OPINION: The fallacy with the Libertarian economic argument

“Freedom, however, is not the last word. Freedom is only part of the story and half of the truth. Freedom is but the negative aspect of the whole phenomenon whose positive aspect is responsibleness. In fact, freedom is in danger of degenerating into mere arbitrariness unless it is lived in terms of responsibleness.” - Viktor Frankl

This paradigm is applicable to many aspects in life, but recently I have taken this principle and watched how it applies to American economics. Even famed economists like Don Boudreaux of George Mason University admit that only most people are decent, fundamentally good and rarely act in a way to intentionally harm another being. The problem with this argument is that it is fatally refuted by its own devices. A central argument in Austrian economics, the basis for libertarian economic theory, is that a government can in no way have an omnipotent knowledge of all intentions of transactions and therefore cannot appropriately regulate them. But doesn't that same argument apply while saying that no single economist can presuppose that everyone is driven by their own self-interest? Regardless of the answer to that question, for my purposes, let's assume that everyone is, in fact, driven by self-interest. In such a case, free-markets and absolute libertarian, non-interventionalist policies may work in a world where it is known that people who work in their own self-interest do so in a way which is mutually beneficial. An example of a mutually beneficial action would be donating to charity with the intention of furthering cancer research which could--in such a case that you might develop a cancerous tumor--benefit you, while, in the short-term, benefits those who have cancer now and cannot afford treatments. Or simply loaning money to someone who needs it would provide the resource the receiver of the funds needs while building trustworthiness and friendship between those involved in that transaction. Let's assume, as many would agree (including Boudreaux), that not everyone is decent (arbitrarily, we'll say 5 percent are truly indecent people). What about these people who act in their own self-interest but in a negative way? If someone steals from a citizen in a hypothetical society which is totally free, is it better to turn the other cheek in the name of liberty (arguing that the robber has the freedom to steal,) or is it better to, in the name of liberty, return order and nullify this unapproved transaction?

To turn this abstract argument into a more observable idea, if a very rich CEO oversees the appointment of a friend to his or her company's board with the only intention being to increase his or her own salary, is it the responsibility of a third party to call the CEO out? And if this supposed CEO then pumps this increased salary into American politics, thereby amplifying his or her voice in this democratic country while reducing the impact of the voice of someone who is more impoverished, do we, in the name of freedom, permit this to happen, or does society confront this CEO and say "you should be more responsible with your money?" Both can be argued equally as the correct answer using the libertarian argument; in libertarianism, we all are entitled to our own freedom. So is freedom applied to ethics in such a way that allows the hypothetical 5 percent of indecent people to become richer while stamping out the voice of those less fortunate, or is freedom applied in a way which says that everyone's freedom should be maintained equally? In this case, isn't the government acting as the “invisible hand" which the free-market argues stems from economics? The CEO who works in his own negative self-interest compromises the freedom of someone with less money while the government promotes liberty. But wait! Government intervention and redistribution is socialism! Or is it simply possible that the principles which drive the two idealistic arguments are not so totally exclusive? Government should not regulate private salaries—period. But the problem is that those who are on the boards of these companies have no obligation to act responsibility. So what solves that issue?

The argument that those who work harder become more successful is only true to a degree—the human mind is in charge of another's success. If I were an empowered employer, it would be within my ability to deny or approve a candidate’s job application, regardless of their qualifications. So my question to the Austrian school is this: do we take the chance that the most prosperous, wealthy person in society may be working with a harmful sense of self-interest, thereby buying out the liberty of the masses, or do we legislate the responsibility which the Austrian argument incorrectly assumes is already there? The latter technically restores the liberty to the masses—isn’t that what all Libertarians want? Unless a CEO can justify their salary, arguing that they are $99,000,000 more productive than their secretaries, this question must be answered.

Is it possible, then, that the government's regulations simply serve to legislate the sense of responsibility crucial to the Austrian argument?

Opinions expressed in this column are solely the beliefs of the writer. 

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