convinced by this chapter than his earlier chapters – sure it “pretends to be naively empirical”, but that seems to be his style – he over extends and presents a false tidiness that makes one distrust him, even when you agree.

bil. writes:

Having been steeped in libertarianism for many years, and also being somewhat academically inclined, I also find this chapter rather unsatisfying for the aforementioned reasons.

However I can see some point to the chapter. After the historical and philosophical start in the earlier chapters, a brief non-rigorous shotgun/grab-bag presentation of several modern issues (that may seem to the nonlibertarian reader to be unrelated to each other) might well serve to flesh out the scope of the problem with government, setting up the stage for the upcoming theoretical presentation. Perhaps this chapter is for those who haven't considered that the dead hand of the government is behind almost every social problem to grace the headlines - so Rothbard lays several of the headlines out side by side.

If I were loaning this book to more sophisticated/educated skeptics with whom I had argued about libertarianism, I might tell them to skip this chapter at first. But for a random person with no familiarity with the libertarian view, it might not be so bad.

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