Libertarians have little reason for optimism these days. Things could have been different. If government interventions since the 1930s had not crowded out profit-oriented enterprise, then programs for retirement, medical care, relief of poverty, dependable energy, and protection of property rights and of the environment would have evolved in more satisfactory ways. Private enterprise would have taken account of increasing life expectancy, increasing mobility, reduced intergenerational solidarity within families, improving medical technology, and changes in the labor force and labor market. The details of flexible evolution could not have been (and cannot now be) foreseen.
Government has forestalled any such evolution. The Great Depression, itself the consequence of botched policy, brought many experiments, including Social Security and privileges for labor unions. Wage controls in World War II brought employer-centered medical insurance. Politicians now have ample opportunities to urge their bright ideas, including more regulation as well as more spending.
It is easy to recommend limited government in a libertarian society. But how can we get there? “Entitlements” and commitments to police the world have saddled the government with extreme financial burdens on top of the explicit and ever-growing national debt.
Libertarian politicians must be willing to negotiate. Academicians, though, should not fudge their analyses in hopes of political influence. A generation ago, Clarence Philbrook rightly condemned such “realism” (American Economic Review, December 1953). Among politicians, everything should be on the table, even tax increases. I rather admire the sober approach of the Simpson-Bowles commission. It is scandalous that politicians should be intimidated into signing Grover Norquist’s antitax pledge. The recent debt-ceiling increase may have been a legitimate bargaining chip, but it was irresponsible to resist any compromise that included it. It is deplorable to call people like Michelle Bachmann libertarians (as I have heard in conversation). The Republican presidential aspirants (including, apparently, the eager-to-be-drafted Sarah Palin) hardly command enthusiasm. Among academics, dogmatic outright anarchists also harm the cause of a free society.
Getting there requires starting from here, which requires restoring government fiscal health on the way. (Remember about sometimes taking one step back to take two steps forward.) Ways can be found to shrink deficits and debt as fractions of GDP and eventually even in absolute terms. That is feasible, fiscally and economically.
Politically — that is another story. Voters, by and large, have become too dependent on government to tolerate libertarian ideas any time soon. Drift will continue, and the government will eventually have to repudiate its debt and other commitments. Default will not come openly but through inflation, through destruction of the dollar.
I am anxious to be shown wrong. Can anyone offer any plausible grounds for cheer?
