Reason Podcast

Do Too Many Libertarians Celebrate a False 'Perfection of the Market'? [Podcast]

Michael Munger on the radicalism of public-choice economics, the failure of Democracy in Chains, and how the libertarian movement needs to evolve.


Viking, Amazon

No recent book has caused a bigger splash in libertarian circles than Nancy MacLean's Democracy in Chains. The Duke historian avers that Nobel Prize-winning economist James Buchanan, who helped created what's known as public choice economics, had racist, segregationist intentions in his life's work of analyzing what he called "politics without romance"; that the Koch brothers—Charles and David—are not-so-secretly controlling politics in the U.S. and are devoted to disenfranchising Americans, especially racial and ethnic minorities; and that libertarians are deeply indebted to the pro-slavery philosophy of John C. Calhoun and that we wish "back to the political economy and oligarchic governance of midcentury Virginia, minus the segregation."

None of this is true, but that doesn't mean MacLean should go unchallenged—or that libertarians don't need to explain themselves better if we want to gain more influence in contemporary debates over politics, culture, and ideas.

In the latest Reason Podcast, Nick Gillespie talks with Michael Munger of Duke's political science department, who has written a caustic, fair, and even generous review of MacLean's book for the Independent Institute. Even as he categorizes Democracy in Chains as a "work of speculative historical fiction" that was "in many cases illuminating," he concludes that her book is wrong in almost every meaningful way, from gauging Buchanan's influence on libertarianism to her inconsistent views toward majoritarian rule as an absolute good to her attempts to smear Buchanan as a backward-looking racial conservative.

Munger, who ran for governor of North Carolina as a Libertarian in 2008 and maintains a vital Twitter account at @mungowitz, also discusses how that experience changed his understanding of politics, why he's a "directionalist" advocating incremental policy changes rather a "destinationist" insisting on immediate implementation of utopian programs, and how the movement's heavy emphasis on economics has retarded libertarianism's wider appeal.

"Many libertarians celebrate something like the perfection of the market," he says. "And so we end up playing defense. When someone says, 'Look at these problems with the market,' we say, 'No, no. Actually, the problem is state intervention, the problem is regulation. If we get rid of those things, then perfection will be restored.' The argument that I see for libertarianism is not the perfection of markets, it's the imperfections of the state, the institutions of the state."

It's a wide-ranging conversation that touches on growing up in a working-class, segregated milieu and possible futures for the libertarian movement.

Munger's home page is here.

Read Reason's coverage of Democracy in Chains here.

Audio post production by Ian Keyser.

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This is a rush transcript—check all quotes against the audio for accuracy.

Nick Gillespie: Hi, I'm Nick Gillespie. This is the Reason Podcast. Please subscribe to us at iTunes and rate and review us while you're there. Today I'm talking with Mike Munger, a political scientist at Duke, about the new book Democracy in Chains by a Duke historian, Nancy MacLean.

In her controversial work, MacLean argues, among other things, that Nobel Prize winning economist James Buchanan, who helped create what is known as public choice economics, had racist segregationist intentions in his life's work of analyzing what he called "politics without romance", that the Koch brothers, Charles and David, are not so secretly controlling politics in the US and are devoted to disenfranchising Americans, especially racial and ethnic minorities, and that libertarians, as a group, are deeply indebted to the pro-slavery philosophy of John C. Calhoun, and that we wish "to go back to the political economy and oligarchic governance of mid-century Virginia, minus the segregation".

We're going to talk about all that and more, including Mike Munger's journey from economist to political scientist then his past history of selling drugs. Michael Munger, thanks for joining us.

Michael Munger: It's a pleasure to be on the podcast.

Gillespie: You wrote a comprehensive and archly critical review of MacLean for the Oakland-based Independent Institute, it's up on the Independent Institute's website, in which you characterized Democracy in Chains as "a work of speculative fiction". Elaborate on that for a bit. What is speculative about it or what is speculative fiction about her account of James Buchanan?

Munger: Well, there's a history of history being speculative interpolation of here's what might have happened given the few points we're able to observe. It's as if a strobe light at irregular intervals illuminates something, and all you get is a snapshot. It's hard to say what people were thinking, what they were saying, but given these intermittent snapshots, you then interpolate a story. Sometimes those stories are pretty interesting, particularly if we don't know much about what otherwise was going on.

The difficulty that Professor MacLean has, I think … And I think she's surprised. Frankly, I think she is surprised that so many people knew so much about James Buchanan and about public choice, more on that in a minute. What she did was admirable. She went to the very disorganized, at the time, archives at the Buchanan House at George Mason University, and she spent a long time going through these documents and got these snapshots.

To her credit, she did go to the archives. To her discredit, she was pretty selective about the snapshots that were revealed that she decided to use to interpolate between. There's plenty of exculpatory evidence that she ignored, put aside, misquoted, but she came up with a really interesting story. I found myself, when I'm reading the book, Democracy in Chains, thinking, "If this were true, it'd be really interesting." I can see why many people who don't know the history of Jim Buchanan in public choice and libertarianism, on reading it, would say, "That's a terrific story," because it is a terrific story, it's just not true.

Gillespie: I mean the large story that she is seeking to tell is that James Buchanan and other libertarian leaning oftentimes, pro-free … I mean, I guess, always pro-free market, classical liberal ideologues, or scholars and ideologues and what not, want to put limits on what majorities can do to people, and they often talk about that pretty openly. She reads that as a conspiracy of disenfranchisement.

Munger: Right, because she doesn't know anyone who believes that. The fact that that's actually just standard in not just public choice, but political science since Aristotle, she finds that astonishing. It's something that…

Gillespie: Well, is she being honest there? Because I mean you've mentioned Aristotle, well, I'll mention Magna Carta, where even the King of England, at a certain point in time, had to admit that his powers were limited and that Englishmen had rights that could not be abrogated by even a king much less any kind of majority. I mean is she just being willfully opaque or thick there, or does she, in these moments … And I guess I'm asking you to speculate on her motives, but does she really believe that?

Munger: Well, in my review, I invoke what I call the principle of charity, and that is that until you really have good evidence to the contrary, you should accept at face value the arguments that people make. She seems to say that we should respect the will of majorities, full stop. I'm willing to accept that as what she believes.

I had an interesting interview with a reporter from The Chronicle of Higher Education, who said, "Can you explain what's wrong with this book?" I sent him four pages with examples handwritten so that he could see. He said, "No, that's too complicated. I don't understand that," so I simplified it. He said, "No, it's too complicated. I don't understand that." Then, finally, I said what I just said, "She appears to believe there should be no limits on majorities," and he said, "Oh, no. That's too simple. Nobody could believe that."

Gillespie: Well, I mean the opening of the book, in many ways, the taking off point is the Brown versus Board of Education Supreme Court ruling in 1954, which itself was an act by the Supreme Court invalidating a majority position that local school districts could segregate students based on race, not based on majority rules. It seems very confusing from the beginning.

Munger: Yeah, not just the Supreme Court, but federal troops sent in directly and explicitly to thwart the will of majorities.

Gillespie: Yeah, but she, at the same time, is saying that any limits on the majority's ability to do as it wants with 50% minus one vote of the population is somehow cataclysmic and calls to mind …

Munger: Well, but to your question, no, I don't think she actually believes that. She's a political progressive. When you dig down, when you drill down on the progressive position, they're not that sure that actual majorities know what they want, and so they need the assistance of experts and technocrats. On some things, that probably is a sensible position, that we could debate whether the Food and Drug Administration, in all of its particulars, is useful, but you've got to at least understand a reasonable person could believe that there are some things that we can't really leave up to the particulars of voting, rather it's what the people would want if they were well-informed. That's what progressives think they're trying to implement.

Gillespie: I mean what is the goal of progressivism in this? Is it on a certain argument it's to say that there's no limit on the government's ability to tax people or regulate people or redistribute wealth and resources? Because obviously she doesn't believe if a majority … I mean she's not a true procedural due process person, where as long as a majority, a simple majority, votes on something, that's the law.

Munger: Well, what she is worried about is any limitation on the ability of the state to act on the rightly understood will of the people. Anything that the First Amendment or … It's fairly common among progressives to say anyone who defends freedom of speech is racist, anyone who defends freedom of property is a plutocrat who is defending … That's a caricature of their position, but what they're saying is any limit on what the government can do when it's trying to do the right thing, we don't want that. They believe they know. They actually believe that they know the right thing.

I have to admit that I have enjoyed going around to my colleagues who, throughout the Obama administration, were pretty happy with what I saw were excessive uses of executive invocation of power. They would say, "As long as my guy's in charge, I don't really mind," but their guy's not in charge anymore. They'll admit, "I just never expected Trump to be in charge."

Gillespie: Right. Well, if we take for granted that progressives tend to be majoritarians, in fact, when their people are not in power, I should point out, they're less likely to be interested in a simple majoritarianism, right?

Munger: Yeah, yeah. Well, but that's why they have to come up with stories for why there's some conspiracy, there's someone who's suppressing the vote, there's someone who's spending money behind the scenes because if actually left up to the people, as Hillary Clinton said, she'd be ahead by 50%.

Gillespie: Right. One of the charges that MacLean makes in the book is that … And she goes back and forth between implying that libertarians are somewhat racist by design, other times it's by default, or that they're not sufficiently interested in the outcomes of particular policies such as school choice, essentially both in a form that was practiced in mid-century Virginia, in the 1950s, as a result of federal orders to integrate their schools. Virginia and a couple of other states talked about vouchers.

That's actually where Milton Friedman got the idea for school vouchers. He talks about it openly in the 1955 essay where he first talked about school vouchers. That libertarians are insufficiently concerned about certain policies' effects on racial and ethnic minorities. Do you think there's truth to that charge?

Munger: There is some truth to it in the sense that libertarians tend to take property rights as given and to the extent that the distribution of power and wealth reflects past injustice. In the case of the south where I grew up, it's not debatable. The distribution of power and wealth does, in fact, reflect past injustice, and saying we're going to start from where we are. It's one of the things Jim Buchanan often said; as a political matter, we're going to start from where we are. The reason is that to do anything else endows not the state, but politicians with so much power that we expect it to be misused.

That's the public choice part of this is that many progressives imagine a thing called the state that's well-informed and benevolent, naturally has the objectives that they attribute to it, but if instead you think politicians are likely to use that power for their own purposes, and it's actually unlikely that we'll achieve the outcomes even that progressives think that we'll get. You might concede, suppose that that were actually achievable, we could at least debate whether it would be a good thing. That's not how the state is going to use the power that the libertarian of public choice person would say. As a result, we have to start from where we are. It's not perfect, but we have to start from where we are.

Gillespie: Let's talk about Buchanan and the response to Brown versus Board of Education by people like Milton Friedman James Buchanan, who, despite having various connections, are very distinct thinkers. On a certain level, they advocated for school choice in the 1950s. School choice in that iteration would have allowed essentially a voucher program, let's say, where a local government, a state government, a federal government gives parents of students a certain amount of money to spend however they wish on education. That would have allowed conceivably for parents to choose segregated schools for their children while also allowing a lot of poor parents as well as racial and ethnic minorities freedom to leave racially-segregated schools.

How should libertarians talk about that? I mean nowadays school choice is primarily driven by explicit concern for and results that are good for poor students in general and ethnic and racial minorities. I guess I'm groping here for the question of should libertarians replace such a prioritization of property rights or of autonomy, individual autonomy, with questions about racial and ethnic disparities? I mean is that something that should come from a libertarian perspective?

Munger: Well, the reason that this is a hard question to ask is that it's a difficult issue for libertarians to take on in the first place. I found this when I was running for governor in 2008. My platform when I was running for governor for education was means-tested vouchers because wealthy people often have some kinds of choices. Now what we should worry about is making sure that those.

Gillespie: Just to point out, you ran for governor of North Carolina as a libertarian.

Munger: As a libertarian.

Gillespie: What percentage of the vote did you end up polling?

Munger: I got 2.8%, 125,000 votes, but I found that libertarians themselves were the hardest ones to convince about a voucher program because they just thought the state shouldn't be involved in education at all, but it already is involved in education; the question is how can we improve it?

I think one of the arguments for vouchers is that if you look at parents, the parents who … And you already said this, but I want to emphasize it. The people who really favor voucher programs tend to be those who otherwise see themselves as having few choices they're happy with. A lot of them are poor African American inner city parents who really care about their children, but have no means of sending them to a better school.

To be fair, there's a famous letter from Milton Friedman to Warren Nutter in the mid-'50s. Warren Nutter was one Buchanan's partners at University of Virginia. In it, Friedman points out that vouchers may be a way around the problem of segregated schools. The reason is that, yes, schools are going to be segregated, there's not really a way around that, but this means that African American parents will have more resources to send their children to better schools. If they're still segregated, at least they're better schools. It's a way of giving more resources to parents.

Gillespie: Do you think somebody like Milton Friedman … He's an interesting case because he stressed, for instance, about the war on drugs, that it had a disproportionate effect on racial minorities, and he did that with other programs as well. Was he hopelessly or willfully naive about the meanness of American society, I think, where he would … And a lot of libertarians say this, and there's some truth to it, but there's also some accommodationist thinking going on, where as long as your dollars are green, racial attitudes will … And you empower people with more money, say, in an education market that people will integrate or get along more easily. Is that just ridiculously idealistic?

Munger: Well, for Friedman, in particular, he himself had been subject to discrimination, very explicit, open discrimination. I think for Friedman, in particular, he was quite aware of the problem and was concerned in a way that many people are not. Libertarians generally often just say, "What we need is a race-blind society." Since it's unlikely that we have that, having institutions that otherwise seem fair may not be a very good solution, but Friedman himself advocated for policies that he thought would at least make discrimination more expensive or would allow people to work around discrimination.

The answer to your question is complicated. I do think that libertarians have, at a minimum, a public relations problem because of the tin ear that we have in talking about this, but I also think that there's a substantive problem in the way that you say that it might be that having some sort of … Well, what I favor, and this is something that Jim Buchanan favored, is to avoid the waste that's involved in denying something like equality of opportunity to almost everyone.

Buchanan was very concerned about unearned privilege. He actually favored a confiscatory estate tax, inheritance tax because he thought that was honoring the privilege, making sure that people, regardless of where they start out, are able to achieve is not just in their interest, but in all of our interests. They're more productive, the society produces more, people are better consumers and better citizens. Equality of opportunity is something we should advocate for more explicitly.

Gillespie: Part of that is that libertarians often try to pass as anarchists, it seems to me. They simultaneously will say, "Well, I'm a libertarian," which is one thing, and it's easily defined or quickly to defined as somebody who believes in a strictly limited government. Almost always from any given starting point, libertarians are going to argue to reduce the size, scope, and spending of government, but a lot of us play-act as anarchists, saying there should be no state, so that the answer to everything, if it's gay marriage, it's like, "Well," or marriage equality, it's the state shouldn't be involved in marriage at all. If it's about public school or about school policy, the state shouldn't be involved in schooling at all and education.

Was Buchanan and Friedman … Or most of the libertarian, major libertarian figures of academics, certainly an economist like Friedrich Hayek, like Friedman, like Ludwig von Mises, like Buchanan, they are not anarchists at all. They take the state as a given, and then it's a question of do you move it in a more libertarian direction or a less libertarian direction. Is that accurate?

Munger: I think it varies a bit. Mises is a hero to anarchists. I think it's complicated, but Murray Rothbard took Mises and, I think, in some ways, overinterpreted, but the Mises-Rothbard approach is much closer to being anarchist. Their claim is that anything that the state does, it will either do wrong or it's just inherently evil; whereas equality of opportunity is a more complicated question.

One problem with equality of opportunity is that it's much easier to take opportunities away from the wealthy than it is to give them to the poor. It's just a knee-jerk argument against redistribution is that all we're going to do is cut the top off the distribution. The problem is not inequality, the problem is poverty.

But a lot libertarians, I think, would not even admit that poverty is a problem on which the government should ask should act. What should happen instead is all we need to do is get rid of taxes and regulations and the market will respond by creating equality of opportunity. There is a point to that in the sense that the best welfare program is a good job.

Gillespie: Right. Well, to cut to the chase, but the Civil Rights Act of 1964, and there were multiple Civil Rights Act in the years, decade leading up to 1964, but that's a flash point because it's often seen as a … Barry Goldwater who later in his life espoused a lot of libertarian-sounding platitudes and ideas and policies. In 1964, when he was running against Lyndon Johnson, was definitely … I mean he was the favored candidate of National Review conservatives and of libertarians. If you talk to older libertarians, a lot of them talk about being actualized into politics through the Goldwater campaign in '64. He also courted segregationists; although he had a long history of actually integrating things like a family department store in Phoenix as well as the Arizona National Guard and the schools in the Phoenix area and what not.

But the civil rights acts in the mid-'60s are often castigated by libertarians for redefining places like hotels, theaters, businesses that were open to the general public as public accommodations, meaning that the state, local, and federal law could force business owners to integrate or to serve all customers regardless of race, color, creed, gender. Do you think the stock orthodox libertarian reading that that went too far? That's actually what Goldwater said when he had voted for everything before that, voted against it. Are libertarians wrong to interpret the 1964 Civil Rights Act, or rather the creation of public accommodations? Are they wrong to say that that is taking government action too far to remedy racism or prejudice?

Munger: That's an interesting question because what Goldwater would have said, and I think many people would rightly defend him for having said, is that the merits don't matter, this is a states rights question. The state needs to be able to govern itself in terms of the way that it decides on voting rights, and individuals need to be able to govern themselves in terms of the uses of their own property. Do you persist in that view when it turns out that the states are systematically misusing that ability to create an apartheid society?

I grew up under Jim Crow laws. I grew up in the '50s and '60s in rural Central Florida, and school busing was taking the black kids who live near my nice white kids school and taking them 15 miles away to a rat-infested, horrible place because that was the black kids school. The beginning of forced busing ended busing. It meant that the black kids could now walk to the nice white kids school.

The state systematically misused this. If individuals systematically misuse their property, at what point does the state say, "All right. That's not really your property. We're going to intervene." I think those are really different questions, but they get conflicted severely by the state.

Gillespie: Right. Also, if I can add, I mean that's one of the things that's interesting is that federal law's often seen as just coming out of nothing as opposed to addressing local and state laws or customs that have the force of law, so that … Simply to focus on federal action misses the point that there's other levels of government doing things that are directly opposite of what the feds were talking about.

Munger: Yes, you cannot defend the right for states to do what they want when what they want is just manifestly evil and which violates the Thirteenth, Fourteenth, and Fifteenth Amendments. There were clear violations of the US constitution that the federal law was finally trying to change. Both the Civil Rights Act in 1964, the Voting Rights Act in 1965 addressed really legitimate problems that the states were misusing the power that they had been given. Now you can lament that the federal government took that power back. It's in violation of the Tenth Amendment.

Okay, the states deserved it because there's no such thing as states, what there is is politicians. Politicians cannot really be trusted. Saying that these are states rights, what it meant was that majorities, and we're back to MacLean now, majorities in these states got to act on evil racist impulses, and those majorities had to be controlled by the federal government. I don't think any other outcome was possible. Certainly no other outcome would have been better than the actual military intervention, which is what we saw: the 101st Airborne with tanks occupying some southern cities and enforcing what should have been the Civil War end of slavery amendments from the 1870s.

Gillespie: Well, you mentioned, bringing it back to MacLean, you also brought the conversation back to Buchanan and his idea of politics without romance by saying there aren't states, there's politicians who use power in ways that are specific and more individual. Just as I think libertarians oftentimes invoke the market as if it's some kind of Leviathan made up of all the different decisions, but it's a walking, strutting humanoid figure, we do that with the state, too.

If you could discuss a bit about Buchanan's characterization of public choice economics. Is that part of what gets under MacLean and other progressive skin? Because he actually is saying that we're not talking about a value free or a progressive values state, what we're talking about are individuals who amass power and then use it.

In a crude way, what public choice economics is about is looking at people in the public sector, elected officials, non-government organizations, in ways that they're similar to actors in the private sector. They want to increase their market share, they want to increase their revenue, but instead of profits, they get more tax dollars or more attention and more resources. That is very punishing to progressives or people who believe in good government. Is that part of what you think is irking her and other people who react negatively to libertarians?

Munger: Sure. It's exactly what is irking them. I think the odd thing is Professor MacLean's indictment of Buchanan as being the embodiment of this, because for him … And I tried to talk about this in my review. It's a little complicated so let me just hit the high spots. The three things that public choice tries to do is methodological individualism. You have to start with individuals partly for reasons of autonomy, but also that's the reason people get to vote.

The second thing is what they call behavioral symmetry, but it's what you said, that politicians after all are not so different from the rest of us. Maybe they're public-spirited, but they also have their own objectives. We can't assume that they're either all-knowing or benevolent, which is often an assumption we make about the state.

The third thing, though, that Buchanan talks about, and this is different from a lot of public choice theory, is that we should think of politics as exchange, that is political institutions are a means of getting groups of people to cooperate in settings where markets might not work. We need some sort of way of choosing as groups. Here, Buchanan really was worried about the problem with political authority. The problem with political authority in philosophy is when can I be coerced? When can the state use this power, which is the definition of what the state is, which is violence, when can the state use violence against me?

The answer that Buchanan wanted was consent, when I have actually consented; not tacit consent, not something that we've made up, not hocus-pocus, actual consent. That's a hard problem, but he did believe that there was such a thing as political authority, but it took something like consensus. We're not all going to agree, but we all have to consent to be coerced. If we are, then we can do it. Under what circumstances can the 101st Airborne be brought into an otherwise sovereign state and force those citizens to do something that they don't want? It's a real problem because they did not consent to be coerced that way.

If you think that the constitution, with the Tenth Amendment reserved certain rights to the states, now maybe they're being misused, but there's a contract called the constitution that says this is what we can do. What we need to do perhaps is change the contract. He was probably too worried about constitutions, but you need to understand that Buchanan's main concern is political authority operating through an agreement called the constitution.

Gillespie: To my mind, and again, I guess, when did Buchanan's … I guess it's considered one of his greatest works, The Calculus of Consent, which he wrote with Gordon Tullock. That was around 1960, 1962, something like that?

Munger: '62, yes.

Gillespie: There was a flowering of libertarian intellectuals, including people like Buchanan and Thomas Szasz with The Myth of Mental Illness, which came out around the same time, and even Hayek with The Constitution of Liberty, that we're all very much explicitly interested in how do you regulate power and how do you disperse power and then reserve coercion for particular moments. It parallels almost perfectly people like Michel Foucault, the French social theorist, who was also obsessed and focused on issues of power.

It has always struck me that there is so much common ground between a Foucauldian reading of power and a libertarian reading of power that was coming out 15 years after World War II and both a Nazi totalitarianism that was vanquished as well as Soviet and communist totalitarianism that was still rising. It boggles my mind that people can't seem to acknowledge that, that left-wing scholars don't want to admit that libertarianism speaks to issues of power and libertarians, if you invoke somebody like Foucault or certainly almost any French thinkers, that they go apoplectic.

It seems to me that Buchanan ultimately is engaged in one of the great questions that arose in the 20th Century of total institutions, total governments in big and small ways, big businesses, giant corporations, schooling that was designed to create citizens rather than educate people and create independent thinkers. Is there something to that? In your political science work, who are the thinkers that you think Buchanan could be most profitably engaged in a dialogue with that we don't necessarily think of off the top of our heads?

Munger: There is much to what you just said. I think that it's easy for us to lose track because … Your conclusion is right. Those conversations didn't happen, and it seems now we've split off, but during the '60s, if you look at the work of Murray Rothbard reaching out to the left, they actually thought that exactly that synthesis was not just possible, but it was the direction that libertarianism should take.

It didn't work out very well because libertarians tended to be skeptical of state power. The left has this contradiction, a complicated contradiction, between saying, "We want the people to have power. We want to be able to protect the power of people." In fact, Foucault, at the end of his life, became very interested in problems of concentration of power in the state, not just in the market, and said some pretty libertarian things.

Gillespie: He had, in some of his last University of Paris lectures, told the students to read with special care the works of Mises and Hayek. He ultimately rejected a classical liberal way of reining in power, but definitely was interested in that. I guess Hayek and Jurgen Habermas overlapped at various institutions in the '60s as well, which is fascinating to think about.

Munger: There was some contact. I think it's partly that the left turned in the direction of endorsing the state, and libertarians … One of our problems is we tend to value purity. That sort of conversation, a lot of people just wanted to kick Murray Rothbard out of the club because we all know that the state is evil and the most important thing is property rights. Anything that in any way vitiates or questions property rights is a mistake.

Buchanan is an economist. He's worried about trade-offs and he's worried about agreements. The reason is that in a voluntary exchange, we both know that we're better off. The argument for markets is you want the state to create and foster reductions in transactions cost that multiply the number of voluntary transactions, because the state doesn't know what we want, it doesn't know what we need. We do know, but if we're able to engage in more and more voluntary transactions, we get more wealth, more prosperity, more individual responsibility, and the world is a better place.

What Buchanan's question was can we scale up from that instead of having bilateral exchanges where I pay you to do something and we're both better off as a result? Can groups of us cooperated problems, like David Hume said, where we have to drain a swamp, there's a mosquito-laden swamp? It's very difficult for us to get together to do this. We have the free riding problem. Is there some institution that will allow us to have something that looks like a tax, but it's actually voluntary because all of us agreed that we're going to pay, just like I go to the grocery store, I voluntarily pay for something. Not all payments are involuntary, not all taxes have to be involuntary. That's the direction that Buchanan took. I actually think that libertarians just dropped the ball. We stopped thinking in those terms.

The oddest thing about MacLean's discovery, and you were saying earlier on that MacLean is indicting libertarians, I suppose that's true, but she really literally thinks there's this one person, James Buchanan, and his work is the skeleton key that allows us to unlock the entire program. In fact, Jim Buchanan has not been that much of an influence in economics. In some ways, public choice theory has become dominant in political science to a much greater extent, but that's because the study of constitutions in the ways that rules, limit majorities is just orthodox.

Buchanan's contributions to increase the number of analytical tools in the toolkit for analyzing majorities, he won, but it's off for MacLean to assign herself the straw man position and give Buchanan the orthodox position. I actually think that the argument in the book is just confused.

Gillespie: Well, we were on the same agenda in an Australian libertarian conference earlier this year, and one of the things you said there which I want to bring up now because it seems like a good time, you complained to a group of [AMSAC 37:02] libertarians that libertarians are too indebted to economists and that we think too much in economic terms, in economistic terms. You yourself, although you've always worked as a political scientist, as an academic, you were trained in economics. What is the problem there? Can you run through your case against being too indebted to economic thinking?

Munger: Many libertarians celebrate something like the perfection of the market, and so we end up playing defense. When someone says, "Look at these problems with the market," we say, "No, no. Actually, the problem is state intervention, the problem is regulation. If we get rid of those things, then perfection will be restored." The argument that I see for libertarianism is not the perfection of markets, it's the imperfections of the state, the institutions of the state.

I've had some debates with my Duke colleague, Dan Ariely, about this. Dan Ariely is a behavioral economist, and he writes about how irrational consumers are. He has a point. Consumers can be manipulated in all sorts of ways. My answer is every flaw in consumers is worse in voters. Every flaw in consumers is worse in voters.

All the things that Dan Ariely points to, the fact that free stuff is too important, that advertising about general principles or things that look cool can make us want something. In markets, at least, when I buy something and it doesn't work, I can buy something else. The problem is there's not any real feedback when it comes to voting. I don't get punished for voting in a way that makes me feel good about myself because I don't really affect the outcome anyway.

I think the thing that we, as libertarians, need to spend more time thinking about is looking at actual policies and saying, "What's a viable alternative to what the state is doing?" not, "If the state does nothing, everything will be perfect," because very few people are persuaded by that. Something will happen. A magic thing called the market will grow up.

Now I understand that. As an economist, I understand that. We talked earlier about the Food and Drug Administration. What would happen if there were no Food and Drug Administration? Well, what would happen is that things like Consumer Reports or other private certification agencies would license drugs, and brand name would become more important.

Would it be better? I don't know. It would work, though. It's not true that in the absence of state action, there would just be chaos, the Wild West would govern the drug market. But to say all we need to do is get rid of the Food and Drug Administration and markets will take care of it is not very persuasive. You would need to specify an actual alternative that utilizes the incentives that people can recognize.

The short answer to your question is libertarians tend to say, "Markets are great if the state would stop interfering. Everything would be perfect because markets are terrific." No one believes that. As a libertarian candidate, I found out no one believes that.

Gillespie: What were your most successful ways of reaching out to new voters or to new audiences, I guess both as running for governor, but also in your academic work and also your work as a public intellectual? What would you recommend are good ways to enlarge the circle of libertarian believers or people who are libertarian or people who are libertarian-curious?

Munger: Well, I have found that conceding that the concerns of the people I'm talking to are valid and we just disagree about the best means of achieving that is a big step, because what libertarians tend to want to do, their answer to almost everything is we should do nothing. There's a problem with property, "Yeah, but if we do anything, it'll make it worse, so we should do nothing," or there's a problem with healthcare, "Yeah, what we need to do is nothing because as soon as we do nothing, things will get better. Saying, "That's actually a real problem, and I see what you're talking about. Here's what I think there were some difficulties with your approach and here's how my approach might work better," that means you have to know something about actual policies rather than just always saying no.

I actually was the keynote speaker at the Libertarian National Convention in Denver, Colorado in 2008, where we nominated Mr. Barr for president. At that, my speech there, the question I asked was, "What are we for?" We need to find some positive, optimistic vision of the future which, if our policies are chosen, will lead people in a way that they can actually understand because, as it stands, what we tend to be is against stuff, and that's just conservatism.

Friedrich Hayek famously wrote a paper about Why I Am Not a Conservative, why, in effect, he was a libertarian. Conservatives are trying to defend cultural traditions and things from the past. They're fighting a rear guard action to slow down change. Buckley famously said the job of conservatism was to stand athwart history, and say stop.

Well, what libertarians have is actually a positive, optimistic vision of a future that could be, and what we need is specific, incremental changes. The distinction that I've tried to make in a couple of places is between destinationists and directionalists. Many libertarians are destinationists. That have in mind a particular libertopia, a particular way that the world should be.

That's fine; ideal theory always will have a place, but they tend to judge policy proposals in terms of whether it conforms with their destination. Whereas directionalists, and I'm a thoroughgoing directionalist, directionalists, I think, should be concerned with does this policy cost less, is it more efficient, and does it increase the liberty of the private citizens that it affects? If it does those three things, that's great, that's a good policy, even if the state is still involved.

Gillespie: A destinationist policy prescription might be just get the state out of all education at every level. A directionalist would be school vouchers or charter schools or something that enhances individual choice.

Munger: Yeah. I was really surprised how many libertarians would reject my platform plank of vouchers, saying, "No, no, the state's still involved, and that's no good." I have advocated for the replacement of all welfare programs and minimum wages with a universal basic income because we're already spending enough to get rid of poverty, it just doesn't actually get to people. That's a directionalist claim. You're saying, "Yeah, but that means that we would still have a welfare state."

I think that ship has sailed. This would give people enough money that those who actually want to behave responsibly would not face a benefits cliff, where the first $10,000 they earn in a job loses them $12,000 in benefits. But I admit that that's a problem for the destinationists.

Gillespie: I hadn't put it in terms directionalist, whatever you just said, and destinationist, but I remember … Libertarians pride themselves on a consistency of thinking. In this context, I've yet to meet the libertarian where I say, "You won't avail yourself of legal pot until heroin is also legal?" and I've yet to see anybody who's like, "That's right up. I'm not using any drugs until all drugs are legal." There's that to consider. You've mentioned growing up in Florida. You have talked and written elsewhere of being a drug dealer at various points. How did you come by your libertarian beliefs?

Munger: Well, my father didn't graduate from high school. I grew up in a very poor part of rural Central Florida. My high school was 50-50 racially. Very few of us went to college.

Gillespie: Even there, though, you did mention … I mean this is something which really gets leftover often, particularly those of us who grew up north of the Mason-Dixon line. You still mentioned that the schools that you went to, growing up relatively poor in the south, a white, were much better than the schools that blacks were going to at the same time.

Munger: Dramatically better until I was in the seventh grade. When I was in the seventh grade, Florida was, by force, desegregated. That meant that there were a lot of young white men who joined the Klan, who brought guns to school. It was a terrible situation for the black students. It must've been terrifying.

My high school was a seven through 12. You're in the seventh and eighth grade, and there's these white seniors shouting at you, red in the face, saying, "I'm going to go to my truck and get my gun." It had to be awful. It was a pretty bad situation to go to school in. This would have been early '70s. Late '60s, early '70s is when Florida was finally desegregated.

Florida had a somewhat less vicious form of segregation. It was one of the last states that the Justice Department focused on, but I think by '68, the schools were mostly desegregated. Then it took a couple of years of moving around to achieve some of those goals. By '71, though, desegregation was fully in place.

I was in some classes where I was the only white kid, and a lot of people really didn't want to be in school. I found that if I sat in the back and read novels, I wouldn't be bothered because the kids up front were fighting. It was easy just to stay back, and so I would read a novel most days. Not surprisingly, I didn't do very well in school.

I also was with some people. We didn't sell a lot of drugs, and it was just marijuana. This was in the '70s, of course. If a policeman stopped you and said, "Do you have marijuana?" and you said no, he'd give you some. That wasn't quite true, but it was pretty common.

I wanted to go to the University of Florida and smoke dope with my friends. My parents saw through this and sent me to a monastery called Davidson College. People know of it now because Steph Curry went there, but at the time it was 1200 students and you really had to work. I was terrified. My high school preparation wasn't very good.

It turns out that I had some patient professors. Davidson College, it's a small liberal arts school, it changed my life, but my friend, Lee Smith, that I went to high school with and that was a much bigger seller of drugs than I was, was killed in Gainesville, Florida in a drug deal gone bad, just two bullets in the head, and the police barely investigated it. "This was a drug deal gone bad, I wish they'd all been killed," was the police line.

I escaped a pretty bad situation through no merit of my own. I can understand why for many of the kids who went to my high school, particularly the black kids, they failed through no fault of their own. They were in such a difficult situation that just getting through the day was difficult. I have a lot of sympathy for the idea that there's a big inequality of opportunity in school. I got out because I was lucky.

Gillespie: Did that drive a libertarian sensibility in you, that equality of opportunity is one of … I mean for myself and I think for a lot of the libertarians I know, that's one of the goals of a freer society. Where did the libertarianism as an explicit philosophy come from in your life?

Munger: Well, I studied economics. I got an undergraduate degree, master's degree, a PhD in economics at Washington University that had a sort of Chicago-ish kind of flair, and so my interest was largely in the study of markets. I worked as a staff economist at the US Federal Trade Commission, and my experience in working in Washington made me a bit more skeptical about even the capacity much less the desire of regulatory agencies to do all of the wonderful things that in economics we study about market failures.

A market failure is a legitimate criticism. These are things that markets may not be very good at, but then you invoke magic and say, therefore, this thing of the state should fix it. Well, why would you think the state will be better since consumers is worse in voters?

Studying economics and then actually working for a regulatory agency in Washington made me think at least I'm on the kind of free market side of republicanism, but this was 1984, the end of Reagan's first term, when I started working for the Federal Trade Commission. We were Reagan revolutionaries. Reagan was going to lead the deregulation, he was going to change the very position of the state.

I was a Republican until 2003. I often would hold my nose and say, "I was a Republican," but the combination of the continuing war on drugs and the attack in March 2003 on Iraq by George Bush commanding American troops, and I have to say, also in March 2003, I had a dinner that changed my life. I had dinner with Rick Santorum, the senator from Pennsylvania. He came to Duke to give a talk, and people said, "Munger, you're a Republican. Go to dinner with him." "Okay."

Listening to Rick Santorum talk about the fact that we're really going to make the government smaller and they were going to change the state, when he was actually in the Senate and we were doing exactly the opposite. I finally got angry and said, "When? When are you going to do any of that? My adult life I've been listening to this and I've gone along with it." He said, "Well, now's not the right time." I realized it was never going to be the right time, and I was not a Republican, I was a libertarian.

Gillespie: As a final topic of conversation, in your caustic review and comprehensive review of Nancy MacLean's Democracy in Chains for the Independent Institute, you do praise the book actually and say it's interesting and illuminating. Can you give an example where she illuminated something that you had not really thought of before and share that?

Munger: Well, there's a passage that she quotes about a meeting that took place in the Virginia Mountains where they were going to start a new movement of libertarianism. I had not been aware that any of those things had happened, and she described the conversation that people had. She talked about a bunch of documents that she found in little tidbits of public choice and libertarian history that I didn't know about.

Apparently, one of the things that was said in this mountain readout, she really does make Buchanan sound like a Bond villain. There's this cabin in the mountains with a roaring fire. They're presumably eating large chunks of meat and drinking expensive wine and scotch, and she said Buchanan said, "When the history of public choice is written, then this is going to be one of the most significant events."

It turns out nothing changed at all. There was no result of this, but MacLean points to this as being a significant thing that was a secret. But she found this in the archives, and Buchanan himself was saying, "I really hope history pays attention to this."

What she did, in spite of her intention, was write that history. She wrote that history of public choice. Now her interpolation of it, I think, is entirely incorrect. Her understanding of basic political science and public choice is wrong, but her illumination to the strobe-like effect of, "Here. Here was this thing that happened," that's really interesting, and she deserves credit for doing some difficult archival research.

Gillespie: Do you have a personal relationship or a professional relationship at all? Do you end up in the cafeteria, bumping into each other, knocking over each other's trays, things like that?

Munger: I, as far as I know, never met Professor MacLean. I expect that we may meet in the faculty dining room, which is quite a pleasant place at Duke. I look forward to hearing from Professor MacLean. I've not heard directly about her reaction to my review. I would say this: I think that some of her reactions to the reactions have been poorly considered because her claim is that the only reason people are writing negative reviews is they're getting paid.

I published my review in a refereed academic journal. Now it may not be a very good refereed academic journal, but it's a refereed academic journal. I didn't get paid. She published, instead of with an academic press, with a trade publication and then managed to get Oprah Winfrey to name this as one of the 20 most important books of the summer. If anybody's getting paid, it's professor MacLean.

Gillespie: Yeah. Well, it is also comforting, is it not, to wake up and read a book in which libertarianism, which is constantly being discounted for having no influence at all in American politics, culture, and the history of ideas, is actually at the white-hot center of everything that happens, even the weather it seems.

Munger: It's the single most important factor in the book. I only wish that that were true.

Gillespie: Yeah. Well, we will leave it there. I want to thank Michael Munger, a political scientist at Duke, who has written deeply and meaningfully about Democracy in Chains, a new book by his Duke colleague, Nancy McLean, which posits libertarianism at the center of all things evil and rotten in America, and particularly the work of James Buchanan. Mike Munger, thanks so much for talking.

Munger: Thanks for having a conversation.

Gillespie: This has been the Reason Podcast. I want to thank you for listening. I'm Nick Gillespie. Please subscribe to us at iTunes and rate and review us while you're there.

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44 responses to “Do Too Many Libertarians Celebrate a False 'Perfection of the Market'? [Podcast]

  1. It’s not that the market is perfect, it’s that is it the only moral solution.

    1. I was about to post something similar. Whether the market is perfect or not is irrelevant.

    2. This. The market is just the sum of individual decisions made by imperfect people using incomplete information. The Invisible Hand sounds like some sinister puppetmaster conspiracy, but it’s actually the most democratic thing there is.

    3. I think that’s more or less why Munger says this:

      The argument that I see for libertarianism is not the perfection of markets, it’s the imperfections of the state, the institutions of the state.

      Because in this scenario, the burden is on the other to defend. Although in all fairness, most statists admit that the government and state isn’t perfect so I’m not so sure that approach will be terribly successful.

      The examples of the failures of the state are everywhere, but no one really cares so pointing that out isn’t going to make people go ‘oh, yeah, you’re right we have been doing it wrong!’ it will be more like ‘yeah, we know it’s doing it wrong but we got ours!’ or ‘they got theirs, now we need to get ours!’

      The underlying assumption in that statement seems to be that people actually prefer good outcomes for everyone instead of wanting good outcomes for themselves specifically and screw everyone else. I don’t think that’s most people, but it’s perhaps enough of them to spoil it for everyone.

      1. most statists admit that the government and state isn’t perfect so I’m not so sure that approach will be terribly successful.

        This is the thing. Each “side” thinks the other is being utopian, while realistically accepting the limitations of their own ideas.

        What tips it for me is that the government is observably less capable of doing things than free markets are. Not to cite Friedman twice in the same thread, but he pointed out that there may be some services, like the postal service, that we agree that we need and would like to have, but that can’t be supported by free markets and must be performed by government.

        What he considered insanity was the idea that you would forbid free markets from even attempting to provide a service and mandate that only the government can provide it.

        Thus, to me, the way I approach trying to get statists more on board with markets is to point out that neither is perfect, but that government-run services are reliably second-rate, and as such markets should always be preferred, and we may even find that if we give them a chance, they’ll do most everything better. Not perfectly, but better.

  2. “Many libertarians celebrate something like the perfection of the market,” he says. “And so we end up playing defense. When someone says, ‘Look at these problems with the market,’ we say, ‘No, no. Actually, the problem is state intervention, the problem is regulation. If we get rid of those things, then perfection will be restored.’ The argument that I see for libertarianism is not the perfection of markets, it’s the imperfections of the state, the institutions of the state.”

    1. I don’t know about this, their are plenty of people who I talk to who believe this but on the whole I think most people I talk too understand that there are inequalities in the market. It’s an interesting thought but unless the person who you are having a conversation with is genuinely willing to hear you out you will never get to a point in the conversation where you can express this. In my experience if I identify as a libertarian(which I don’t anymore) a bunch of assumptions are made about my positions that have never been articulated by any libertarian I’ve ever talked to.

      1. You’ve been talking to Tony, haven’t you.

        1. I live in DC so I’m surrounded by Tony’s. Most people are receptive to ideas if I don’t lay claim to a political ideology before laying them out.

          1. Most people are receptive to ideas if I don’t lay claim to a political ideology before laying them out.

            I’ve noticed this, too (SF Bay Area resident). Almost everyone agrees with libertarian principles in the abstract, and almost everyone agrees with libertarian critiques of government overreach, as long it’s not called “libertarianism,” since “libertarianism” is what Idaho white supremacists are into, and has echoes of Hitler (and now John C. Calhoun).

            I’ve also noticed that you can easily maintain people’s sympathy as long as you don’t criticize or praise specific politicians or policies that are closely identified with one Team or the other, because then people’s tribal loyalties kick in and they’ll take all kinds of bizarre positions to avoid agreeing with the other Team.

          2. Yes. I almost never bring up that I am a libertarian. Rather, I bring up points specific to an issue being discussed, and never in a confrontational manner. Rather, I start with something like “have you considered X” or “I see where you are coming from, but what about X.” I notice when I do this, people are much more likely to listen.

            1. I negotiate large-scale construction change orders for a living. A standard, good negotiating tactic is to summarize your opposition’s position before stating your own. If they don’t feel like you’ve heard and understood them, they’ll be much less likely to listen to you and will just sit there through your talking and wait to make their case again, assuming that you just didn’t hear them.

              I find this principle serves well in political discussions, also.

              1. That’s very insightful. Thanks!

              2. So if I’m hearing you correctly, a good negotiating tactic is to call your opponent a stupid pathetic loser that nobody likes and whine that he’s being unfair and say the whole thing’s just sad in a 3 a.m. tweet?

  3. The market is not perfect, but it does constantly self- correct from a larger knowledge pool than any group of experts can possibly have.

    The argument is not that it flawless, but it makes fewer errors snd corrects them quicker than a consciously formed management can.

    1. So why do business work from a top-down model in most cases? Why isn’t central planning a bad thing in those cases?

      1. This is why we can’t have nice things.

      2. Sometimes I’m still stunned by how little you understand

        1. So stop being stunned and assume I’m a moron. Why is top-down central planning good in a business or household or the Olympics or zillions of other endeavors, but it’s also, in general, bad?

          1. We’ve assumed that for years Tony. No matter how many times people explain things to you, you never seem to learn or understand.

            It’s why lots of people think you’re a sock.

          2. Nothing is “in general” good or bad. It’s about scale.

      3. Because it doesn’t. 20% fail the first year. 50% fail after 5 years. Only 33% make it to ten years.

    2. The argument is not that it flawless, but it makes fewer errors and corrects them quicker than a consciously formed management can.

      ^ This.

      As Friedman pointed out, it’s not that there weren’t recessions prior to the creation of the Federal Reserve, it’s that they were measured in months, rather than in years.

  4. “The argument that I see for libertarianism is not the perfection of markets, it’s the imperfections of the state, the institutions of the state”

    Which is a very anti-libertarian statement. That sounds like the argumentation of a Rockefeller Republican rather than someone who is seeking to try to shrink the size and scope of the state

    1. I agree but I’m not sure if it’s for the same reasons. You can argue against the effectiveness of the state but then you’re throwing contradictory studies back and forth and arguing which study was full of shit. The moral argument, not for the market but rather against the state, is superior I think

  5. “The argument that I see for libertarianism is not the perfection of markets, it’s the imperfections of the state, the institutions of the state.”

    Same thing restated. Everything bad happens because of the state. The good things the state does are ignored. The only interesting question is why full-grown adults hold onto a comprehensive worldview that depends on every thought leading back to the premise “government bad!”

    It’s just all so pointless.

    1. “Same thing restated. Everything bad happens because of the state. ”

      No you stupid asshole, he’s saying either way, you get imperfect behavior, but on the whole, the state is more imperfect.

      Why are simple concepts so difficult for you? Why do you pretend an intellect you can’t demonstrate.

      1. And how does he justify this comparison empirically?

        The whole setup is a false choice, a misunderstanding of how the world works, and just dumb. The market and state are not in competition with each other. They are two separate entities, but they intersect at many points. Government does what it’s supposed to do, and that includes creating the conditions for a market to function. “Just get off my back, government” is a fine sentiment if you’re a business that’s being hounded too much by regulation. But a zero-sum formulation ignores (as I said) things like the fact that you’d never be motivated to start a business without some minimum level of government to protect your rights and facilitate commerce.

        1. “And how does he justify this comparison empirically?”

          So. NOW you pretend you understand what he’s talkong about.

        2. you’d never be motivated to start a business without some minimum level of government to protect your rights and facilitate commerce.

          Do you understand what the term “minarchist” means?

          Who am I fooling – of course you don’t.

          1. So does minarchism include policing large financial institutions for fraud or no? What about oil companies for harm done to nature? Is that OK in a minarchy?

            1. Why not? What leads you to believe that we would be against those things?

    2. It’s not “Everything bad happens because of the state” it’s the government is bad when it initiates force. The proper function of government is to defend individual negative liberty with the retaliatory use of force, period. Jailing a murderer good, jailing a pot smoker bad. See the difference?

  6. Progressives should be thankful to Jim Buchanan for giving them public choice theory: a formalized definition of their own conspiracy theories.

  7. her attempts to smear Buchanan as a backward-looking racial conservative.

    A racial conservative? You mean someone who believes all people should be treated equally? How is that a smear?

    1. all people should be treated equally


  8. A lot of “market imperfections” are simply people whining that they can’t get what they want at a price they want to pay. The lack of free beer isn’t a market failure. If a large number of greedy bastards all competing to get you to buy your beer from them can’t bring the price down to zero, it’s not for a lack of trying. You think a government-run brewery could do a better job at bringing down the price of beer? What incentive could they possibly have that beats the incentive of a big bag of money to a greedy bastard?

    1. Best not to believe in any perfect being. You start saying things that amount to “Whatever the market does is by definition the correct outcome.” Leaves people out of it. That’s religion.

      1. You start saying things that amount to “Whatever the market does is by definition the correct outcome.” Leaves people out of it.

        No. This is what you consistently refuse to understand no matter how many times it is said to you:

        Markets = people

  9. “Well, now’s not the right time.”

    Didn’t you understand what he meant by that, Dr. Munger? He meant the voters, as currently constituted & with their current desires, won’t let him. They’d vote him out. And he’s right.

  10. I think believing that anything can be perfected is a danger in of itself.

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