Essay:Where some libertarians erred in their assessment of which demarcations are important

From Mises Wiki, the global repository of classical-liberal thought
Jump to: navigation, search
Essay.svg This essay contains the opinions of one or more authors and does not necessarily represent the views of Mises Wiki or the Mises Institute. Mises Wiki essays may sometimes contain opinions that are not widely accepted by Austrian school thinkers, but nonetheless reside on the site to help stimulate critical thinking, constructive dialog, and an open-minded process of creative problem-solving furthering the growth of the body of Austrian school thought.

Libertarians usually make a big deal about the difference public and private entities. They either want to abolish the government or reduce it to a night watchman state. They justify this by saying that there is competition and consumer choice in the private sector, while the government forces people to pay for its services and does not allow competing governments in its jurisdiction.

This makes no more sense than saying that McDonald's is a government because it does not allow Burger King employees to sell food on its premises. The government claims the territory it controls as its property. Where did it get the claim to its property? By force. If one were to trace the acquisition of the land on which the McDonald's was built, one would probably find that it too was seized by force at some point in the chain of history. As Mises points out:[1]

All ownership derives from occupation and violence. When we consider the natural components of goods, apart from the labour components they contain, and when we follow the legal title back, we must necessarily arrive at a point where this title originated in the appropriation of goods accessible to all. Before that we may encounter a forcible expropriation from a predecessor whose ownership we can in its turn trace to earlier appropriation or robbery. That all rights derive from violence, all ownership from appropriation or robbery, we may freely admit to those who oppose ownership on considerations of natural law. But this offers not the slightest proof that the abolition of ownership is necessary, advisable, or morally justified.

People might say, McDonald's is blameless, though; it acquired its property by contract. What, then, of the land that the U.S. Government acquired through the Louisiana Purchase? The government consensually contracted with the French Government for the land and was at least one step removed from the expropriation of the land from the Native Americans. That does not make it much different.

Competition and consumer choice

People say, "The government forces us to pay taxes; we can't just stop patronizing it as we would stop patronizing a McDonald's." This is not true; the difference in switching from one provider to the next is not that great. To quit patronizing McDonald's, you have to leave McDonald's. As long as you stay there, if you want to eat, you have to buy their food. The same is true with countries. If you want to quit paying taxes to the U.S. Government, you have to leave the United States (and avoid any country that would require you to obey U.S. Law's requirements that you continue paying taxes for 10 years after leaving).[2]

The major difference between the U.S. and McDonald's is that the U.S. is nonprofit and McDonald's is for-profit. If McDonald's were a nonprofit organization, its quality and prices would probably drop because those in charge of it would lack a profit motive. This would be especially true if its competitors were also nonprofits, since they too would lack a profit motive and therefore would tend to be lackadaisical about making improvements in their ways of doing things, and hence would present little threat to McDonald's survival. There are some products that nonprofits have a tendency to not provide as well as for-profit companies could. Law, police, courts, and defense are probably among those products.

If the United States government were converted into a for-profit company, the quality of governance would probably improve, especially if other governments were to also convert to for-profit companies. Perhaps the most urgent reform that is needed is to get rid of the system in which each citizen has one vote and instead let voting shares, each of which would entitle the owner to a share of the profits, be traded on the stock market. It would drastically change the incentive structure.

The outcome might be much the same as if all governments were to be abolished and power were to revert to property owners.[3] Either way, there would tend to be consolidations and spin-offs until the optimal size of sovereign units were to be approached. For example, the U.S. may be so big as to have diseconomies of scale. Prudent corporate leaders, then, might break it up into smaller companies after gaining control. Or if homes owned by sovereign individuals were to be too small to take advantage of economies of scale in governance, they might tend to be bought up by entrepreneurs building larger jurisdictions.

Public goods

If the choice is between a nonprofit government owning or not owning the roads, then perhaps it is better to have it not own the roads. But what if the choice is between a big for-profit entity that provides police, courts, and defense to its customers either providing roads as well, or not? It might be a good additional service to bundle into that package. There are many private roads owned and maintained by landlords who pay for their upkeep by charging rent; that is not much different from a public good.


  1. Mises, Ludwig von. "Violence and Contract". Socialism. 
  2. Armstrong, Briggs (23 March 2009). "Abolish the Expatriation Tax". 
  3. In the words of the U.S. Declaration of Independence, in such situations in the past, "the Legislative powers, incapable of Annihilation, have returned to the People".