Thomas L. Knapp wrote:
We pretty much all want to see the indigent have police protection, but
we each can free-ride on the charity of others to finance that protection,
and so that protection will inevitably be underproduced by a totally free
market. <BH
In English: "I want to have police protection, and I want some other
people to have police protection, but I don't want to pay the price for what
I want, so I'll make up a bad-sounding name for those who don't want police
protection for themselves or others badly enough to pay for it, like 'free
riders,' so that I can pretend that I'm doing something other than what I'm
doing (e.g. stealing other people's stuff and hocking it to buy the stuff I
want)." <TK
I indeed am perfectly willing "to pay the price for what I want". "What I
want" is not to personally finance police protection for all the indigent,
because I can't afford it. Nor is "what I want" to wash my hands of the
problem by merely donating my share of what it would take to finance police
protection for the indigent if everyone who wanted such protection were to
donate their share, without regard to whether all the other donations
actually happened. No, "what I want" is to ensure that, of all the (say)
100 million people willing to donate their far share to achieve such
protection, nobody chooses the course that is rigidly dictated by basic
self-interest: namely, that by withholding their share, they keep the entire
value of their share, while losing only 1/100millionth of the benefit they
want to see provided.
You can't just close your eyes and put your fingers in your ears and sing
loudly and deny the existence of the free-ridership problem described in so
many freshman macroeconomics textbooks. That would be typical of
paleolibertarians weaned on Rothbard or Rand and ignorant of the innovations
in political economy that have occurred since their prophets closed the
paleolibertarian canon in the late 1940s. They doomed legions of their
acolytes to self-marginalized irrelevance due to ignorance of developments
like:
* The 1939 generalization of Pareto optimality
<http://en.wikipedia.org/wiki/Pareto_optimality> by Kaldor and
<http://en.wikipedia.org/wiki/Kaldor-Hicks_efficiency> Hicks to launch
modern welfare <http://en.wikipedia.org/wiki/Welfare_economics> economics;
* The 1950 formalization of the Prisoner's
<http://en.wikipedia.org/wiki/Prisoner's_Dilemma> Dilemma and the
subsequent avalanche of developments in game
<Game theory - Wikipedia; theory;
* Arrow's 1951 impossibility
<http://en.wikipedia.org/wiki/Arrow_Impossibility_Theorem> theorem, leading
to Sen's 1970 liberal paradox <http://en.wikipedia.org/wiki/Liberal_paradox>
;
* The 1953 discovery of the Allais paradox
<http://en.wikipedia.org/wiki/Allais_paradox> , and many subsequent
discoveries about bounded
<http://en.wikipedia.org/wiki/Bounded_rationality> rationality and cognitive
bias <http://en.wikipedia.org/wiki/Cognitive_biases> and the development of
Prospect Theory <http://en.wikipedia.org/wiki/Prospect_theory> by Tkversky
and Khaneman in 1979;
* Samuelson's 1954 formalization of the theory of public goods
<http://en.wikipedia.org/wiki/Public_goods> ;
* Tiebout's 1956 theorem
<http://en.wikipedia.org/wiki/Tiebout_sorting> about the optimal local
provision of public goods;
* Coase's 1959 proof <http://en.wikipedia.org/wiki/Coase_theorem>
that markets can handle negative <http://en.wikipedia.org/wiki/Externality>
externalities only in the absence of transaction costs;
* The 1962 creation of public choice
<http://en.wikipedia.org/wiki/Public_choice_theory> theory by Buchanan and
Tullock; and
* Arrow's 1963 formalization of the problem of asymmetric
<http://en.wikipedia.org/wiki/Asymmetric_information> information.
For example, Rothbard's For a New Liberty
<http://www.mises.org/rothbard/newlibertywhole.asp> (1973) and Ethics
<http://www.mises.org/rothbard/ethics/ethics.asp> of Liberty (1982) make no
mention of public goods or externalities or free riding. And anyone
learning their economics only from Rand will have even less hope of
awareness of these ideas.
The cumulative revolution in the theory of political economy that took place
in the 1950s and 1960s is very recent by historical standards. Nobody needs
to read Aristotle's 2300-year-old treatises on biology or anatomy, with his
theories that head-first birth in animals is caused by weight asymmetry
around the umbilical cord, and that the brain's function is just to cool the
blood. But progress in the theory of political economy has been so slow that
Aristotle's political theories are still required reading. Nevertheless, in
my lifetime there has been a noticeable and significant positive impact on
serious policy discourse by the last half-century's innovations in political
economy -- as compared to very little progress by the LP in promoting
libertarianism as a retail political brand. I'm becoming increasingly
convinced that the further successes of libertarianism will come primarily
from the influence of libertarian economic theory on professional policy
analysts, and that these successes won't be accelerated -- and may even be
slowed -- by the retail political efforts of libertarians whose knowledge of
economics is limited to osmosis from paleolibertarian prophets like Rothbard
and Rand.