Alberto Mingardi  

The biggest problem for libertarians

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A couple of years ago, John Stossel wrote a brilliant essay for Reason, aptly entitled "Why We're Losing". Stossel's main point was that

Liberty is counterintuitive. It takes hard work to overcome the brain's attraction to simple-sounding solutions. It's not easy to convince people that sometimes the best way for governments to address a problem is to do less, not more. It's easier to admire the activist or politician who talks about helping the less fortunate than it is to cheer on a hustler who wants to get rich by selling you stuff. Those of us who see expanding the private sphere as the best way to help the most people have an uphill battle in making our case.

I won't argue with that, but I would add that the biggest problems libertarians--or, more generally, people who argue for a broader scope for the market economy--have, is that human beings are extremely reluctant to develop political ideas based upon their own experience.

Let me give an example of that. A couple of weeks ago I was in New York and I had a rather tight agenda. There were many people I wanted to see, and not enough time to see them all. So, on a Friday, I ended up having drinks in lower Manhattan, and a dinner in the Upper East Side. Being Friday night, I stood on a corner in vain for a good twenty minutes, looking at more taxi cabs that I have ever seen, none of which was apparently free to pick me up. Then, all of the sudden, a black car noticed me, and the driver asked where I needed to go. Upon my answer, he immediately figured out the price he would charge me: a price that was far higher than the usual taxi fare.

I was late, and somehow grateful that the car stopped by, so I jumped in.
I then had a quick chat with the driver, and asked immediately if he was just working on his own, or also occasionally with Uber and Lyft. He does, and he generally praised both services, with some qualifications. In particular, he explained to me that he thought Uber was unfair because of its "Surge pricing," i.e. the mechanism by which Uber increases prices during busier times. Perhaps that needed to be regulated. Now, this man, who was charging me a very high price because he correctly estimated I would be fine with that if I was really running late, criticized a similar strategy when deployed by an impersonal mechanism and not by his own judgment. I have reacted charging him with a sermon on his inconsistency, which obviously didn't buy me a special discount.

You may find tons of examples. The beauty of the market process is that, after all, you do not need to understand it to use it shrewdly. The world is full of perfectly cautious and careful customers, who believe nobody else is and thus contend that stricter regulations are needed. Most people are hardly patient with the inefficiencies of government bureaucracies, but this very fact doesn't seem to prevent them to preach for greater government interventions.

Indeed, you reach a paradox when it comes to politics. The late Ken Minogue nailed it in his marvelous "The Servile Mind":

Public respect for politicians has long been declining, even as the population at large has been seduced into responding to each new problem by demanding that the government act. That we should be constantly demanding that an institution we rather despise should solve large problems argues a notable lack of logic in the demos.

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COMMENTS (5 to date)
zeke writes:

Good post!

I think another reason why libertarianism is losing is because it strikes at the heart of the academy. It tells smart peope: you aren't as smart as you think you are. It reminds them that in the end they are more like the rubes. In contrast, statism flatters the egos of the academy. It tells them that they possess special knowledge about the world and that if everyone would just listen to them, then they could craft a better world.

ThomasH writes:

The problem that any "loosing" side faces is that it's proposed solution run up against cognitive hurdle. Liberal economists see the same problem when they unsuccessfully explain that cutting government spending during recessions is NOT like a family cutting expenditures during a period of lower income, that a carbon tax is an elegant, market friendly and least cost approach to climate change, that charging for public street and road use is a solution to congestion, that an EITC is better way of shifting income to low income workers than a minimum wage, that regulation guided by cost-benefit analysis is better than "more" or "less" regulation, or argue for a shift from income to progressive consumption taxes.

Michael clarke writes:

I identify as libertarian. The strongest, simplest argument that I have ever heard about why we are not winning the battle of ideas is this: there are very large groups of people in society that want to be told what to do (including trantransfer of responsibility), and very large groups of people who want to tell other people what to do. Libertarian ideas do not appeal to either of these large groups.

y writes:

[Comment removed for supplying false email address and for name-calling. Email the webmaster@econlib.org to request restoring your comment privileges. A valid email address is required to post comments on EconLog and EconTalk.--Econlib Ed.]

Peter Drake writes:

I don't think the driver was inconsistent. He just knows his customers prefer predictable pricing. Having the price change on short notice is a negative for customers, and Uber is attempting to win customers and public support from the existing taxis who do not charge surge pricing.

In short the driver may be making the rational choice to forgo surge pricing in return for more market penetration, and more business.

A better way might be to have an overload status. When the system is overloaded you could choose to pay extra for an unshared ride, or you could pay the normal fare and possibly share some or all of the ride with strangers. This has the benefit of raising revenues (and bringing more drivers into the system when overloaded) while giving customers choice.

And if a customer ends up sharing a portion of your ride then it makes sense, given that the system is overloaded. The other option would be to wait longer for a pickup and nobody wants that.

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