David Friedman Speaks at CU
by Ari Armstrong
[The following article originally appeared in the March/April 2001 edition of Colorado Liberty.]
The Libertarian student group at the University of Colorado at Boulder hosted a March 5 forum with David Friedman, professor of law and economics at Santa Clara, California. Friedman's talk, "Arguments For and Against Government," drew a crowd of around 200 students and area libertarians.
"David Friedman was tremendous," CU student Alex Baia said. "Articulate libertarians like Dr. Friedman are one of the many antidotes that the CU Boulder Campus Libertarians will use to fight outdated statist philosophies with the logic of liberty."
Friedman spoke for about an hour and then answered questions from the audience. Following the talk, the student group hosted a reception, also on campus. Bob Glass of Longmont presented Friedman with a Tyranny Response Team T-shirt during the reception. Participants came from as far away as Colorado Springs.
Tom Parker of the Boulder party said that Friedman "gave a fascinating and intellectual talk on the benefits of free markets, along with many real-life examples. Why is San Jose housing so expensive? 80 percent of the land is off the market. Do tariffs help? They help special interests, but hurt the country. This was a packed-house, first-rate event put on by the CU Libertarian group."
Friedman's central argument was that government is not able to solve "market failures" because of analogous but more pervasive political failures. An example of a market failure is air pollution, when the producer of the pollution doesn't bear the costs of it.
David Friedman meets with CU Campus Libertarians. L-r Alex Baia, Flux Neo, Heather Demarest, Brian Schwartz, Friedman, and Matt Zenthoefer.
We cannot simply assume that the government system will operate in an ideal way, argued Friedman. Democratic voting is inherently problematic. Because the chance of any particular voter having an affect on the election is so remote, and because the benefits of a wise vote are distributed among the entire population, the vast majority of voters are ill-informed (or "rationally ignorant").
Representative politics tends to degenerate into special interest group warfare, in which highly organized groups lobby to transfer wealth from the vast population to themselves. This skews incentives to produce and it also wastes resources in lobbying efforts and the resulting bureaucracy. Friedman offered numerous examples of how politicians made a problem worse in attempting to solve it.
On the other hand, entrepreneurs often solve market failures on the free market. For instance, "natural monopolies" such as the telephone line system are overcome with new technology such as cable access and satellite systems. Value is captured from the "public good" of radio broadcasting by packaging it with advertisements.
Even difficult problems like air pollution can be addressed on the market, as Friedman writes in his classic book The Machinery of Freedom. For instance, a class action lawsuit is possible in many instances. Others point out that improved technology and voluntary social pressures also contribute to a cleaner environment.
Thus, on balance, Friedman argued, society is better served by relying wholly on market institutions rather than on politicians.
Friedman also made a few comments about the Libertarian Party. In Machinery, Friedman writes, "We should regard politics not as a means of gaining power but as a means of spreading ideas." He said the LP can be a useful tool in that regard. Whereas some commentators in Liberty Magazine such as editor R.W. Bradford have recently suggested libertarians form a multi-partisan political interest group, Friedman reaffirmed the value in pursuing a variety of approaches concurrently.
Friedman's other books include Law's Order: What Economics Has to Do with Law and Why it Matters and Hidden Order: The Economics of Everyday Life. Friedman's web page is at www.daviddfriedman.com. The page includes sections of Machinery, an entire economics textbook, and papers on a variety of subjects from the history of Iceland to obstetrics to John Lott's work in More Guns, Less Crime. Analysis
While all libertarians agree with Friedman on most issues, many see his more radical formulations as problematic. At his talk, Friedman suggested that if one believes in the efficacy of the market order, one should think about extending those principles even to law and defense. Friedman is a self-described "anarcho-capitalist" who wants to do away with "government" all together.
Part of the debate revolves around semantics. Whereas Friedman describes his market system of legal services as an absence of government, other commentators such as Albert Jay Nock differentiate between the "government" and the "state," with the former referring to an institution that limits its activities to defending property rights. By extending Nock's analysis, some have referred to Friedman's system as "market government" or at least "governance," even though no monopoly is involved.
As his basis of evaluation, Friedman relies upon the notion of economic efficiency, which describes the fulfillment of subjective preferences. Basically, Friedman argues that people would get more of what they want in a consistent market system. But this formulation gives rise to two problems.
First, most people who support a strong state aren't concerned with subjective values, but rather with objective ones. In other words, some people want to enforce their values regardless of whether other people approve of them. Libertarians regularly respond that politicians are more subject to "moral failure" than are individuals interacting in a voluntary system.
Second, as the Austrian economists argue, subjective values cannot be measured or aggregated. For instance, Hans Hermann Hoppe argues that the state could never be considered "efficient," because some people find the very existence of the state disvaluable. The same argument, though, can be applied to the market. If lots of people value the use of force and monopoly privileges, then the market cannot be considered "efficient."
At some point, then, libertarians must turn to arguments over objective values. Libertarians like Ayn Rand argue that material progress is objectively valuable for human life, and a market system works best for producing goods and services. (Rand is a libertarian by most definitions even if not by her own.) In addition, Leonard Reed argues that people can be spiritually fulfilled only through voluntary interactions, not by the use of force.
Friedman could easily modify his standard of economic efficiency to conform to certain objective constraints. Then, the debate becomes one over purely market institutions as opposed to a minimal state. Rand argues that the minimal state is a necessary prerequisite for the market, whereas Friedman (and others like Murray Rothbard) argues that law and defense agencies can arise on the market absent a central monopoly. This is largely a question of history.
One thing is for certain: all libertarians agree that the modern American state is much too powerful and it spends way too many resources. A minimal state along the lines of what's defined in the U.S. Constitution is relatively ideal. As Harry Browne argued, let's first repeal the income tax and then argue about whether other types of taxes should be repealed. To do otherwise is a bit like arguing over what size swimming pool we want, when we're dying of thirst in the desert. Let's first work on getting that cool drink of water.