Democracy And The Public Goods Trap

One thing that should be clear from the prior posts on the hypothetical 50% libertarian country is that one cannot simply make philosophical arguments as justifications for roles of the state. Any argument that also does not take into account what will actually happen fails immediately.

What does it all mean? Again, this is just my conjecture. A lot of smart people spend a lot of time studying this stuff, and you should read them for more definitive answers. I write as a layman.

At heart, the issue revolved around the economics of the use of force. Because a monopoly on the use of force does not have a counter (it's a monopoly after all), it will favor the highest bidder. Financial incentives can never be gotten rid of. Where money and the state intersect, concentrated interests are favored over dispersed ones. When a single body is given the power of the legitimate use of force, it is much easier to transfer wealth from large-numbered diffuse interests who have little to gain from fighting to small-numbered focal interests who accrue a large benefit than vice versa. The latter have much to gain from expending resources to capture favor from that monopoly on the use of force. Force-monopolies make aggression cheap and liberty an undersupplied public good.

These properties filter down to party politics and elections. Consider the following hypothetical exchange between a Libertarian Party and a potential donor:

LP staff: So how about it? We're really excited about spreading liberty. We could really use your help.
CEO of ACME, Inc: I'm sure you could. I really like what you guys are all about. But why do you need my help?
LP staff: Because as an outsider party, we need resources to get our message out - campaigning, travel expenses, making those funny hats, etc. Most Americans don't know we even exist, and those that do have the wrong impression. Without more money, we'll never be able to compete with the Republicans and Democrats.
CEO of ACME, Inc: But let me ask you - I have to look out for the interests of my shareholders. How will the LP benefit ACME?
LP staff: Ahh. That's the best part. The LP will strive to create a business friendly environment. We will fight to remove red tape, end tariffs on products used to manufacture ACME Widgets, and we'll even get those OSHA guys off your back! Surely you'll like a pro-business political party.
CEO of ACME, Inc: Well, uh, that sounds nice. If you get all of those things accomplished, our operating expenses will decrease by $0.10/share. And how much are you of a contribution are you asking for?
LP staff: Well, a mere $1,000,000. That's what you gave the Republicans last time. Surely we're a more business-friendly party than those phonies!
CEO of ACME, Inc: $1,000,000? That's $0.07/share. So the benefit to my shareholders will only be $0.03/share.
LP staff: Um, ah, well... But that's better than nothing, right? The point is, you'll benefit from the business-friendly LP!
CEO of ACME, Inc: Well, thanks for your time, but I have to be going. I'll certainly consider your offer.
LP staff: But, but, but...wait. Don't you like what the LP has to offer?
CEO of ACME, Inc: I'll be brutally honest here. I'm going to give the $1,000,000 you're asking for to the Republicans.
LP staff: But why!?!?! You of all people should know that they are not really pro-capitalism! They only pretend to be around campaign time. We're the real deal!
CEO of ACME, Inc: Well, I spoke to one of their staff members before meeting with you, and they're also asking for $1,000,000. But they said that they will help pass tariffs against my foreign competitors. I estimate that my gain will be much more than under your policies. My shareholders will stand to benefit $0.30/share. And get this - the tariffs will be called a "Free Trade Agreement"! Are the Republicans good, or are they good?
LP staff: But what happened to your principles?!?!
CEO of ACME, Inc: This meeting is over.

Replace CEO of ACME, Inc with President of the Teamsters Union or President of the AARP, and the same incentives hold. The Libertarian Party is fighting a battle that the other parties are not - the battle ering a better return on investment than either the Republicans of Democrats, it cannot compete for dollars.

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