Can We Stop Pretending to Take Libertarians Seriously, Now?
Imagine the good we could do if we stopped playing these free-market make-believe games and started acknowledging what does and doesn’t actually work in the real world
I’ve been in an ongoing argument with some awful people for the last week or so. My piece “Hurricane Harvey and the Failure of the Free Market” argued that price gouging is a bad thing, and that the unfettered free market is not the best and most efficient way to deal with disasters. This set off a libertarian and free-market extremist backlash that continues even today.
Plenty of men were eager to explain to me that price-gouging works, that it’s the most efficient delivery system because it’s powered by the free market, and that attempts to control price-gouging—to make sure that stores aren’t selling cases of bottled water for 99 bucks a pop—would result in negative outcomes.
My favorite response came from Donald J. Boudreaux, an actual professor of economics at George Mason University in Virginia. He wrote it in the form of a letter to me, and it begins:
You write in your recent essay criticizing columnist Tim Worstall (“Hurricane Harvey and the Failure of the Free Market”) that “When you argue that selling $99 cases of bottled water in a disaster area is a good thing, you need to reinvestigate your humanity.” I’ve a question for you: How much bottled water have you personally delivered this past week to the people of south Texas? I suspect that the answer is “none.”
Professor Boudreaux’s assumption is correct. I haven’t personally delivered any bottled water to the people of south Texas. I also have not personally stopped any crimes, fought any wildfires, or rescued any cats from tall tree branches in the past week. Professor Boudreaux further argues:
Your failure actually to make available bottles of water at prices lower than $99 per case to people who are paying $99 per case means that you, in effect, are charging those people prices higher than $99 per case for bottled water.
Uh, I’m not charging anyone any amount for bottled water in the aftermath of Hurricane Harvey because, as Professor Boudreaux established, I’m not in the area. He continues to construct his rhetorical bridge to nowhere:
What is the minimum price-per-case that would entice you to spend the time and suffer the trouble actually to bring bottled water to Harvey’s victims? $100? $199? $1,999? $10,999? Whatever that price is, if you haven’t personally undertaken or directed efforts actually to supply bottled water to Harvey’s victims at some price lower than $99 per case, then, again, you are effectively charging Harvey’s victims a price for bottled water that is higher than is the $99 price that leads you to fling your moral condemnation at people who are doing what you are not doing — namely, actually making bottled water and other needed goods actually available.
No amount of money would entice me to go to Houston and sell heinously overpriced bottled water to people who have been displaced by the hurricane. Instead, the money that I’ve donated to Hurricane Harvey relief efforts are helping to deliver bottled water to people in need. What’s more, relief workers are delivering the water to the people of Houston free of charge.
See, I don’t know how Professor Boudreaux teaches economics in his classes, but I prefer to live in a society that favors specialization of skills. I don’t have the regional awareness, the logistical knowhow, or the social connections to efficiently deliver goods and services to the victims of Hurricane Harvey.
So rather than wander into a disaster zone and fumble around like a well-intentioned tourist, I give money to the people who understand the region and who have experience providing relief efforts. And I happily pay taxes to a federal government that sends in experts to bring comfort to those in need and begin the long process of rebuilding. That’s how I responded to Hurricane Harvey, because that’s how an economy works in the real world.
The pro-price-gouging responses I’ve been fielding from libertarian free-market boosters have all followed a very recognizable pattern. Whenever they’re asked about specific situations affecting poor people—a father needs to get insulin for his sick child, say, but the only pharmacy for hundreds of miles is charging hundreds of dollars that the father doesn’t have for the medication; a family literally dying of thirst doesn’t have the cash to purchase those hundred-dollar crates of water—they accuse the questioner of being histrionic, or of indulging in hypotheticals.
But that’s the thing: these examples are meant to evoke real-world situations. People die in hurricanes all the time because they can’t get the resources they need. Their experiences are more real than any of the hypothetical excuses for price-gouging that all the Professor Boudreauxs of the world put forth.
So, I’ve been thinking. Maybe it’s time to split economics into two schools.
On the one side, you have Professor Boudreaux and Professor Mark Perry and (non-professor) Tim Worstall. These are the people who create grand and unworkable theories that “prove” the free market is the omniscient, ever-efficient arbiter of goods and services. They contort their arguments into morally abhorrent statements “proving” that if you ignore all the deaths and poverty and rampant income inequality, the free market is beyond reproach.
Maybe it’s time that we let folks like Perry and Boudreaux and Worstall do their own thing in a little echo chamber of their own devising. We can call their discipline “make-believe economics,” and we can treat them the way we treat anyone who feels passionate about niche video games or cartoons that we don’t care to understand: we pat them on the head and leave them to their little subculture.
But while the “make-believe economists” are off on their own private subreddit building a contrarian financial model explaining why punching babies is the only sane economic recourse for American business or whatever, the rest of us will promote what we’ll call “real-world economics.”
In “real-world economics,” economic choices have consequences. Using my sophisticated “real-world economics” model, I argue that making water too expensive for impoverished people to afford in disaster zones will end in death—and therefore that economic decision is frowned upon.
Once you align the two economics theories side-by-side, it should become pretty clear which side you’re on:
“Make-believe economists” like to argue that the minimum wage should be zero. “Real-world economists” understand that it’s impossible to live in modern society on $1.25 an hour.
“Make-believe economists” argue that the market will eventually disincentivize corporations from polluting, and that regulations kill business. “Real-world economists” understand that human beings can’t survive in toxic environments, and that businesses cannot be trusted to self-regulate.
“Make-believe economists” think that giving tax breaks to the wealthy will somehow trickle down to the 99 percent. “Real-world economists” understand that the way to raise wages is to raise wages.
“Make-believe” economists believe that poverty is a state of mind. “Real-world economists” understand that a family’s earnings, or lack thereof, have real effects on the lives of their children, and therefore their grandchildren, and their grandchildren’s children, and so on.
Look: I’m all for thought experiments. And while contrarians mostly exhaust me, I guess the devil’s advocate argument might actually help some people think through a problem. But to pretend that someone is making a legitimate point when they’re making a claim that flies directly against the evidence of every single example in recorded history is a farce. Put in a way the libertarians might understand: in the free marketplace of ideas, some lines of thought have no value at all.
So maybe the next time loudmouth dude presents you with a ludicrous argument that could only spring from an Ayn Rand novel—say, the push to privatize the war in Afghanistan—maybe the correct response is to smile, nod, and murmur in a comforting voice, “that’s a very interesting idea, honey, but could you please keep it down? The adults are talking.”
