Are libertarians misunderstood?

A conversation with Reason editors Nick Gillespie and Matt Welch: "I don't think either of us are anarchists..."

Topics: War Room, Democratic Party, Great Recession, Libertarianism, Republican Party,

Nick Gillespie and Matt Welch, the editors of the leading libertarian publication Reason, see hope in their fellow Americans’ increasing disenchantment with the political system. In their new book “Declaration of Independents: How Libertarian Politics Can Fix What’s Wrong With America,” they note that independents now account for the largest bloc of voters in the country and urge more defections from the two major parties. Only by dismantling this hierarchical system of power, they maintain, can we achieve real deregulation of government-run services, which will lead to increased consumer choice and a more thoroughly democratized society.

Say what you will about libertarian arguments, but they’re always fun to discuss. So we sat down with Gillespie and Welch earlier this week and talked about their philosophy over a sushi lunch:

Your book urges the American public to embrace an unregulated market free of government control. But you also include a quote from Julian Assange, a self-described libertarian, stating that “a free market ends up as a monopoly unless you force it to be free.” So basically, some external body has to exist to ensure the freedom of a market — doesn’t that imply that free markets are inextricable from some form of government control?

Matt Welch: I think a lot of people, when they want to initiate a discussion about or with crazy libertarians, hold them to a standard that other people don’t.

And crazy libertarians are… you guys?

MW: [Laughs] Oh yeah. They wanna go immediately, “What is the logical conclusion of this philosophy? Would you have the state build roads? And you wouldn’t even have a fire department, and that kind of stuff!” That logical question isn’t given to progressive or conservative groups — they’ve been around longer, and there’s also an explicitly or self-consciously philosophical bent to libertarianism.

We don’t really spend a lot of time talking about “libertopia” around here. It tends to be kind of practical-minded — like, if we’re going to spend the same amount of money on education, just as a starting point, how about we spend it this way?

So you’re not advocating for zero governmental regulation or control?



Nick Gillespie: I don’t think either of us are anarchists — it’s not a question of that. We’d like to define libertarian less as a noun and more as an adjective. So it’s like, [you're libertarian if] in any given situation, you’re moving towards a kind of individual regulation.

Politics is built upon — and it has to be, and this is why we’re not anarchists — areas of common concern where you need to forge a national, state-level or citywide consensus.

What are those areas?

NG: Things like national defense. To a certain degree, I would say school funding — I mean, I would rather have the state out of education, but it’s not gonna happen anytime soon. Certain types of air pollution regulations. Frederick Hayek is one of our big intellectual heroes, and his book “Constitutional Liberty” just takes for granted that there’s going to be some social welfare state provided by the government. You could argue that it doesn’t have to be, but look — we assume that it is. The idea is that you squeeze down those areas where there really does need to be a [governing] consensus to the smallest degree possible — because when you have that, you definitely have clear winners and losers: 51 percent of people get to make the other 49 percent eat shit, basically. You still have to make a case for why what you’re doing is worth purchasing if you’re a businessman, but it’s not a win-lose proposition. It’s much more about persuasion and voluntary cooperation than forcing people to do one thing or another.

Just more broadly speaking, you can see in places such as the Internet, which is relatively unregulated, how markets in general and voluntary associations — and a kind of libertarian world — would work. It creates a lot of value. It sends out huge amounts of information. It creates reputation and branding. That becomes more important than regulation by people with guns.

In your book, you talk a lot about using market principles to deconstruct the duopoly of America’s two-party system. Can you expand upon that?

NG: Well, we’re always going to have two major parties. We’re not saying, “OK, we’re gonna have 50 different parties.” But the two main parties have lost huge amounts of market share.

MW: I mean, Republicans in many ways created the Tea Party by being hugely big government and routing the limited-government side [of their party] for more than 15 years. Democrats are going to be flirting with this. Obama is persecuting medical marijuana shops and spending more money on drug war enforcement than his predecessors did, being lousy on civil liberties in general, lousy about Guantánamo, lousy about starting wars.

And you don’t think Obama’s policies are responding to the needs of the time?

MW: No, and he’s taking all those liberal votes for granted.

NG: Parties can benefit, we think, if they decentralize decision making to the lowest level possible. So like with schools, with K-12 education, giving students and parents choice is a huge selling point — the satisfaction rates of people who choose their schools versus people who get assigned them, I mean, they’re not even close. And if you keep doing that in a variety of different issues, what you have to do is you have to give up your ability to dictate.

And for political activists, if you wanna be successful, you have to realize that these parties are not going to be able to make people do what they want, and that you’re much better off going after specific issues and creating kind of ephemeral, ad hoc syndicates that push certain issues. We know this group that’s pushing school choice, and it includes people like Dick Morris, the toe-sucking fetishist and Republican presidential advisor, and Joe Trippi, who was Howard Dean’s campaign manager. So it’s a broad coalition of people who have nothing really in common. Besides sucking toes, which I’m sure Trippi is into as well.

The underlying argument in your book is that deregulation leads to a decentralization of services, which in turn leads to a democratization of services and increased freedom for everyone involved. But I can think of situations in which the deregulation of a system would not lead to the decentralization of power — like in any situation in which a monopoly is formed. And I can think of examples when even if an industry did decentralize, it wouldn’t lead to the democratization of services — like any situation in which you had asymmetric information flow between the producer and consumer.

NG: Right. Can you name an example? I mean, you said you had examples.

Well, you guys wrote your book in the shadow of the Great Recession, but the book never actually addresses how the recession happened in the first place. And critics of libertarianism often cite the different actors in the subprime mortgage crisis, arguing that they took advantage of an unregulated system to consolidate power, and took advantage of a lack of understanding amongst consumers to sell them products that they didn’t fully understand.

MW: It’s a big question, so I’ll just take on little bits of it. One is the notion that the financial crisis was caused by deregulation… The central libertarian argument about what to do in the wake of a financial crisis is let the people who made these terrible decisions go bankrupt. And when appropriate — and do it early and often — send the motherfuckers to jail, you know?

If they did something illegal. But one of the problems is that if the system’s been deregulated, then it’s not illegal.

NG: But fraud is always illegal.

MW: Yeah, fraud has never been deregulated.

NG: When you talk about — OK, think about it this way. If mortgage companies knew that they were on the hook for the mortgages they underwrote, they would be very careful in who they lent money to… What happened was that every mortgage originator basically knew that they would get $500 to $2,000 in fees for simply originating loans, and then when they sold them they didn’t sell them to simply derivative companies — they sold them to Fannie Mae and Freddie Mac. Because the government told these guys to buy every loan that they could get. They kept pushing banks and said, “We’re going to regulate you to extend credit to more and more people who might not meet the gold standard credit regulations.” … In fact, the housing collapse tracks with a libertarian understanding in that it’s caused by government interventions in the private sector.

Regulatory bodies, if you look closely, are never put in to restrain business. They’re called in by big business in order to freeze the market at a certain place in time … And look at this in terms of the financial banks and investment banks in the country. Going in there were six major banks that had something like 60 percent of the market. Now there are four that have like 70 percent of the market. So in fact, all of this regulation, all of this government-supported intervention to fix things, led to a high concentration in this market.

MW: You can’t keep monopolies anymore unless you give consumers what they want, or if your [market control is] set in stone by the government. It’s easy to fall into the trap of thinking we’re going to be under the thumb of corporations with a capital C, but those corporations are desperate to sell you crap. And you don’t like it, or you suddenly have choice, that’s it, they’re screwed.

Stephen Metcalf recently published an article in Slate arguing that libertarianism essentially excuses and enables selfishness. What’s your response to that?

NG: I mean, I don’t think you’re going to walk away from this interview and think, “God, those motherfuckers only think about getting more for themselves.” I’m a libertarian because I believe that a free enterprise system and the political system that goes along with that opens up opportunities. And if you look at the actual rules that are in place that are supposedly socially progressive, most of the time they don’t help poor people. Things even like minimum wage laws — the rate of unemployment among teenage black males has only gone up since the minimum wage laws were jacked up in the late ’50s and was indexed for inflation, because the more people come into the market with fewer skills, the [more the] deck is stacked against them, and you get priced out at the beginning … Maybe I’m wrong, but I know precisely why I’m a libertarian, and it’s precisely because it promotes social and economic mobility.

MW: I’m greatly influenced by living in Central Europe between ages 22 to 29 in the early ’90s, beginning less than a year before communism collapsed. And for me, free trade and immigration are the quickest way I can think of for poor people to get rich … It’s not some weird accident that in China and India in the past two decades we’ve seen more than half a billion people pulled out of poverty. And it is because they went in directions of market reforms … The opportunities just got better for everybody, and that’s what jazzes me up in the morning. And if a rich asshole makes a mistake, he should go bankrupt. My motivation is exactly the opposite of what Steven Metcalf thinks. To the extent that he thinks.

Teresa Cotsirilos is an editorial fellow at Salon.

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