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Commentary

Libertarian Compassionomics?


     
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Is it true that libertarians don’t care about the poor and the oppressed? Is libertarianism just a convenient ideological cover for selfishness and callousness? The Bible has choice words for those who oppress the poor and kind words for those who help them. If we take this as the standard, are libertarians dropping the ball?

I would say no. Our ability to conceptualize and implement a vision of an Ideal and Just Society is extremely limited, and the political route between the obvious and simple system of natural liberty that Adam Smith found so compelling and the Ideal and Just Society some people want to see is fraught with peril. Every twist and turn brings unintended consequences.

As I’ve written before, a lot of what we do in the name of helping the poor actually oppresses them. Economics can’t tell us which values to have or which baseball team to root for, but it can teach us the unintended consequences of some of the policies we enact (allegedly) in the name of helping the poor. These policies often have precisely the opposite of their intended effects. If we’re serious about helping the least of these among us, the best thing we can probably do is to get rid of interventions, programs, regulations, and controls that continue to oppress the poor.

I think policymakers, analysts, and armchair pundits would do well to adopt a principle from the medical profession: first, do no harm. In considering how we are obliged to the poor, I think a good place to start is “don’t do anything to make things worse.”

If we want a positive program of action, we should start getting rid of programs that harm the poor. The law of unintended consequences is one of the staples of an introductory economics course, and there are a lot of unintended consequences that can be avoided with better policy. Price floors like minimum wages and price ceilings like rent control hurt precisely the people they are allegedly enacted to help. Subsidies waste resources because they re-direct land, labor, and capital away from higher-value and toward lower-value uses. Restrictions on immigration and international trade make the poor poorer than they would otherwise be.

A standard idea in economics is that it is very difficult to give away money in ways that actually benefit the people we’re trying to help. If we announce that we will be giving away free food, for example, we can expect people to spend time waiting in line when they could otherwise be helping others and thereby creating wealth. The foregone output from people standing in line and waiting is one of the costs of our benevolence.

Furthermore, the incentives can get positively perverse. In his excellent book Discover Your Inner Economist, Tyler Cowen writes about fights over prime begging turf and an underground market for amputations in order to increase begging takes. You might remember a particularly gruesome scene in Slumdog Millionaire in which children are blinded so that they can become more profitable beggars.

There is an important lesson here about the nature of politics. Politics generally encourages such misdirections of resources as the political system encourages people to enrich themselves by picking others’ pockets. It also encourages people to invest in keeping their pockets from being picked. All of the lobbyists in Washington, DC and state capitals across the country are consuming resources without producing anything valuable in return.

There is a lot of low-hanging fruit here, but it is low-hanging fruit that people are going to resist picking. I think we should focus on the policies that we know are hurting the poor and creating human rights disasters around the world. Unfortunately, these include some of the left’s sacred cows like minimum wages, subsidies for anything that looks even superficially “green,” and the movement to prevent large firms from opening factories in poor countries. It also includes some of the right’s sacred cows like immigration restrictions and war with anyone who looks at us the wrong way. In short, libertarians offer proposals to infuriate everyone.

Fury aside, we need to get serious about some of these ideas if we’re serious about poverty alleviation and curtailing human rights abuses. To borrow from the economist Alan Blinder, it requires a combination of soft-heartedness and hard-headedness. Simply meaning well won’t do it. We also need the right ideas.


Art Carden is a Research Fellow at the Independent Institute in Oakland, California, and Assistant Professor of Economics at Samford University.
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