Book Excerpt: ‘Libertarianism A to Z’

By Jeffery Miron

Libertarians are sometimes confused with conservatives because they share a belief in small government, but libertarians would legalize drugs and prostitution, do away with tax-free status for churches, and remove most federal laws banning abortion. We’ll get the Libertarian view of the world from Jeffery Miron, lecturer in economics at Harvard University and senior fellow at the Cato Institute. His book, based on his course on the topic, is “Libertarianism, From A to Z,” excerpted below.

Introduction

What is the appropriate size and scope of government?

Liberals and conservatives offer radically different perspectives on this question, but both advocate big government in many areas. Roughly, liberals support economic regulation while conservatives favor social and foreign policy intervention.

Libertarianism argues for limited government across the board. In broad brush, libertarianism is socially liberal and fiscally conservative, so libertarians want government out of people’s bedrooms and out of their wallets. This description hides a host of more subtle issues, since balancing the pros and cons of different policies is often not

trivial. Thoughtful application of the libertarian perspective nevertheless leads to consistent conclusions about which parts of government are beneficial, and which are not.

The principles of libertarianism point toward legalizing drugs and prostitution, replacing public schools with vouchers, and eliminating farm subsidies, trade restrictions, and middle-class entitlements. Libertarianism opposes regulation of guns, child labor, campaign finance, unions, financial markets, and more. Libertarianism would leave abortion policy to state governments, terminate foreign policy interventions, and get government out of the marriage business. Under libertarianism, government would have roles in national defense, criminal justice, and contract enforcement, but little else.

These positions rely on the idea that, however well-intentioned, government often does more harm than good. Most government generates more cost than benefit because interventions fail to achieve their stated goals and even create unintended consequences, many far worse than the imperfections these interventions were intended to fix. Private arrangements, on the other hand, work better than many people recognize, and imperfections in one private arrangement give rise to others that dampen the harmful effects of the first (and so on) in an ever-evolving, robust system. Markets aren’t perfect; they have to adjust over time and may have inefficiencies. But government is worse.

Libertarianism, from A to Z analyzes existing and proposed government policy in three steps. It first asks whether, in a given arena, the problem that allegedly justifies government intervention is substantial and whether private arrangements might significantly ameliorate it, if a problem exists in the first place. Next, Libertarianism addresses whether, in cases where private mechanisms seem genuinely insufficient, proposed interventions for the problem achieve their stated aims. Libertarianism then considers the positive and negative consequences of the proposed intervention, including its unwanted side effects as well as its direct costs. Libertarianism advocates intervention if, but only if, the entire set of consequences from intervention is better than from laissez-faire, meaning a policy of non-intervention.

I call this approach “consequential libertarianism” because it draws conclusions based on what effects different policies have on the economy and society. This approach differs from the brand of libertarianism called philosophical, or rights-based, which invokes particular principles about liberty or property rights as the basis for choosing between policies (see consequential versus philosophical libertariansm). The consequential approach is, fundamentally, just the insistence that appropriate evaluations of competing policies must consider all their effects, not just a subset or the stated intentions rather than actual impacts.

Few people would dispute that a rational analysis should account for all the effects of one policy versus another. This approach to analyzing policy should not be controversial—but it is. Some worry that the libertarian approach leaves no room for considerations of morality or social justice, but this concern is misplaced. Terms like “morality” and “justice” are just short-hands for consequences that are widely regarded as undesirable. For example, the view that war is immoral is really a consequential conclusion that war causes death and destruction without beneficial impacts that outweigh the harms. Morality and justice fit in the consequential framework just fine, because the approach makes explicit the consequences that underlie views about morality, justice, and similar values.

The potential difficulty with consequentialism isn’t the issue of justice but that policy decisions involve tradeoffs. Every private arrangement is imperfect in some way, while every government policy generates positive and negative effects. So, accepting the consequentialist approach might not seem to settle any issues. To make matters more difficult, some consequences of policy are difficult to quantify, and people hold disparate views about which consequences deserve the greatest weight in policy evaluations. It might seem, in fact, that one can accept the consequentialist perspective and yet disagree radically with the specific conclusions derived in this book.

Where does that leave us? The libertarian claim, which Libertarianism, from A to Z, attempts to substantiate, is that most policies have so many negatives, and private arrangements are sufficiently good, that radical reductions in government make sense for any plausible assessment of the effects of most policies and for any reasonable balancing of these effects. This assessment does not apply in every case; libertarianism accepts a role for government in a few, limited areas. But these interventions—in national defense, criminal justice, and contract enforcement—are the exceptions to the rule.

Libertarianism, from A to Z presents the case for libertarian policy conclusions in a series of short essays about government policies and related issues. This format is meant to make the discussion accessible to a broad audience and to avoid excessive detail when possible. It also aims to help you learn to think like a Libertarian, by applying broad principles systematically and consistently across a broad range of issues. For example, a number of essays explain that state-level intervention is less bad than federal intervention, even if the state interventions are themselves undesirable, because a state-by-state approach allows variety and experimentation that help identify the positive and negative effects of policies.

The ordering of the entries is alphabetical, for want of a better alternative. Each entry is meant to be self-contained, but all of the entries rely upon pursuing the same logical course (one of the key aspects of libertarianism is its consistency in applying a skeptical view to all policies) and ideas that arise in one area spill over to others.

The selection of entries is not meant to be all inclusive, and I’ve intentionally erred on the side of fewer with the hope that general principles emerge clearly enough. There are several kinds of entries: those that discuss general policies (anti-poverty programs), those that discuss specific policies (the Civil Rights Act of 1964), those that discuss relevant historical episodes (the great depression), those that discuss ideas related to libertarianism (utilitarianism), and so forth. Many entries contain cross-references to related entries in the form of a “see also” line.

The discussion focuses on policies that involve large-scale government expenditures, that affect large sectors of the economy and society, and that illustrate key adverse effects of government interventions. Federal policies get more attention than state policies, since federal interventions do more harm. Quantitatively important policies receive greater scrutiny than policies that, however ill-conceived, do not affect many people. The analysis also focuses on the key issues in modern political debates: education, poverty, and discrimination, but also abortion, gay marriage, national security, and campaign finance. The analysis shows that consequentialism consistently evaluates policies based on their effects, not on preconceived assumptions about when intervention is beneficial or how good it might make us feel.

The tone of the analysis is part advocacy, part explanation. While the discussion attempts to make the best possible case for libertarian conclusions, the book attempts to provide a balanced introduction to libertarianism for readers who want to understand the libertarian view, whether or not they find it convincing. This book tries both to indicate in a concise way what the standard libertarian positions are and to outline the main reasons for those positions.

The phrase “libertarian position” is, of course, a simplification. Just as those who consider themselves liberals or conservatives often disagree with their fellow travelers, libertarians differ not infrequently on key issues. Indeed, some libertarians will object vehemently to a few of the conclusions offered here (see, for example, gold standard versus fiat money). But libertarians unquestionably share a broad, common core of judgments about the appropriate size and scope of government, so it makes sense overall to talk about “the” libertarian perspective.

I hope that Libertarianism will, if nothing else, inspire readers to think and talk clearly and honestly about the role of government in society. I am confident that when this happens, policies get better – that is, more libertarian.

(Excerpted from section on Religion)

The prevailing view in the United States and many countries is that governments should be neutral about religion. The first amendment to the U.S. Constitution, for example, states that “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise therefore.”

In fact, U.S. policy is decidedly pro-religion. First, the tax code designates religious institutions as non-profit enterprises and therefore imposes no tax on their revenues (collections, membership fees, bake sale proceeds, and so on). Second, contributions to religious institutions (and other charitable activities) are tax deductible. Third, most religious institutions are exempt from property taxation imposed by local governments. All these special provisions subsidize religious institutions (and other non-profits or charities) relative to for-profit activities and non-charities.

Making policy neutral toward religion would therefore require several changes in current tax codes. Fortuitously, the ideal changes are desirable independent of religion.

The main required modification is elimination of taxes on business income like the corporate income tax. Taxation of business income requires governments to define what constitutes a business, which then creates the opportunity to treat some as for-profit and some as non-profit. If instead the system recognized that all income accrues to people, and only taxed wages, salaries, dividends, capital gains, and so on, the distinction between profit and non-profit businesses would never arise. Taxation of business income is undesirable in part because it gets government involved in inappropriate issues, such as defining religion, but also because it fosters the perception that taxes are free because they can be imposed on business rather than people. This is false, since all businesses are owned by people.

To prevent the subsidy for religion that arises form the deductibility of charitable contributions, tax codes can eliminate this feature (ideally along with all other deductions and exemptions). As discussed under personal income taxation, an income tax system without any deductions or exemptions is likely more efficient than one that treats different kinds of income differently.

Once the tax code has stopped defining for-profit versus not-for-profit activity, and stopped designating some activities as charities, it is straightforward for local governments to impose the same property tax rate on all property. This is again desirable independent of the desire to have policy neutral toward religion: it keeps the tax code neutral about the different possible uses of property.

Libertarians are not for or against religion; they oppose government policies that favor religion, in part because this means government must define what constitutes a religion. This will inevitably favor the status quo at the expense of smaller, newer religions, and at the expense of individual liberty.

Copyright © 2010 by Jeffrey A. Miron, published by Basic Books, A Member of the Perseus Books Group.