Do Libertarians Assume Too Much Individual Competence?

            One criticism of libertarianism is that it assumes too much individual competence among people. The critic argues something like this: ‘Libertarianism is fine if we assume everyone knows what their individual interests are and how best to achieve them. But the fact is that most people are too ignorant to know either of these things, hence they need the strong, guiding hand of a paternalistic government’.

            

           First off, libertarians do not assume that individuals are omniscient or anywhere close to omniscient. They would definitely not agree with the critical statement made above though. So what do libertarians actually think on the subject of individual competence and its implications for political theory? I will talk about three main libertarian stances on the subject in this post. I am speaking as the utilitarian libertarian that I am of course. Natural rights libertarians would undoubtedly modify the discussion somewhat.

1. Individuals can be reasonably expected to know their own desired subjective ends better than anyone else:

            
           A key tenet of free-market economic theory is that all value is subjective, emanating from the subjective evaluation of goods and services by individual actors. Given this, it seems eminently reasonable to state that the individuals themselves will best know the contents of their own subjective evaluations of goods and services, and hence will know best which ends they wish to pursue with their resources, effort, and time. I hope I will not elicit any disagreement when I state that the individuals themselves will best know whether they enjoy eating chocolate ice cream, or vanilla ice cream, more, or, whether they derive more enjoyment and satisfaction from working as an architect, or from working as a computer programmer, once they have had experience with both. Social scientists, government bureaucrats, or even close family members, cannot know these things as well as the individuals themselves do. Coercive interventions to prevent individuals from pursuing their freely-chosen ends will frustrate individuals and make them less well-off.

2. Individuals can certainly err in their choice of means to achieve their ends, but private experts will be more effective at helping them than a coercive government will:

            
           Individuals are not omniscient, and hence may err in their choice of the means they seek to use to achieve their desired ends. Primitive farmers who prayed to the agricultural gods in the hopes of increasing the fertility of their fields chose inappropriate means to achieve their subjectively determined end of increasing the yield of their fields. Someone with knowledge of fertilization techniques, an expert, could help the primitive farmer to adopt more appropriate means to achieve his end.

            

            Both libertarians and statists recognize these facts: the difference is that statists use this as an excuse for government coercion in the name of ‘protecting the consumers’, while libertarians argue that private experts offering their services on the free-market will be more effective and not result in the negative effects associated with coercion. Essentially, the issue is this: individuals often need specialized information in order to adopt appropriate means to achieve their respective ends. Thus, the need for an information industry is created. As with every industry, the issue is: should it be run according to free-market principles or run by the government?

            

           The libertarian arguments against socializing the information industry run parallel to the libertarian arguments against socializing any industry. They are:

a. The separation of payment from service in government operations impairs the process of economic calculation. In this case, it impairs the ability to compare the cost of gathering and disseminating more information versus the benefits of that information. More funds devoted to information gathering can result in more information gathered and disseminated, but where to stop? In the private sector, the answer is clear: when it is no longer profitable to provide more information for more marginal uses.

b. The funds necessary to fund government information gathering and regulation based on this information must be levied through taxation, a process which progressively undermines incentives to produce and incentives to accumulate and maintain capital. On the free-market, on the other hand, the ability to purchase information from private experts with earned money serves as an incentive to amass more money by serving the consumers effectively.

c. Government has the ability to legally monopolize the industry if it so chooses. Competition in information provision serves as a spur for experts to increase their knowledge, their reputation, and their customer base. This force is absent in government information operations. Also, the government often makes its ‘expert’ seal of approval the legal requisite for providing a good or a service at all, thus artificially restricting the supply of the good or service in the name of protecting ‘quality’. Some people do not have the money to afford ‘quality’ though, and hence they are just priced out of the market entirely by the government’s restrictions. This would not be the case in a freely-competitive information industry, where a stamp of approval by an expert organization would be a very good thing for goods and service providers to have, but not a legal requisite. It would then be up to the individual consumer to decide if he is willing to pay only for products with an exacting expert stamp of approval, or take his chances with cheaper offerings with a less rigorous expert stamp of approval or with no stamp of approval at all.

d. By separating payment from service, and then providing the service for ‘free’ or at a subsidized price, information consumers’ needs for information are all artificially placed on the same plane. In a free-market, certain information consumers would be ready and willing to pay higher prices for crucial information, and then information experts would know what areas of information gathering to focus on particularly. Government information gatherers are not as keen to this signal, and hence may spend their time and the taxpayers’ resources gathering less essential information.

e. There is no good reason to assume, as many statists do, that government bureaucrats will be on average smarter and more caring than private information providers. In fact, on the free-market, an information expert’s monetary rewards will be directly related to his expertise and reputation for having expertise, which is not as directly the case for the government bureaucrat.

            

           Thus, to call for the government to use its expertise and information gathering skills to ‘protect the consumer (or the producer) from himself’ by providing free information and restricting private business based on this information is really just to call for the socialization and monopolization of the information industry by government. As usual, the libertarian has many good reasons for opposing the socialization of this industry, as with any other industry, recognizing the many advantages of the voluntary, free-market provision of information services by private experts and expert organizations.

Note: Sometimes private information providers are not paid directly by the information consumer, but indirectly by advertisers who want ‘eye-time’ with that information consumer or by goods and service providers who want their product to be evaluated by a private information provider or organization to make it more marketable. In either case though, maintaining a strong reputation for expertise and trying to provide the amount of information that people are willing to spend time and effort to obtain and use, not more and not less, are crucial for the private information provider to succeed monetarily.   

3. Dependence tends to lead to incompetence; independence tends to lead to competence; applying this to political systems:

            
           It is a fairly well-established psychological and pedagogical fact that if you treat someone like an incompetent who can’t do anything for himself, he will be more likely to become an incompetent who can’t do anything for himself. On the other hand, if you treat someone like a competent person who can do things for himself, he will be more likely to become a competent person who can do things for himself. A more independent person will tend to have more opportunity and drive to hone his skills and thinking abilities than a perpetually dependent person.

            

           While many recognize these truths, libertarians apply them in their analysis of political systems. Thus, imagine you have two political systems: one which treats its subjects as incompetents that must be taken care of as dependents, and one which treats its subjects as generally competent individuals who are more or less capable of making their own way through life independently. Skill, thinking abilities, and independence will tend to be fostered in the latter, while incompetence, passivity, and perpetual dependence will tend to be fostered in the former. The latter political system will be a better climate for fostering ingenuity and economic prosperity than the former political system because of these psychological forces. This is one important reason why libertarians support a political system characterized by freedom rather than one characterized by paternalistic statism.

            Thus, we have seen that libertarians do not assume that individuals are omniscient or anywhere near it, they just think that the fact that individuals are not is not a valid justification for paternalistic statism. This is because individuals are the best judge of the ends they personally want to pursue, because a free-market information industry will be more effective than a socialized and monopolistic information industry, and because treating people like dependents will tend to make them more dependent, while treating people like capable, independent individuals will tend to make them more capable and independent. Thus, pointing out that individuals are not universally competent in no way undermines any of the tenets of libertarian thought, contrary to popular belief.