The Question Libertarians Supposedly Can’t Answer

“If your approach is so great, why hasn’t any country anywhere in the world ever tried it?” writes Michael Lind of Salon.com.

Supposedly this is the great impossible question which entirely refutes the efficacy of a free and voluntary organization of society.  Lind argues in his article that, since no nation has ever tried it, it must not actually be a plausible means of social organization.  The errors with this line of reasoning are many.

For starters, the question is a non-sequitur.  It does not logically follow that because no geographical area has tried it, free people living amongst themselves could not work.  In order to actually make this determination, controlled testing would need to be conducted.  However, no state in its right mind would ever agree to establish such a test case.

Imagine if the state of Nevada, and the US federal state, agreed to set aside a 50 square mile area in the middle of the Nevada desert that would be entirely free from any legal jurisdiction.  I’d wager that within a matter of a decade, that 50 square mile area would transform itself in an economic powerhouse rivaling Hong Kong.

Every major international corporation would seek tax asylum there.  Every person that currently banks with the Swiss or Cayman Islands in order to hide their wealth would bank there instead.  Pharmaceutical producers would flock there by the thousands to escape regulations.  Currency exchanges that allow for wealth preservation (money laundering) would spring up overnight. The financial incentive for industry to move into that area would be absolutely enormous.  The city of Las Vegas itself grew out of a lack of regulation.  Why do you think Vegas is in the middle of a desert?

The biggest gripe by the Southern states leading up to the US Civil War was that the Northern states were not holding up their end of the Constitutional bargain.  The Northern states were refusing to return runaway slaves, which effectively created a vacuum of freedom.  Prior to the Northern states rejection of slavery, the slaves in the South had no where to run.  But once the North stopped returning slaves, a mass exodus of slaves followed shortly thereafter.

It must be recognized that taxation, along with inflation, is effectively a form a slavery.  The same thing that happened with the Southern slaves will happen with productive citizens, if a zone of freedom is made available to them.  The act of taking wealth which is not earned by force is effectively the same as forcing a victim to work for free.  What is the difference between taking 100 dollars from a computer programmer or forcing the computer programmer to work for you for free for the same amount of time it would have taken him to earn 100 dollars?  There is no effective difference.

While taxation is a milder form of slavery, since taxes typically don’t take all of what a person earns, the incentive to flee to a tax free zone is directly proportional to the amount of taxes levied.  As tax burdens and inflation rise, the incentive for productive citizens to flee rises.  All state governments know this, so they act accordingly.  This is why states have capital controls between nations, why states have immigration controls, and why states cooperate with each other in dealing with international tax evaders.  One small zone of freedom is all it takes to undermine the financial resources of every state entity on the face of the earth.

It’s worth noting that Hong Kong is consistently rated the most economically free nation on the planet.  Hong Kong is only 426 square miles in size (smaller than Los Angeles), yet it packs a population of over 7 million people (more than double LA’s population) .  This is what happens when a relatively free zone borders a communist country; people move there.  The more freedom a zone offers, the higher the incentive to move there becomes.

Further, there are other factors at play when it comes to understanding why no completely free zones exist on the planet.  It might be argued that, if freedom actually worked, we should expect governments to adopt it!  But clearly this assertion has some major logical problems.  It should be understood that there really is no such thing as a “state.”  No one can point and say, “here is the state!”  States are nothing more than term for a group of people who have assumed power over others.

Since states are composed of individual actors, we have to look at the self-interests of those who support the state.   It is in the self-interest of bureaucrats to take the wealth of the productive.  It is in the self-interest of poor people to take the wealth of the rich.  It is in the self-interest of corporations to use regulations as a barrier to market entry.  It is in the self-interest of bankers to get bailouts and artificially depress interest rates.  It is in the self-interest of the drug cartels to keep drugs illegal.  And so on and so forth. As Frédéric Bastiat said, “The state is that great fiction by which everyone tries to live at the expense of everyone else.”

Coercively funded governments work on the exact opposite principles of the free market.  Where in the free market, if a corporation is producing a product or service that people don’t value, they will be driven out of business.  However, the same is not true for political “services.”  If a politically organized “service” doesn’t work the way it was envisioned, typically it will be subsidized more than it already is.  There is no way for the public itself to have a say in what “services” are funded, other than through the electoral process.  It should be self-evident that defunding any program is not in the best interest of any politician, because it will cost him the votes of those people who are employed in carrying out that service. These perverse incentives almost always cause the state to expand over time, rather than contract.

So what we are left with is a situation where the smallest and most free governments will, over time, generally tend to become the largest and most intrusive.  A large amount of economic freedom creates a tremendous capital base that the state can draw from over a long period of time.  This is why states that have always tended to be socialist are poor, while states that were more free in the past and have become socialist over time, are relatively richer by comparison.  This is not a hard and fast rule, as the size of a state and the type of political organization employed can have a large impact on the growth rate of government, but does make for a good rule of thumb.  It also helps explain why no completely free zones presently exist on the planet.

The question remains as to just how a completely free and voluntary society might organize itself, but luckily, some very bright economists have done some work to show how a system of property rights, law enforcement, and national defense might come about.  If you’re interested in an overview of voluntarism, I recommend checking out the following video by economist David Friedman:

To sum up, I think I’ve effectively answered Lind’s question.  Libertarians can indeed present arguments against the non-sequitur offered by Lind.

  • Ivan

    As someone who actually lived in Hong Kong for many years, this is a stupid post. 50% of the population live in public housing. The gap between rich and poor is growing so much that people are actually living in cages:

    https://www.nydailynews.com/news/world/wealthy-hong-kong-poorest-live-metal-cages-article-1.1258661

    If that’s your vision of libertarianism, i don’t want anything to do with it.

    • Pete Petepete

      As someone who has lived in Hong Kong for many more years, your argument is stupid.

      50% of the public live in public housing in large part because the Hong Kong government owns all the land. The government leases all land to private individuals. The government purposefully restricts the sale of land leases, which has set the price of land arbitrarily high, thus shutting out a great bulk of the working class from being able to afford housing. This is what created the need for the Hong Kong government to “do something” about their own malfeasence, and their band-aid solution was to offer these downtrodden folks housing at the government’s expense.

      You claimed to have lived in Hong Kong, but you seem to have not left your Sai Kung condo and learned about the country.

    • http://www.libertariannews.org/ Michael Suede

      My argument is that living in Hong Kong is better than living in Guangzhou, so people move there. I never said it was a utopia of freedom.

      Are you suggesting I’m wrong about that?

    • Jessica Darko

      I think it’s funny how liberals always focus on the gap between rich and poor, rather than the quality of life of the poor, who they pretend to care so much about.

      In the USSR, there was no gap between the rich and the poor– but that’s not a god thing (excluding the fat cats in the government, of course.)

      In the USA, the gap may be higher, but at our most free, we had the wealthiest poor people in the world. Which is why so many people around the world wanted to move here.

  • Jessica Darko

    Here’s the question liberals can’t answer:

    Since socialism has failed every time it’s been tried, why don’t you admit this and come up with something new, rather than attacking libertarians with these kinds of anti-intellectual bullshit, dishonest “questions they cant answer”, and other argument techniques?

    • S. James Schaffer

      FDR managed to pull it off. You think you can get electricity out in the middle of nowhere because it’s in the private sector’s best interest?

      I do Identify as Libertarian, but I also understand there are times for the government to step up and promote life, liberty, and the pursuit of happiness. State power can be used for good – we just have to maintain eternal vigilance to try and ensure it is only used for good.

      Libertarianism remains my guiding principle, but reality must take it’s toll, and there are no Ideals or Philosophy that can survive a head-on collision with Reality unaffected.

      Sadly more and more Libertarians are climbing into bed with Randroids and the Koch Brothers (CATO, i’m looking in your general direction) and adopting the same absolutist approach that is destroying the Republicans. Climate science denialism, Fundamentalism, Social collapse, and Anarchy lie in that direction. I fear for the future of the open, big tent libertarianism I grew up with.

      • A.S.

        Why would anarchy (a truly free market and non-aggression principle-based society) be a bad thing? What makes you think “government” even exists, outside of of bunch of people making up directives, and their enforcers carrying out the extortion we euphemistically label as “taxation”?

        Larken Rose on why being a “criminal” is not the same as being “a bad person”:

      • http://www.timkaiseronline.com TimKaiserOnline

        FDR did what? You got your Statist blinders on? All those projects were a waste of stolen money. I live in the middle of nowhere, and now Verizon gave me 4g in a town with less than 800 residents. Verizon ain’t the best company out there, but they’re providing me with the fastest mobile data I’ve ever seen. Private sector, competition. If the govn’t didn’t regulate the creation of electricity then electricity would have come a lot quicker to the middle of nowhere.

        State power will never be any good. The only power it has it stole from YOU. Raped you, took your right to self-governance. Brainwashed you into thinking the use of force could EVER be a good thing. (exception, self-defense) If Libertarianism is your guiding principal, then you don’t know what Libertarianism is. Go read ‘The Anatomy of the State’ by Rothbard, or ‘The Market for Liberty’ by Tannehill. FDR eroded personal liberty and sent the US into a tailspin. Paved the way for the current abuses of power. Next you’ll be saying that the civil war was a good thing for the economy or something.

  • gastorgrab

    “Liberty is not a means to a higher political end. It is itself the highest political end.”

    – John Dalberg-Acton