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Why Liberals are Not Libertarians
By Ernest Partridge (about the author) Page 3 of 5 page(s)
The source of market failure is hinted at in Milton Friedman's notorious proclamation that "the social responsibility of business is to increase its profits." This result is neatly accomplished by internalizing profits and externalizing costs on unconsenting third-parties, the so-called "stakeholders." If the stockholders of a corporation are dissatisfied with the profit-making of the corporation, they can fire the managers. But who, other than the government, speaks for the stakeholders: those who live downwind and downstream from a factory, or most recently the tax-paying public, present and future, that has been presented the bill for rescuing Wall Street? If not the regulatory agencies, then perhaps the courts. However, as I have explained elsewhere at some length, the courts fall short as a remedy for market failures.
Limits of privatization and property rights.
The Tragedy of the Commons. Garrett Hardin's landmark essay, "The Tragedy of the Commons," vividly displays the principle, "good for each, bad for all."
Imagine a village of sheep herders, surrounded by an open pasture, a "commons," owned by none and utilized by all. The number of sheep in the pasture is at "carrying capacity," which means that the addition of more sheep will degrade productivity and sustainability of the common resource. It is to the advantage of each villager to add to his personal wealth by putting another of his sheep in the commons. But by so doing, he decreases the wealth and well-being of all the others. "Good for each, bad for all."
And now the "tragedy:" Absent collective constraints on the individual, the only rational thing for the autonomous "economic man" to do under these circumstances is to increase his wealth by adding sheep to the commons. Presumably, all the others will be likewise motivated. True, it will destroy the resource and bring ruin upon all, including himself. But he is helpless, by himself, to avoid this result. Might as well "get what he can while he can."
If this scenario applied only to sheep herders and pastures, it would be of little interest. But the significance of the tragedy of the commons resides in its scope of application: to air pollution, to global population, to game management, to ocean fisheries, and to much, much, more.
Hardin's solution is both obvious and compelling: "mutual coercion, mutually agreed upon." But who or what is best suited to articulate and enforce the mutually agreed upon rules of mutual coercion? What else but a democratic government, acting in behalf of all, and answerable to all?
The libertarian replies that the tragedy of the commons can be addressed by privatizing the commons -- for example, by closing the open range and dividing it into private parcels. This solution internalizes the cost of over-exploitation, thus motivating the owner to manage the property sustainably. Agreed. But this is only a partial solution, for some commons, by nature, can not be privatized. Among these are migrating wildlife, pollenizers, the atmosphere, rivers, aquifers, the ocean, the hydrological and nutrient cycles, the global climate. The economic value of these so-called "natural services" is calculated by Robert Costanza, et al at approximately double the gross national product of the United States.
Who or what is to protect and preserve these indispensable natural services? We arrive at the same answer: the government, or more correctly, a consortium of governments, for these services, like nature itself, are totally indifferent to both national boundaries and property lines.
"The Public Interest:" Randville, Rawlsburg, and New Orleans. Are there public goods? Ayn Rand, let us recall, believes that there are no public goods because, "there is no such entity as 'the public' -- since the public is merely a number of individuals -- any claimed or implied conflict of the 'public interest' with private interests means that the interests of some men must be sacrificed to the interests of and wishes of others."
The liberal, of course, vehemently disagrees. As evidence of the existence of "public goods," consider a parable.
Two communities are situated on opposite banks of a great river: on the right bank (appropriately) is "Randville," and on the left bank is "Rawlsburg." Randville is populated entirely by libertarians rugged individualists all, who shun "collective" activity and who assume full responsibility for their personal safety, welfare and property. "Rawlsburg" is comprised of liberal individuals who are properly covetous of their personal rights, yet fully aware of the desirability of promoting public goods and of acting collectively in the face of common emergencies.
News arrives at both communities that a great flood is approaching from upstream. The citizens of Randville immediately get to work piling sandbags around each of their individual dwellings. Across the river in Rawlsburg, brigades of citizens are hard at work building a levee around the entire town.
Come the flood, the puny separate efforts of the rugged Randville individualists prove to be futile, while the substantial communal levee surrounding Rawlsburg holds firm and the community is spared.
"Now hold on!," the libertarian retorts. "Surely, faced with this common emergency, the folks at Randville would volunteer to build a levee. That's just common sense."
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