Time to Grow Up

Carl Gibson and Libertarianism

Carl Gibson is a writer for the Huffington Post. He has recently written a critique of Ron Paul and his libertarian views and potential policies if he is elected president. Carl Gibson feels that libertarians have a childish outlook on life. He also claims that libertarians do not have a proper understanding of the role of government. He believes that libertarians have a mistaken view about authority. Here is what he has to say:

Libertarian views of government regulation are very similar to how the 6 year-old views the authority exerted by their parents. Ron Paul's every-individual-for-themselves rhetoric appeals to young, radical libertarians with simplistic viewpoints of authority, and an ignorance of why government exists in the first place.

Carl Gibson insinuates that libertarians are children, and goes on to describe what a Utopian world for libertarians would look like. I will list some of the points he makes, and expand on why a libertarian perspective actually makes sense.




Carl Gibson's critiques and my rebuttals

Carl Gibson has the typical statist view that we need big government to maintain peace, health and prosperity. Ron Paul and both libertarians and anarcho-capitalists in the other hand believe that smaller government and less regulations will do it better, and maintain individual freedom. Rarely have I seen through the mainstream media the interviewers give Ron Paul a chance to explain in detail why he thinks libertarian ideals will work. This article is no exception. I will take some points made by Carl Gibson and give my rebuttals in italics.

  • Taxpayers would save money since Ron Paul would abolish the Department of Education and cut the Food & Drug Administration budget by 40%.

This is correct. It would allow taxes to be cut. You and I can then choose how to spend more of our money how we see fit. That in and of itself gives us more freedom and honors private property (after all, our earnings are our private property. We should be able to own it). The implication by Carl Gibson on this point is that yea, we save taxes, but it does not contribute to the "common good". Do not be fooled by this belief. There is no "common good". All that happens is that whenever government organizations use coercion (after all, whether or not we want to pay into it and oblige by it's rules, we are forced into it) like this are created, it centralizes both money and power to a few people to do as they wish. Rarely does it improve the common good. I will use Carl Gibson's two examples here.

First of all, we know that education in the United States leaves plenty to be desired. However, because the Department of Education is a big bureaucracy, it cannot be innovative and responsive to the needs of students. It is also supported by the teacher's labor unions who demand higher wages for teachers and some sort of tenure program so teachers cannot get fired easily. This fosters complacency. So what do we get? Higher taxes on everybody (whether they have kids or not), mainly through property taxes with no way to reign in costs...and little to show for it from our students. Libertarians believe that the free market would do a much better job of producing innovative, quality education. After all, education is a service that can be met in a free market capacity, certainly much more cost effectively because it has to run at a profit or close it's doors. We could see more home schooling. We can see entrepreneurs implementing innovative ways to reach hard to teach students. For example. The Internet has made great inroads for creating cost effective teaching tools: there is a site called Kahn Acedemy that is free and has courses covering everything from history to finances, chemistry, mathematics, and everything in between. Another example is online home schooling that is, once again, very cost effective. On the collegiate level, we have many accredited colleges offereing online courses at a fraction of the cost. I also want to mention a resource I find valuable: The Ludwig Von Mises Institute. This site teaches Austrain Economics that, in my opinion, best explains how an economy works. The point is simply this: already the free market is making great inroads to education. If we eliminate the Department of Education, it would happen even faster...and be even better by freeing up more capital.

The FDA. Most people view the FDA as protecting us from the predator drug companies who want to push drugs on us without proper trials, and that we would have a much higher death rate from bad drugs. But the question remains, how many good, cost effective drugs have been prevented from coming onto the market from the FDA? Sound crazy? It isn't. I'll let James Altucher explain:

Let’s also assume I've developed a drug that will cure your liver cancer without chemo. Now what do I do?

Here’s the four steps I would CURRENTLY have to do:

A) It costs a billion dollars to get a drug through the Food And Drug Administration.This is why I mention the bad personality part. There’s zero chance I’m going to raise this money. Instead, because my personality is so bad I have no friends at the various research magazines so I’ll never get my findings published and consequently I’m going to get fired before I get tenure and I’m going to end up as a cashier at Walmart. What sort of tests do I need to do? I have to round up potentially thousands of people to take my drug, take placebos, check for safety, effectiveness, blah blah blah. It takes ten years to do this so potentially valuable drugs stay out of the hands of patients who will most assuredly die in this time.

B) At any one of these four steps, judges at the FDA can decide if I passed or failed my trial. These judges are often people who have worked at my competitors or who want to work at my competitors, making it extra hard to get through the implicit corruption that surrounds the FDA.

C) Now I have to convince the insurance companies to pay for my medicine so patients don’t have to pay the full cost. Because I just spent a billion dollars on approving my medicine (over a TEN YEAR period on average) the medicine is VERY expensive so I can make back the cost. Insurance companies don’t want to pay for my medicine. They don’t want to pay for any medicine really. So this is a hard process. And I have to raise another $50 million to survive long enough to hire people who will convince all the insurance companies to accept my drug.

D) Finally, I have to educate doctors that my drug will cure liver cancer. Doctors could care less about me. They are going on cruises funded by the big pharma companies (who just finished spending billions on their drug trials) and the big insurance companies where they are told what billion dollar drugs to recommend to their patients. They aren't going to listen to me.

As you can see, it is a lengthy, costly process. It is also not necessarily for the "common good". There is a lot of corruption involved. This is an example of how a government cartilizes big business. The FDA makes the approval process so onerous that only big pharma has a chance of getting approval. This flies in the face of free market, innovative solutions. Is there a free market solution? Of course. James Altucher has a great idea:

Get rid of the FDA. Simple. Let the Internet be a virtual FDA. A drug will have a web page, a scientist with verified credentials will document his research, and comments from users will describe their experience with a drug. Many people die and get sick from FDA-APPROVED(!) drugs. The same thing will happen here. But will save the billion dollars and will allow drugs to be quickly tested by the audience that needs it most – people dying of terminal diseases. These people will quickly report back if there is success and we’ll know what works and what doesn't. If there are bad stories then it’s a guarantee we will hear about them. And it won’t require a billion dollars and ten years to hear about them.

You can read his full rant here. It is pretty funny and insightful.

As you can see this is very outside of the box thinking. Very innovative. Much less expensive, more freedom of choice, and more potential to save lives. Who is James Altucher, and why should we listen to him? He is an entrepreneur who started several multi million dollar companies (among other fascinating thinngs he has done) and now has a blog where he writes about his experiences and ideas. You can find it here, Altucher Confidential.

  • Employers would save money by paying workers as little as they wish, since Ron Paul would abolish the Davis-Bacon Act.

Here Carl is talking about minimum wage laws. Progressives assume that without minimum wage laws, businesses will be able to pay workers slave wages and get away with it, along with runaway profits. I have one question to this: How? If a job seeker is offered a job to do for let's say $1.00 an hour, does that mean the job seeker has to take it? What are the odds of most job seekers taking a wage so low? Practically nil. The potential employer has to pay at least a certain wage to attract workers. Otherwise he cannot be in business. More importantly, this would be a voluntary agreement. Any time the employee feels it is not enough, he can quit and seek employment elsewhere, or even start his own business. The problem with minimum wage laws is that the business owner still has to run at a profit (in a free market competitive environment, this is usually anywhere from 1 to 10%...not much), so if a minimum wage law causes the value of the employee to be higher than the value he brings to a business, the business has to eliminate the job. Quite simply, this leads to an increase in unemployment.

  • Employees would no longer be required to pay into Social Security. The Social Security trust fund would become insolvent, making retirement that much harder for those who paid into it all their lives.

Too late. The problems are already "baked into the cake". In spite of all the payments retirees made into the system, it was mismanaged and the funds simply are not there for the long run. If retirees get their payments, it will be from inflated dollars which means that the benefits will not go far enough. The problem is worse if you force the younger generation to continue to pay into Social Security. They will have to pay much more in taxes and get even less benefits out of it. It would also cut into economic growth and lead the United States to bankruptcy. Social Security is a serious problem that cannot be swept under the rug. Hard choices are going to have to be made. An idea I have goes something like this: have a "phase out" plan. Personally, I would be willing to pay into Social Security for about five more years and receive no benefits (I am 48, so I have paid into it for over 20 years so far, and I can still work for at least another 15 years to save for my own retirement. I am also talking about the aggregate for my age group when I talk about me in this sense) from doing so if Social Security taxes are eliminated for my children. This way we can still pay benefits for retirees and work on getting back to free market solutions for the younger generation. Admittedly, this is only one idea, but I am willing (and I think many Americans must be willing) to make a sacrifice of this kind for a smooth transition back to prosperity.

  • Too-big-to-fail banks like Wells Fargo, Citi, Chase and Bank of America would be allowed to merge and/or buy out their competitors, as would oil giants like ExxonMobil, and Chevron, as would cell service providers like AT&T and Verizon.

It is clear that Carl Gibson is concerned with big companies forming a monopoly with this statement. I have a few counterpoints about this one.

  1. The too big to fail banks expanding and buy out competitors. Here is the irony. The reason the too big to fail banks are able to buy up other banks is because they are bailed out by the government. They are not operating on free market principles. What should have happened is they should have gone bankrupt. Then they could not buy other companies. I am aware of the argument that the financial system would have collapsed. It would not. Healthy businesses that have strong balance sheets would have bought the bankrupt companies and would have done a better job. There simply would have been restructuring. Tax payers would not be on the hook for bailing out the banks. Life would have gone on.
  2. In a free market economy a monopoly is impossible. Why? Because of competition. Whenever a business or industry is showing unusually high profits (20% net or more), other entrepreneurs will set up shop to bite into market share. They will undercut on price, hire better staff, create a better mouse trap and so forth. In short order, the monopoly will no longer be. There will be better products or services for the consumer. The main fear of a company getting a monopoly is that it then can "gouge" consumers by charging whatever they want. The way I see it, in a free market economy if a company does have a monopoly, it is able to do it by keeping prices low. This is good for the consumer, whether it is a monopoly or not. But for proof that companies do not maintain monopolies, take a look at the Dow Jones Industrial Average in 1920 and compare it to now. How many companies then are on there now? I also guarantee you that the ones still on there had to adapt with new technology, products, or services to stay there. Why? Because of competition.
  3. The concern should not be about monopolies (one company cornering a market), but of cartels. This is where several companies in an industry get together to keep competition out and raise the prices on their products. How does this happen? Through government regulation. Large companies like stronger regulations and higher boundaries to entry into their industry. They do it through lobbying the government and propaganda. They tilt the playing field to keep new start ups out. One only has to look at the pharmaceutical industry to see how that plays out.

I have given 4 rebuttals to what Carl Gibson wrote. He has a few others, but for brevity I will end it here.

Time to Grow Up

The title to Carl Gibsons article is Grow Up, Ron Paul. He is essentially saying that Ron Paul and libertarians need to grow up and accept government rules and regulations. The truth is that it is the other way around. Rules and regulations take away our ability to make choices on our behalf for our own benefit. Freedom does not mean we have no responsibilities or worries. Freedom means the right to choose how we live, and to reap the rewards and consequences of our choices. In short, to behave as adults. Now, more than ever, we need to embrace it.

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If you find this article interesting and want to see more like it, go to my blog Anarchist Insights.

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