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Why are there no libertarian countries?

by Matt Mitchell on June 17, 2013

in Economic Freedom

In a recent article in Salon, Michael Lind posed a question:

Why are there no libertarian countries? If libertarians are correct in claiming that they understand how best to organize a modern society, how is it that not a single country in the world in the early twenty-first century is organized along libertarian lines?

He (or more likely his editors) called it the “question libertarians just can’t answer.” The headline of E.J. Dionne’s piece in praise of Lind’s article was more direct, calling the question “Libertarianism’s Achilles’ heel.”

Before addressing the substance of the question, it is worth noting that Lind seems to have misunderstood a central tenet of libertarian thinking: Few libertarians claim to have any superior knowledge of how to organize society. More often, libertarians come to their world view precisely because they think that no one could know how to plan the affairs of others.

Setting this aside, though, is the absence of a purely or even mostly-libertarian state proof that libertarian goals are unworthy? I don’t see how. No one thinks that the existence of poverty makes charity an unworthy goal. Why should the existence of widespread government intervention in private affairs make individual freedom an unworthy goal?

The key here is to appreciate the distinction between an optimal position and an equilibrium position. Optimality—whether it is defined as Pareto efficiency or justice as fairness—is a normative description of the degree to which we think a condition is ideal. Equilibrium, on the other hand, is a positive description of the way we think the world will actually turn out.

The two can be one and the same, as when economists predict that the outcome in a competitive market will be efficient. But the two needn’t be the same.

And in fact, a long list of libertarians and libertarian-leaning thinkers seem to have believed that liberty is emphatically not a stable equilibrium. Perhaps the most famous statement to this effect is Thomas Jefferson’s lament that “The natural progress of things is for liberty to yield, & government to gain ground.” More recently, in his introduction to Capitalism and Freedom, Friedman averred that “Freedom is a rare and delicate plant.”

Perhaps these statements can be dismissed as rhetorical flourishes. But formal public choice models quite often predict sub-optimal political equilibria. And libertarians frequently cite these models in support of their limited government perspective. So, like a great deal of progressives, it turns out that libertarians seem to think that “what is” is not optimal and that we should strive for, well, progress.

Much of the rest of Lind’s piece is dedicated to Mauritius, a small economically-free island nation off the coast of Africa. Mauritius often ranks high in economic freedom while, Lind notes, it has comparatively high infant mortality and comparatively low literacy rates. From this sample of one, he concludes:

Libertarians seem to have persuaded themselves that there is no significant trade-off between less government and more national insecurity, more crime, more illiteracy and more infant and maternal mortality, among other things

This is not the way social science–or any science–should be done. Do you know someone who regularly exercises yet seems to struggle with a weight problem? If so, this is hardly a reason to conclude that limited exercise is statistically significantly related to excess weight. It might be an indication of a broader relationship. But wouldn’t you want to gather more data and examine it in light of your existing theories?

Fortunately, economic freedom indices such as the Economic Freedom of the World Index (EFW) by Gwartney, Lawson, and Hall, have permitted researchers to do just that. And as it happens, each of the “trade-offs” that Lind names has been examined. Let’s take each in turn:

  • National insecurity and economic freedom: David Steinberg and Stephen Saideman examined the relationship between government involvement in the economy and ethnic violence in a 2008 article published in International Studies Quarterly.  In their words, “Our theory of insecurity predicts that free market economies reduce violent ethnic conflict by reducing fear and insecurity. We present statistical analyses, using data from the Minorities at Risk project and the Index of Economic Freedom, showing that government involvement in the economy increases ethnic rebellion. Our results suggest that the overall size of the public sector is less important than government interference with the market allocation mechanism.”
  • Crime and economic freedom: Edward Stringham and John Levendis explored the relationship between economic freedom and homicide in their chapter in the 2010 EFW. They found economic freedom and homicide to be negatively correlated. Here is Figure 6.1:

economic freedom and homicide, 2010 EFW

  • Illiteracy and economic freedom: A number of authors have looked at the relationship between economic freedom and literacy, often focusing on male/female inequality in literacy. In her 2006 study in Independent Review, for example, Michelle Fram Cohen used a Gender Empowerment Index that included disparities in female and male literacy, life expectancy, and income.  She found economic freedom was positively related to the female empowerment index. Michael Stroup also looked at this relationship in his 2007 article in the Journal of Economic Behavior and Organization. He, too, found a positive association between economic freedom and female literacy (he also found economic freedom was positively associated with life expectancy, fertility, and contraception use by women). Then there is this chart in the 2011 EFW (click on the chart to make it larger):

economic freedom and literacy, 2011 EFW

  • Infant mortality and economic freedom: This relationship was charted in the 2007 EFW:

economic freedom and infant mortality, 2007 EFW

  • Maternal mortality and economic freedom: Stroup visited this question in his chapter in the 2011 EFW. Here is the chart, which also shows the relationship between economic freedom and adolescent fertility:

economic freedom and maternal mortality

For an overview of the entire literature, check out Lawson and Hall’s recent article in Contemporary Economic Policy (here is a non-gated working paper version). They reviewed 198 articles using the EFW as an independent variable. In their words:

Over two-thirds of these studies found economic freedom to correspond to a “good” outcome such as faster growth, better living standards, more happiness, etc. Less than 4% [MM: 8 articles] of the sample found economic freedom to be associated with a “bad” outcome such as increased income inequality. The balance of evidence is overwhelming that economic freedom corresponds with a wide variety of positive outcomes with almost no negative tradeoffs.

———

Update:

Here is Jonah Goldberg’s response to Lind. Many others have had excellent responses as well.

 

  • Chad

    Excellent piece, both as a rebuttal to Lind, and a general ‘go-to’ source for common misconceptions about libertarian thought.

  • Tom_of_Tamworth

    Lind suffers from a classic case of Analytic-Synthetic dichotomy:

    “[One must] distinguish metaphysical facts from man-made facts—i.e., facts
    which are inherent in the identities of that which exists, from facts which
    depend upon the exercise of human volition. Because man has free will, no human
    choice—and no phenomenon which is a product of human choice—is metaphysically
    necessary. In regard to any man-made fact, it is valid to claim that man has
    chosen thus, but it was not inherent in the nature of existence for him to have
    done so; he could have chosen otherwise. For instance, the U.S. did not have
    to consist of 50 states; men could have subdivided the larger ones, or
    consolidated the smaller ones, etc.

    Choice, however, is not chance. Volition is not an exception to the Law of
    Causality; it is a type of causation. . . . Further, metaphysical facts are
    unalterable by man, and limit the alternatives open to his choice. Man can
    rearrange the materials that exist in reality, but he cannot violate their
    identity; he cannot escape the laws of nature. “Nature, to be commanded, must
    be obeyed.”

    Leonard Peikoff, “The Analytic-Synthetic Dichotomy,”

    Introduction to Objectivist Epistemology, 110–111

    “In regard to nature, “to accept what I cannot change” means to accept the
    metaphysically given; “to change what I can” means to strive to rearrange the
    given by acquiring knowledge—as science and technology (e.g., medicine)
    are doing; “to know the difference” means to know that one cannot rebel against
    nature and, when no action is possible, one must accept nature serenely.
    . . . What one must accept is the fact that the minds of other men are not
    in one’s power, as one’s own mind is not in theirs; one must accept their right
    to make their own choices, and one must agree or disagree, accept or reject,
    join or oppose them, as one’s mind dictates. The only means of “changing” men
    is the same as the means of “changing” nature: knowledge—which, in regard
    to men, is to be used as a process of persuasion, when and if their
    minds are active; when they are not, one must leave them to the consequences of
    their own errors. . . .

    To deal with men by force is as impractical as to deal with nature by persuasion.”

  • http://www.facebook.com/russnelson Russ Nelson

    Facts and logic will not convince people who did not arrive at their conclusion using facts and logic.

  • http://betterinstitutions.blogspot.com/ Shane Phillips

    Are there charts like these that just compare the nations in the top quintile? It’s good to know that economic freedom leads to these positive outcomes, but knowing the difference between the Central African Republic, for example, and the US doesn’t really tell me as much as the US vs other modern, developed countries would.

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  • MoreFreedom2

    Would those holding the power over a nation, power that makes them wealthy, give it up easily? There are many people in government partnering with them, in enjoying those benefits. And they also pay off part of the population to keep public support. All part of the way they keep their power, and avoid a libertarian state.

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  • henrybowman

    “And in fact, a long list of libertarians and libertarian-leaning thinkers seem to have believed that liberty is emphatically not a stable equilibrium.”

    Indeed, liberty, like a skyscraper, is an unusually low-entropy construct. It requires great care to assemble and maintain, but can be fatally wounded by even a relatively minor incursion.

    The other popular quote in this vein is the one about “eternal vigilance.” While the quote itself is true, what is not true is the assumption that any people are capable of being eternally vigilant enough to thwart any group of elected professional looters whose jobs and paychecks afford them all the resources necessary to devise ways to wriggle out from under public control.

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