Boudreaux: a duck in a barrel, I know, but easy targets can make good illustrations

The other day I bemoaned the fact that some people who appreciate the allocative efficiencies of free action in markets seem to miss the allocative efficiencies of free action in government because the organizing logic is a little different. To me, there's an obvious institutional division of labor that the classical liberals easily identified but that is being ignored by a lot (not all) modern libertarians. A good example of a modern libertarian not being able to think about free government the same way they think about free markets is provided in this post by Don Boudreaux. It's about as sensible as the critiques of the market you hear from the OWS crowd.

He writes:

"Former CDC official William Dietz – criticizing George Will’s criticism of the nanny-state’s quest to dictate our diets in ever-greater detail – observes that “Many neighborhoods have abundant fast-food restaurants and lack supermarkets….  Individuals can’t be expected to make healthy choices if there are no healthy choices available” (Letters, Sept. 1).

True.  But this fact doesn’t mean that George Will is wrong to counsel skepticism of government.  Quite the contrary.

Just this past Tuesday you properly criticized the use of zoning regulations to prevent the opening of a Wal-Mart in D.C. (“Expedite zoning appeal so Wal-Mart can start construction in the District,” Aug. 28).  So here we have a case of the market attempting to expand people’s food choices, only to be obstructed in that effort by the very agency – government – that Mr. Dietz calls upon to assist the market in expanding people’s food choices."

OK, now consider my taste for Virginia wines. Not every store carries them - often you get to choose from California, Argentina, Chile, Australia, and New Zealand (interestingly, it's not too hard to walk into a store with no Old World wines, but that doesn't bother me as much). Now would it make sense to me to say what Don said here about government? Would it make sense for me to scoff at the ability of the market to provide for peoples' wine preferences because of the clear evidence of an instance where it didn't provide for my preferences?

No, of course not. That would completely misunderstand the organizing logic of the market. For one thing, there are stores that do provide Virginia wines in response to consumer demand, and I know who does and doesn't and who has more and less variety of it. Moreover, prices convey information to sellers in the market, so my demand for Virginia wine from this stores competitor will influence the choices of the store that did not carry Virginia wine.

There is an organizing logic of the market that we know is efficient (given a reasonable definition of "efficient", of which we have a few), and it would be ignorant of me to berate the market simply because of an observed case where I don't get what I want.

The same goes for free government, and yet Don is making an exactly analogous argument here. OK, governments don't always do what we want (surprise!!!). There is an organizing logic for free governments though, where votes and petitions to representatives communicate information about our demands. We have a legal system in place that arbitrates violation of our rights by government just as surely as if a private actor violated our rights. And we also decentralize power so that all of these mechanisms work more smoothly.

There are obvious pitfalls of government, so why have government at all? Well this gets back to the classical liberal division of labor between the market and the state that I was talking about. The market is very good at providing private needs, and the state is better at providing collective needs.

And look around you. What does the government provide? It almost exclusively provides goods characterized by externalities. That's no accident. The one exception is consumption programs that exist for egalitarian reasons, but (1.) Jefferson, Paine, and others talked about and thought about inequality in externality terms - and I think this is the right way to look at it, and (2.) many of our current egalitarian policies were set up with macroeconomic externalities in mind (Social Security and unemployment insurance were discussed in terms of consumption smoothing, and still are in many cases). Anyway, if you don't like thinking about it in those terms, you might take a capabilities approach, as discussed in the last post. These are all clearly ways of thinking about state action that are firmly in the liberal tradition.

There's no real defense of the sort of the arguments that Don is making, which are really akin to OWS and some of the more thoughtless leftist protesters out there.