Count me among the perplexed, and no more so than about applying libertarian ideals to real problems. It’s not for lack of desire or effort to understand. I’d love nothing more than to find a set of ideals I can adopt ex ante and that actually work reliably when push comes to shove ex post. But they’re hard to come by. Everything seems to be a work in progress. I don’t think libertarianism has any more “truth” than many other ideologies.
Edward Glaeser shares my skepticism, or I his. In a gem of an Economix post today he writes,
Consider the purely hypothetical case of a massive oil spill in the Gulf of Mexico. The traditional libertarian would argue that regulation is unnecessary because the tort system will hold the driller liable for any damage. But what if the leak is so vast that the driller doesn’t have the resources to pay? The libertarian would respond that the driller should have been forced to post a bond or pay for sufficient insurance to cover any conceivable spill. Perhaps, but then the government needs to regulate the insurance contract and the resources of the insurer.
Even more problematically, the libertarian’s solution requires us to place great trust in part of the public sector: the court system. At times, judges have been bribed; any courtroom can be influenced by the best lawyers that money can buy. Andrei Shleifer and I have argued that the early regulations were appealing precisely because of a sense that the courts couldn’t be counted upon to protect private property.
“Keep the hand of government off my freedom and out of markets!” sounds like a sensible slogan. I’ve yet to understand how it’s possible. Where’s the line between the helping vs. heavy hand? Anyone claiming to see the absolute demarcation has impressive confidence.