Michael Lind on Libertarianism
What this covers
Michael Lind and Russ Roberts debate the viability and desirability of libertarian political economy, beginning from Lind's claim that libertarianism remains untested ideology rather than grounded doctrine. Roberts, an economist and host, defends classical liberal principles while Lind challenges whether simplified economic reasoning should drive policy. The conversation spans theory, history, and practice—from the nature of the state in classical liberal thought to the mechanics of how subsidies and deregulation reshape modern politics. Both speakers converge on opposing crony capitalism, the system where losses are socialized and gains privatized, though they disagree sharply on what causes it and whether libertarian alternatives would eliminate it.
Lind argues that no predominantly libertarian state exists because the ideology is utopian—incompatible with either national defense or the economic conditions industrial societies face. He traces how subsidies into concentrated markets trigger a Subsidy Price Feedback Loop, where producers simply raise prices by the subsidy amount, then lobby for more. On trade and education, Lind contends that economics textbooks reduce Comparative Advantage and credential claims to slogans that mask real winners and losers. Roberts counters that the Argument from Absence of Precedent proves nothing, and presses back on whether Crowding Out of private charity was inevitable. The two diverge on whether natural monopolies like banking should be nationalized utilities or remain private, on the obsolescence of mid-century labor arrangements, and on whether American K-12 education has actually failed. Throughout, they return to the distinction between pro-business and pro-market thinking, and whether social insurance arose from necessity or ideology.
Lind argues that libertarianism is a utopian philosophy that has never been successfully implemented and that simplified 'Econ 101' reasoning distorts public policy, while Roberts defends classical liberalism and they converge on opposing crony capitalism.
- No predominantly libertarian country exists, suggesting the ideology is unworldly
- Government subsidies into imperfect/monopolistic markets drive up prices via political feedback loops
- Both speakers agree crony capitalism—socialized losses, privatized gains—is the worst of both worlds
Libertarianism lacks historical precedent and theoretical grounding in actual state practice.
- If libertarianism were workable, there should be at least one predominantly libertarian country among nearly 200 sovereign states, but libertarians can only point to particular policies they like (Chilean privatized Social Security, Swiss banking) rather than an actual libertarian nation, which suggests the ideology is fundamentally unworldly and utopian.
“If you can't point to a single country out of nearly 200 sovereign states on this planet in 2013, that you approve of, then isn't your ideology fundamentally unworldly and utopian?”
- If you create a libertarian paradise on desirable territory surrounded by militaristic welfare states, your country will not remain sovereign for long unless it can mobilize military resources and population support to defend itself from aggressive non-libertarian neighbors—a real flaw in libertarian theory.
“if you are surrounded by militaristic, socialistic welfare states, and then you create a libertarian paradise... your country is not going to be sovereign for very long, if it cannot mobilize the military resources and the population support to defend it”
- True classical liberal theory in the Hobbesian-Lockean natural rights tradition is fundamentally about war and violence—the state of nature is a state of war, so people pool their coercive power into bounded territorial units to protect their rights against external predators and internal tyrants; modern self-described libertarians have abandoned this and instead descend from a 19th-century Proudhonian anarchist tradition assuming human sociability.
“ultimately it's pooled coercive power that is at the heart of true classical liberal theory. What I think--the people who call themselves classical liberals now are not actually in that Hobbesian-Lockean, 17th century natural rights tradition”
- The claim that the United States between the 1870s and 1900s was a libertarian paradise is false because it was by no means a laissez faire society—it had high tariffs and a government that intervened to help businesses crush strikers in the railroad and other industries.
“We had high tariffs, the government was intervening was to help businesses crush strikers in the railroad and other industries.”
- Without support from the Koch brothers and self-interested corporations there would be no significant libertarian intellectual or political movement; as the Cato Institute and East Coast libertarians took corporate contributions to become players in the Republican Party, they went silent on crony capitalism and objectionable defense contracts—just as progressive intellectuals sell out to be players in the Democratic Party.
“the Cato Institute and the East Coast libertarians, when they decided to get corporate contributions, suddenly they became silent, a lot of these corporate-funded libertarians, about crony capitalism, about defense contracts they object to, and so on, in order to become players in the conservative wing of the Republican Party.”
Subsidies and market power in oligopolies cause prices to rise by the subsidy amount absent regulation.
- Subsidies create a vicious political feedback effect: producers (doctors, universities) raise their prices by the amount of the subsidy, then tell their clients to lobby Congress to increase the subsidy because prices are rising, allowing producers to keep driving up their own prices indefinitely.
“you get this political feedback effect where the doctors or the universities with their tuition raise their prices. Producers raise their prices by the amount of the subsidy. They then tell their clients... write your Congressman and tell him or her that you have to increase the subsidy.”
- Obamacare will initially tend to drive up prices because of all the new money flowing into the health care system; this can be mitigated with price regulation, but absent it, producers may simply jack up their prices.
“I think we're going to see this as a result of Obamacare. That the initial tendency will be to drive up prices because you have all of this new money flowing into the system.”
- When government pours subsidies (whether through consumer or producer) into imperfect markets dominated by oligopolies or monopolies with market power—as in health care via Medicare/Medicaid and higher education since the 1960s—you cannot rely on competition to keep prices down, and absent price controls producers simply raise prices by the amount of the subsidy.
“when you put government subsidies into an oligopolistic or monopolistic market and you don't have some kind of price control system, that you cannot rely on competition to keep prices down.”
- Natural monopolies and public utilities—including not just water and sewage but basic transactional banking—when held in private hands act as predatory monopolies and oligopolies exacting a tax from every entrepreneur and customer, which is actually bad for markets; the best outcome would be to regulate them like utilities or nationalize them, but productive businesses have been persuaded that bankers are risk-taking entrepreneurs rather than utility operators.
“When these are in private hands, these are predatory monopolies, these are oligopolies; they are exacting a tax from every entrepreneur, every business, and their customers. It's actually bad for markets.”
Welfare states emerged from military mobilization and remain necessary for modern industrial conditions.
- There is a historical link between providing economic security to citizens and the need to mobilize them in colossal wars: the British welfare state emerged from the Beveridge Report and the promise to soldiers fighting Hitler, the GI Bill provides a U.S. parallel, and historically every expansion of voting rights has been justified by the rights of soldiers.
“there's a link between provisions of some kind of economic security to your citizens and the need to have those citizens mobilized in these colossal wars like the World Wars.”
- Much of the modern welfare and warfare state can be justified on classical liberal grounds because industrial conditions—giant organizations that can poison landscapes, a wage-earning majority in industrial cities whose family and local charity support systems ceased to function—reluctantly require far larger minimum government than the 17th or 18th century did; this was not love of the state but a conclusion forced by circumstance.
“you can justify a lot of the modern welfare state as well as a lot of the modern warfare state on classical liberal grounds; that is in today's industrial conditions this is the minimum that you need. The minimum government that you need is vastly bigger than it would have been in the 17th or 18th century.”
- Government social insurance demonstrably crowded out private charitable activity, and federal social insurance crowded out state, county, and local provision—serious private charities fighting hunger and poverty for large groups largely ended with the New Deal and the rise of federal spending; the open question is whether this was a bad thing.
“There is no doubt that government social insurance crowded out a lot of charitable activity. And also that Federal social insurance crowded out a lot of state and county and local.”
- The decline of fraternal civic organizations like the Elks and Moose Lodges was caused by Social Security and government insurance, because 90% of members joined for economic benefits—health insurance, burial insurance, old folks' homes—not the activity itself, so their decline arguably liberated civil society by leaving only members genuinely interested in the activity.
“the only reason 90% of us joined them was because they had health insurance... So, they provided health insurance, they provided burial insurance... And also they had old age homes.”
Economists and policy advocates conflate ideology with science and oversimplify complex institutional realities.
- Academics and think-tank intellectuals benefit from extremely slow productivity growth in the non-profit intellectual sector, so they cannot yet be replaced by software programs—a think tank being 'a university without students.'
“we benefit from the fact that our productivity growth is extremely slow in the non-profit intellectual sector, so we can't yet be replaced by software programs.”
- If the welfare state were abolished it would not be replaced by money from the rich, because the great industrialists historically did not provide charity matching even a minimal welfare state (one reason such states were created), and today's wealthy donors are mostly interested not in the domestic poor or middle class but in global poverty, the environment, and elite cultural and educational institutions that benefit themselves.
“my fear would be that if you got rid of the welfare state it wouldn't be replaced by money from the rich, because they would be spending all the money on zoos and on, you know, symphony orchestras.”
- Introducing an element of choice via vouchers does not make a program a free-market program; a government-funded school voucher is just as much a government program as money going directly to a district school, because you are still taxing people—you are merely routing the taxes through the consumer rather than the producer.
“merely introducing an element of choice does not make it a free market program. You are still taxing people. You are simply allowing the taxes are going to the consumer rather than to the producer.”
- Libertarians differ from Marxist socialists in that Marxists, asked how they would structure insurance or public utilities after the Revolution, dismissed it as a bourgeois question to be worked out later, whereas libertarians have incredibly detailed plans in advance—which makes their position more plausible and is good marketing.
“the Marxists... would say, that's a bourgeois question; we'll work all that out after the Revolution. Libertarians have these incredibly detailed plans in advance.”
- Economics is not a science and there is far too much advocacy without certainty on the part of economists; the 'Econ 101' that drives policy is not the textbooks but the oversimplified vision—often with a right-of-center bias—that all activities can be done by for-profit firms in competitive markets, which politicians invoke as if all economists agree.
“We were using 'Econ 101' as shorthand, for what people with a fairly limited economic education think that economics says... an extremely simplified vision of all activities can be done by for-profit firms in competitive markets.”
- The worst of all possible worlds is pretending finance is a free market while bailing it out so all the upside belongs to the financial sector and the taxpayer pays the downside; the genuine cross-partisan agreement should be against crony capitalism—getting rid of the socialize-the-losses, keep-the-profits model—in sectors like banking, housing, higher education, and health care by moving them either in a more market direction or making them openly government.
“we are going to get rid of these socialize-the-losses and keep-the-profits model, of crony capitalism. I think that could be a program for one or both parties.”
- Since the 1980s the center-right, more pro-market side has dominated elite public discourse—the way we talk about markets and business—even if not actual public policy, which is why Lind's critique targets pro-market myths now rather than collectivist ones.
“your side, or at least the center right, more pro-market side, has pretty much dominated the elite public discourse. Really since the 1980s. Not public policy necessarily.”
Modern economies shifting to non-tradeable service work require new visions neither left nor right has developed.
- The whole 1950s model—social insurance and labor-market institutions premised on a typical unionized industrial wage earner (e.g. auto manufacturing) who, with the bosses, could extract rents from market power and share them via generous pensions and welfare states—was designed for a society where 30%+ of the workforce was in factories, and does not fit a coming society of largely non-automatable, non-offshoreable personal services; Progressives are stuck in this 1950s model because of their union base.
“that whole 1950s model which existed in various respects to this day... was essentially designed for a society in which 30% or more of the workforce... was in the factory sector. And it seems to me the society we are moving towards... the factory-type model and the industrial workforce model just does not fit.”
- Because of technology, the world economy is shifting from a manufacturing base to one where much of the productive sector is robotic and the vast majority of people (already ~86%, perhaps reaching 96%) work in non-traded domestic services that neither robots nor foreign workers can do—jobs like nursing aides, retail, and hospitality that currently pay very little—and neither Left nor Right has a vision for what to do with these people.
“the entire world economy is moving from the manufacturing based economies of the 20th century... to a new economy in which much of the productive sector will be robotic. And the vast majority of people will work in the non-traded domestic service sector doing jobs that neither robots nor people in other countries can do. It's already about 86% of the population; it may end up being 96%.”
- The vast majority of jobs in the US, and most jobs being created, require no higher education beyond high school—nursing aides, janitors, security guards greatly outnumber all scientists, engineers, lawyers and professors combined—so a janitor with a Ph.D. is paid no more than other janitors because the labor market structure of an occupation determines compensation, not credentials.
“a janitor with a Ph.D. is not going to be paid any more than other janitors. Because most actual occupations, the labor market structure is what determines compensation. It's not credentials.”
Free-trade theory produces winners and losers at every moment, not universal gains, despite public messaging.
- The theory of international trade going back to Ricardo's comparative advantage is never reducible to the simple thesis that in free trade all sides win—no sophisticated economist, including free-trade defenders like Bhagwati, makes that claim—because at any point in time trade produces both winners and people who struggle, but these qualifications get lost in public debate which reduces the argument to a win-win bumper sticker.
“the theory of international trade, all the way back to David Ricardo, who has all kinds of qualifications for his theory of comparative advantage is never reducible to the simple thesis that in free trade all sides win.”
- Certain militarily relevant traded-sector industries—aircraft, automotive—are essential for national defense, so all potential great military powers will sponsor or subsidize their domestic producers rather than buy abroad, because at the end of the day you don't know who will be your ally or who will embargo imports; this does not imply general statism or economic nationalism.
“there are certain militarily relevant industries in which all of the potential great military powers are going to somehow sponsor or subsidize their domestic producers rather than buy the stuff abroad.”
Certain government interventions like banking regulation or labor organization created political capacity now lost.
- Before 1970s-80s banking deregulation, laws against branch banking protected small state and local banks, which let politicians take on Wall Street because they were funded by small-town banks; eliminating those laws made consumer life easier but meant politicians now raise money from the same megabanks, creating a real political problem.
“before banking deregulation in the 1970s and 1980s, we had this very vulcanized and very inefficient banking system... laws against branch banking protected state and local banks against the New York banks. And once you eliminated those laws... suddenly all of these politicians who could take on Wall Street... they are raising money from the same megabanks.”
- The narrative that America's K-12 system has failed is largely propaganda: whites, blacks, and Latinos have steadily improved academic performance over generations, the US remains near the top internationally, and non-Hispanic white students on PISA scores rank with Shanghai's; the overall scores are dragged down by African Americans (recently disenfranchised) and recent rural Latin American immigrants, paralleling how Turkish immigrants drag down German scores.
“Non-Hispanic whites in the United States are at the top. They are up there with the kids of Shanghai, China. And by the way, the Chinese scores are only for Shanghai... So, what are the two groups that drag down the scores in the United States?”