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Advancing Austrian Economics, Liberty, and Peace

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Making Economic Sense
by Murray Rothbard
(Contents by Publication Date)


Chapter 40
What to Do Until Privatization Comes

Free-market advocates are clear about what should be done about government services and operations: they should be privatized. While there is considerable confusion about how the process should be accomplished, the goal is crystal-clear. But apart from trying to speed up privatization, and also forcing that process indirectly by slashing the budgets of government agencies, what is supposed to be done in the meantime? Here, free-marketeers have scarcely begun to think about the problem, and much of that thinking is impossibly muddled. 

In the first place, it is important to divide government operations into two parts: (a) where government is trying, albeit in a highly inefficient and botched manner, to provide private consumers and producers with goods and services; and (b) where government is being directly coercive against private citizens, and therefore being counter-productive. Both sets of operations are financed by the coercive taxing power, but at least Group A is providing desired services, whereas Group B is directly pernicious.

On the activities in Group B, what we want is not privatization but abolition. Do we really want regulatory commissions and the enforcement of blue laws privatized? Do we want the activities of the taxmen conducted by a really efficient private corporation? Certainly not. Short of abolition, and working always toward reducing their budgets as much as we can, we want these outfits to be as inefficient as possible. It would be best for the public weal if all that the bureaucrats infesting the Federal Reserve, the SEC, etc. ever did in their working lives was to play tiddlywinks and watch color TV.

But what of the activities in Group A: carrying the mail, building and maintaining roads, running public libraries, operating police and fire departments, and managing public schools, etc.? What is to be done with them? In the 1950s, John Kenneth Galbraith, in his first widely-known work, The Affluent Society, noted private affluence living cheek-by-jowl with public squalor in the United States. He concluded that there was something very wrong with private capitalism, and that the public sector should be drastically expanded at the expense of the private sector. After four decades of such expansion, public squalor is infinitely worse, as all of us know, while private affluence is crumbling around the edges. Clearly, Galbraith's diagnosis and solution were 180-degrees wrong: the problem is the public sector itself, and the solution is to privatize it (abolishing the counterproductive parts).

But what should be done in the meantime?

There are two possible theories. One, which is now predominant in our courts and among left-liberalism, and has been adopted by some libertarians, is that so long as any activity is public, the squalor must be maximized. For some murky reason, a public  operation must be run as a slum and not in any way like a business, minimizing service to consumers on behalf of the unsupported "right" of "equal access" of everyone to those facilities. Among liberals and socialists, laissez-faire capitalism is routinely denounced as the "law of the jungle." But this "equal-access" view deliberately brings the rule of the jungle into every area of government activity, thereby destroying the very purpose of the activity itself.

For example: the government, owner of the public schools, does not have the regular right of any private school owner to kick out incorrigible students, to keep order in the class, or to teach what parents want to be taught. The government, in contrast to any private street or neighborhood owner, has no right to prevent bums from living on and soiling the street and harassing and threatening innocent citizens; instead, the bums have the right to free "speech" and a much broader term, free "expression," which they of course would not have in a truly private street, mall, or shopping center.

Similarly, in a recent case in New Jersey, the court ruled that public libraries did not have the right to expel bums who were living in the library, were clearly not using the library for scholarly purposes, and were driving innocent citizens away by their stench and their lewd behavior.

And finally, the City University of New York, once a fine institution with high academic standards, has been reduced to a hollow shell by the policy of "open admissions," by which, in effect, every moron living in New York City is entitled to a college education.

That the ACLU and left-liberalism eagerly promote this policy is understandable: their objective is to make the entire society the sort of squalid jungle they have already insured in the public sector, as well as in any area of the private sector they can find to be touched with a public purpose. But why do some libertarians support these "rights" with equal fervor?

There seem to be only two ways to explain the embrace of this ideology by libertarians. Either they embrace the jungle with the same fervor as left-liberals, which makes them simply another variant of leftist; or they believe in the old maxim of the worse the better, to try to deliberately make government activities as horrible as possible so as to shock people into rapid privatization.  If the latter is the reason, I can only say that the strategy is both deeply immoral and not likely to achieve success.

It is deeply immoral for obvious reasons, and no arcane ethical theory is required to see it; the American public has been suffering from statism long enough, without libertarians heaping more logs onto the flames. And it is probably destined to fail, because such consequences are too vague and remote to count upon, and further because the public, as they catch on, will realize that the libertarians all along and in practice have been part of the problem and not part of the solution.

Hence, libertarians who might be sound in the remote reaches of high theory, are so devoid of common sense and out of touch with the concerns of real people (who, for example, walk the streets, use the public libraries, and send their kids to public schools) that they unfortunately wind up discrediting both themselves (which is no great loss) and libertarian theory itself.

What then is the second, and far preferable, theory of how to run government operations, within the goals for cutting the budget and ultimate privatization? Simply, to run it for the designed purpose (as a school, a thoroughfare, a library, etc.) as efficiently and in as business-like a manner as possible. These operations will never do as well as when they are finally privatized; but in the meantime, that vast majority of us who live in the real world will have our lives made more tolerable and satisfying.

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