The Case for Small Government

A Libertarian Perspective on Economic and Social Policy

March 24, 2006


What is Libertarianism?

The traditional version, often referred to as philosophical or rights-based libertarianism, asserts that government policy should never infringe individual rights or freedoms. Philosophical libertarians oppose virtually all government intervention since regulations, taxes, mandates, prohibitions and the like all limit individual freedoms.

A different version of libertarianism, often referred to as consequential libertarianism, opposes most government interventions because these appear to generate adverse side-effects that are worse than the problems they were designed to alleviate. Consequential libertarians share the policy conclusions of philosophical libertarians for the most part, but they disagree in some cases. In addition, consequential libertarians argue for small government based on consequences rather than rights.

In my view the consequential approach has several advantages over the philosophical perspective.

To begin, the consequential approach allows one to distinguish moderately bad policies from really bad policies. Drug prohibition is a terrible policy from the consequential perspective because it generates a black market and all the attendant negatives. Moderate sin taxation, however, does not create a black market This does not mean sin taxation is a good idea; it harms responsible drug users by raising drug prices. But the ratio of benefits to costs from moderate sin taxation is likely better than for prohibition. Thus consequential libertarians can feel comfortable encouraging sin taxation over prohibition, even if they have reservations about sin taxation itself.

Philosophical libertarianism has a harder time adopting this kind of nuanced stand. Philosophical libertarianism tends to suggest an absolutist “all interventions are horrible” perspective.

A second benefit of the consequential approach is that it can persuade people who do not agree with the principle that policy should never infringe individual rights. Some such people, for example, might agree that drug prohibition causes more harm than it prevents, even if they would impose limitations on individual rights if they thought such infringements were beneficial overall.

Stated differently, consequential libertarianism is just cost-benefit analysis. Ample room exists for disagreement about any given cost-benefit analysis. But few people dispute that society’s choice of policies should consider the entire range of pros and cons from different interventions. In this sense, few dispute the basic approach that underlies consequential libertarianism.

Maybe consequential libertarians should not use the term libertarian at all; it is often more confusing than illuminating. Maybe the right label is just, “Consequentialism.”


At 9:42 PM, Blogger Tom C said...

Ok, but doesn't that just leave Democrats, Republicans. etc., as "Consequentialists" that put different benefits and costs on different outcomes? For example, if you believe the benefit of equalized incomes is enormous, you would see the (real) costs of government intervention as worth the outcome. This could make you a Communist, but wouldn't you still be Consequentialist?

At 11:00 PM, Anonymous Stan said...

This is one of the issues that truly separate a lot of libertarians. In the end, I think that most libertarian thinking boils down to consequentialism, but that many "rights" based libertarians view the situation from a higher level. By that I mean that they take the inability/unwillingness of the state to accomplish the good ends people want as a starting point of their analysis. This means that when discussing such issues as environmental regulation or drug prohibition, "rights" based libertarians start out with the assumption that no good can come of government action, because of inherent corruption, information problems, poor incentives, etc. Nevertheless, this is a great topic and I hope the Mike Hubert doesn't spoil it with his usual ranting about the stupidity of libertarianism in general.


At 4:06 AM, Blogger James said...

I really think this is an excellent post presenting the case for consequentialist (as opposed to rights based) libertarianism. The professor's position is one that I'm not unsympathetic to, but I still have my disagreements. My full response to this post seemed too long for a comment, so I've put it here.

And yes, this is one of the issues that libertarians are divided over. I've known some non-libertarians that would point this out as though it were indicative of some failing in libertarianism. Frankly, I think it's a strong point that libertarians are concerned with the foundations of their view. Most statists seem quite content to draw from any inconsistent hodge-podge of assumptions to justify their favorite form of statism. So even if no two libertarians agree on what constitutes a sound basis for being a libertarian, that's still far and away better than the typical statist who can't even agree with himself as to what constitutes a sound basis for statism

At 7:18 AM, Blogger Mike Huben said...

I agree that consequentialism is a better basis for thought. The common, rights-based libertarian fundamentalism uses rights as instructions to stop thinking, to roll over, and to morally surrender.

However, consequentialism is a philosophical system with all sorts of questionable premises itself.

In what units are possible consequences measured? In order to weigh consequences, there must be some commensurate unit. You can't directly compare apples and oranges to make a decision which is the better consequence: you must select a unit such as price, sugar content, weight, color, craving, what ever.

Most people would want to weigh in terms of values, but values (outside of individuals) tend to be incommensurate. So the commonest two proxies we have are markets and voting. Both have conspicuous failures as ways of representing values: for example, the impoverished would have far less ability to voice their values in markets than the rich.

The big problem with consequentialist libertarianism is the same as communism: it would all work very well if everybody simply adopted the same sincere beliefs. Libertarians tend to have a set of values (such as an overwhelming preference for personal liberty) that most other people don't share. So whose values should "win"? Those who think drugs threaten their families or those who think they don't harm others?

Rights-based libertarianism gives false promise of resolving incommensurate ideas of rights. Consequentialism gives false promise of resolving incommensurate values. We've moved the basic problem one layer deeper, from rights to values. I think that problems can be resolved better with consequentialism, but it would be difficult to demonstrate because the two systems have incommensurate assumptions of "better".

What we do find in consequentialist arguments is cherry picking of consequences to tilt the arguments toward a favored consequence. Few people are familiar enough with a subject to spot this sort of lying by omission. Lies, damned lies, and consequentialism, you know. Much libertarian argument against government acts on this basis: ignoring the beneficial consequences of government in favor of denouncing harmful consequences.

And when libertarian argument against government does list some beneficial consequences of government, it usually doesn't present the commensurate comparison required by consequentialism. Instead, somehow the benefits are usually brushed aside and the harms emphasized.

At 12:30 PM, Blogger Nicola Moore said...

I am not comfortable with the label “philosophical libertarian” as it has been defined here. What I believe Prof. Miron means to take issue with are natural rights theorists who are a subset of what he calls “philosophical libertarians.”

Natural rights theorists argue that all individuals are endowed with a natural right to freedom by virtue of the fact that they are human. These theorists then use this argument to make a moral case for libertarianism and, as Prof. Miron correctly points out, to oppose all governmental infringements upon liberty on moral grounds.

There is another subset of philosophers who argue that rights are adventitious. These theorists contend that the reasons we, as humans, come to identify particular things as “rights” is that these things generate good consequences. For instance, these philosophers would argue “freedom of speech” is identified as a right because a marketplace of ideas brings about good consequences (e.g. creativity and diversity which are critical to prosperity).

Consequentialism is a way to think about both the economics AND the philosophy of libertarianism. Thus, I would suggest libertarians keep their name but more carefully distinguish between the natural rights theorists and the consequentialists in the room.

At 2:23 PM, Anonymous Javier said...

I agree that the dicotomy between philosophical and consequentialist libertarians is a false one, or at least a misleading one. Both positions are "philosophical."

For instance, every theory of consequentialism needs to choose a particular set of consequences that matter from a moral perspective. What if the relevant unit is rights or freedoms? Then a libertarian consequentialist could consistently maintain that we should maximize people's freedoms or rights.

I think the more relevant distinction is between different understandings of the moral importance of coercion. Some libertarians categorically reject coercive political power (how this position can avoid collapsing into anarchism is unclear). Other libertarians don't reject the coercive use of political power, perhaps because they think that the limited use of political coercion will ultimately enhance people's freedoms or rights. Under limited government and the rule of law, people can realize valuable freedoms, such as the liberty to engage in mutually beneficial exchanges, freedom of association, etc.

At 10:02 PM, Blogger Bob Schubring said...

Personally I tend to use the term "Pragmatist" in place of "Consequentialist". The Pragmatist begins with a few, rather personal, range-of-the-moment political goals to make his or her life more comfortable in the near term, then seeks to sell out the future to attain comfort in the present. For example, on the afternoon of 9-11-01, the U.S.A. was crawling with business travelers who needed a way home and could not fly, because the national airspace had been closed indefinitely.

In moments like those, virtually everyone becomes a Pragmatist.

The inherent danger in Pragmatism is that it seeks the safety and comfort of one group to the exclusion of the rights of another. The Pragmatic thinker cannot resolve inter-group conflict by any means other than coercion or capitulation.

The Libertarian thinker first limits himself with the question: "Do I have to fight to get what I want, or can I simply work to produce what I want?", followed by the guiding principle, "Is somebody already engaging in violence against me to keep me from getting what I want?" If the second question is properly answered "Yes", the Libertarian considers himself justified to retaliate in order to get back the freedom that was taken from him. If the answer is "No", then there is no justification for using violent or coercive methods to get what one wants.

The best quote from a pathological Pragmatist I've heard came from Robert Strange McNamara's autobiography, The Fog of War. Having admitted that had Japan won World War II, he would have been hanged as a war criminal for his role in planning Nagasaki, Hiroshima, and various conventional air raids that burned Japanese civilians alive by the hundreds of thousands, he made the striking statement: "How much evil must we do before we can begin doing good?".

To Robert the Strange, it seems that the pragmatic goal of the U.S. political system is simply the comfort and security of U.S. citizens, and the idealistic goal of "doing good instead of evil" only comes into play after we first reach such a level of comfort and security that we can afford the luxury of "goodness".

Were a typical murder defendant to present such a defense in a court of law, he would likely get the maximum allowable sentence, as no jury would consider the murderer's comfort and security to rank above the right of the rest of us to life.

Call me an unthinking and surrendering Libertarian fundamentalist, but I refuse to endorse a political policy that sends troops and airplanes halfway 'round the globe to blow big holes in the ground in the name of our comfort and security, after we made enemies halfway around the world by previous foreign misadventures that put greater value on my comfort and security than on some non-citizen's right to live.

If George W. Bush were a Libertarian instead of a Pragmatist, it is likely he would have begun his administration with a warning that the U.S. would not fight wars to protect private oil investments in foreign lands, thereby triggering a swoon in the stock market and a rush to find alternatives to foreign oil.

Because George W. Bush is a Pragmatist instead of a Libertarian, it took him six years in office, a swoon in the stock market, and the loss of thousands of human lives, to reach the same conclusions...involuntarily...all the while being an unsurrendering, non-rolling over, wild-thinking President.

Mr. Huben, your response, please.

At 2:48 AM, Anonymous erik said...

I have been having a dispute with a friend on what libertarians typically believe. I have been arguing that libertarians generally start from the premise that everyone equally and fully has a right to themselves, and noone may infringe on anyone else's rights. Market failures to internalize many externalities are well documented; as such, all externalities should be taxed or internalized in some way, even by government intervention. Not doing so would be violating some people's rights to themselves as others aren't paying the full cost of their actions.

My friend argues that libertarians don't agree with even this form of government intervention because any regulation will infringe on people worse than any externalities.

Could someone shed some light on this argument?

At 5:39 AM, Blogger Bob Schubring said...

To Erik:
The single biggest source of externalities is political protection, i.e., threats of violence, against those who are harmed by an action but not allowed to register their disapproval.

For example, the State of Florida recently killed a child in one of their "boot camps" by beating him to death. For details, visit
""> Maia Szalavitz' weblog
. The killing has no economic impact on the Florida politicians who facilitated it, nor upon the state employees who carried it out...because the State of Florida crafted a statute that makes itself immune from lawsuit by the people it harms.

In a similar vein, some corporations have willingly taken undue risks with their investors' money...such as the Enron fiasco. Here again is created an externality by political means: Enron's executives get to keep some of what they stole by operation of the bankruptcy laws.

In summary, it is difficult to find a genuine market failure in which politics has not been a major force, if not the only force, driving the market buggy.

At 7:00 AM, Blogger Mike Huben said...

Bob Schubring wrote: "Mr. Huben, your response, please."

OK. You said it yourself. "Call me an unthinking and surrendering Libertarian fundamentalist."

I recommend you try out a country where government is not involved, such as Somalia.

Now, you might complain that there are violent groups there, but the fact is that you cannot strip the violence out of all humans: not even with the mystical power of libertarianism.

Indeed, all rights, all liberties, all property, all law rely on violence and its threat for their creation and enforcement. Thus, if you want to claim that there's government involvement in some private fiasco such as Enron, well duh. You can't escape it.

The big question is how we channel that violence to our preferred ends.

We're agreed that the Bush reaction to 9/11 was incredibly stupid and wrong. A law enforcement response might have been better in Afganistan than a military response. And we should not have invaded Iraq.

At 9:56 AM, Blogger James said...


General answer: Not all libertarians agree on every subject, including the issue of market failure.

Personal answer: Ok, externalities are bad. Here's a solution. My bowling team should have the power to confiscate a portion of your and everyone else's paycheck and use the money to fund various violent activities. I really, really promise that our activities will correct market failures. Of course we may decide to do just enough good stuff (like correcting market failures) to maintain our power and then spend the remainder of the confiscated cash on whatever things we happen to like. So just to keep ourselves accountable to you, every few years we'll give you a one in a few hundred million chance of stripping us of this power. We might use some of the confiscated dough to stack the odds even further in our favor, but don't worry too much about that.

Sound like a good idea? I doubt it. Is there anything that makes the idea more appealing when it's a gaggle of politicians, rather than bowlers, making such an offer?

At 10:12 AM, Blogger James said...

"I recommend you try out a country where government is not involved, such as Somalia."

Libertarians don't believe that the amount of government is the *only* issue determining how pleasant it would be to live in some society. What's it called when you deliberately misconstrue the view that you're attacking?

Besides, anyone can point out a worst case scenario of statelessness, but if you want to do a worst case analysis propertly, you have to set the problem up correctly and compare a worst case example of anarchy with the worst case example of government, i.e. Somalian anarchy vs. Maoist statism. When you compare worst case to worst case, being without a government is still preferable to being with one.

At 1:32 PM, Anonymous erik said...


Gerrymandering in the US has reached awful levels and needs to be fixed. If we could fix this problem it would go a long ways towards having some accountability from politicians. Also, the impact of one vote is incredibly low but this is the nature of modern democracy.


Pollution and the tragedgy of the commons are two very well known negative externalities not caused by the state.

At 4:00 PM, Anonymous Ken said...


Well, at least not directly. They're caused by the neglect (or refusal) of the government to assign and/or enforce property rights in these areas. Since what belongs to everyone effectively belongs to no one, the solution is simply to recognize someone's ownership of it.

At 3:49 AM, Blogger James said...


I'm not understanding your response. Are you willing take me and my bowling team up on our solution?

I'm also not sure why you consider "fixing" government to be a real possibility AND believe government to be necessary. If people outside of the government can be expected to provide the public good of fixing the government, why can't free actors also be expected to provide all of the other public goods that people hope for governments to produce?

"Pollution and the tragedgy of the commons are two very well known negative externalities not caused by the state."

The government is the single largest polluter in the US, so I'm not buying the bit about pollution not being caused by the state. The state also causes commmons problems regularly. The public treasury, the legal system, regulatory agencies, etc. have all become the new grazing areas. Different groups lobbying the government to take other people's money and give it to them in the form of transfer payments are effectively no different than different groups grazing their animals on the same land.

At 2:03 PM, Anonymous erik said...


As it stands I am not willing to give your bowling team control. I haven't even seen you bowl! Can you convert the 7-10 split? Will you return the bowling shoes? These are answers every democracy needs answered.

But seriously. I originally posted to ask a question on what libertarians believe. You answered it when you said they believe different things.

I'm not sure if I have an answer for your questions. I don't feel like I know enough to make an intelligent response so I will accept your point and vow to learn more about it. However, I could be the single largest idiot in the world but all the other idiots would still pose a problem. Do you know how much of the total the government pollutes? I'd like to learn more about that.

Finally, are there any legitimate functions of government in your eyes?

At 7:39 AM, Blogger James said...


I really apreciate your frankness.

Re: pollution, I've not looked at concrete numbers on this since I was in the military years ago managing haz waste disposal. In the training related to that job, I learned that the DoD was the biggest polluter, but that we didn't have to care becase the government doesn't actually follow the laws it makes for others. Off the top of my head, see this and this, for a start. Google for "sovreign immunity" and pollution for more.

Re: government, I wouldn't really care what a government did, so long as it didn't engage in activities that people would rightly recognize as harmful, immoral, evil, counterproductive, etc if any other agency in society did them. E.g. if I or anyone else confiscated some of your money to pay for my grandmother's medications, just about everyone would object. When it's the government doing the very same thing, a lot of people make a lone exception in how they regard this kind of behavior. I don't. On the other hand, if politicians wanted to use their own money or solict voluntary donations to fund some project, that would be fine by me. In other words, I don't draw the line at any particular functions, but at the ways an agency executes those functions.

At 2:53 PM, Blogger Chris said...

Philosophically, a rights approach is more consistent. However, when you try to explain libertarianism to others, it is much easier to take a consequentialist approach. I think consequentialism is a useful tool for policy and argumentation, but it lacks the consistency (problems with interpersonal utility comparisons for CBAs) of a rights determined moral philosophy. So, to me at least, consequentialism is like libertarian lite (diet lib).

At 2:42 AM, Anonymous erik said...


Thanks for the lead. I'll look more into it. Did you mean for both links to point to the same site?

You have an interesting take on the government. It is certainly food for thought.

At 4:46 PM, Blogger James said...


Sorry; I meant also Ch. 8 of the same book.

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