The following excerpts are from the Keith Knight – Don’t Tread on Anyone podcast

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Keith Knight: A lot of criticism of the free market is not unique to the free market. For example, there is greed, there is dog-eat-dog competition, it can disrupt & disorder, and there’s no guarantee of my safety.

Well, that all applies ten-fold to the state because you can’t opt out of funding them and they have no competition. Do you think there’s anything that uniquely applies negatively to the free market that justifies the existence of the state?

Art Carden: I really don’t think there is. I tend to believe that states are kind of inevitable and there’s always going to be an organization with a comparative advantage in violence – that’s the way that my advisor defined a state when I was in graduate school, but I don’t think it’s necessary.

Sort of like the song in the Sound of Music where the girl’s singing, “anything you can do, I can do better,” I would say anything States can do, markets do better. I don’t think the state is necessary for any of the problems that we want to fix or any of the problems that we want to solve. I think the last four years have been a really nice illustration of the difference between the market and the state when you consider the administration of Donald Trump.

A lot of people are horrified at Donald Trump as just a crass human being who is just an opportunist. Assume for the sake of argument that everything everybody says about Trump is right, that he’s the worst of the worst. Okay, well, would you prefer a world in which he’s doing suspect real estate deals in New Jersey and New York to a world in which he has his finger on the nuclear button? I think the answer is yes. I would much rather Donald Trump confine his efforts to trying to make money in the real estate market rather than trying to make America great again by pursuing all sorts of boneheaded policies like immigration restrictions and tariffs.

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Keith Knight: In your book Political Philosophy: An Introduction and in your book Why Not Capitalism you mentioned this excellent book, The Problem of Political Authority: An Examination of the Right to Coerce and the Duty to Obey by Michael Huemer. What is so important about this book?

Jason Brennan: Yeah, that is one of my favorite books. One of the main questions in political philosophy is what—if anything—justifies government? In particular, governments claim to have two special moral powers—I’m going to use different words than the ones he uses—I call them legitimacy and authority. Legitimacy refers to a supposed governmental power to create and enforce rules over a certain geographic area against certain people. So, governments are a proper subset of a society which claim the right to have monopoly power in coercively enforcing rules. That’s what they are.

So, what makes government legitimate? If anything, why would it have the right to create these rules? Why would it be allowed to enforce rules that others cannot?

Authority is another purported power of government. To have authority is to have a power to impose on another an obligation to obey. If I say to you right now, “You may not smoke marijuana,” you don’t think you have any obligation to follow my orders, right? If I say, “I order you not to smoke pot,” you’re like, “Who are you? I don’t have to listen to you.” But when governments order us not to smoke pot, most people believe that we acquire an obligation not to do it in virtue of government issuing that order.

It’s really perplexing. Why would government have legitimacy? Why would it have authority? What Mike does in that book is he very carefully goes through a couple thousand years of arguments trying to show that governments have authority & legitimacy, and it’s amazing how bad these arguments are. Basically, they all fail.

The argument that you get in middle school that your teachers tell you is, “Well, government has authority because you consent to government.” No, you don’t. There’s no plausible interpretation of the relationship between you and your government under which there’s consent. They’ll make other kinds of arguments as well, so Mike very carefully goes through and shows that none of these arguments work. He then gives us a psychological diagnosis about why we might believe in government authority, even though we don’t have any good arguments on its behalf. That’s the first half. The first half just basically shows we don’t have any reason to believe in authority or legitimacy.

The second half then asks, is anarchism feasible? If we don’t have reason to believe in authority or legitimacy, what about the alternative—anarchism? And Mike says, we don’t know if it would work, maybe it would be a disaster, but he gives us some grounds for thinking empirically that it would work better than people think. A lot of the things they think would happen under anarchy, it’s not as bad as they think.

Some other books you might read on that—if you’re interested in anarchism—there’s a book called “Anarchy Unbound” which is a nice case study in how anarchism [might work]. Actually, the subtitle is “Why Self-Governance Works Better Than You Think.” There’s another book by Edward Stringham called “Private Governance” where he points out that, as a matter of fact, this is an empirical claim that most of the government or governance, the rule enforcing that protects your rights in your own life is not done by government, it’s done through extra legal channels.

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Keith Knight: It’s incredible that he can be so skeptical about market failure but doesn’t hold those same principles to the state. The argument is that people don’t have tons of information in the market, so they make bad decisions. What, are people omniscient about politics and politicians? “Well,” they’ll say, “there’s greed in the marketplace.” But there’s greed in politics!

Do you see anything that applies to the free market in a unique way that is negative and unique to the market, that doesn’t apply to the state ten-fold? Considering you can’t opt out of funding them and they don’t have competitors?

Bryan Caplan: That’s a tough question. It’s a good one. Let me come back to that in just a minute.

Here’s what was very revealing to me about Paul Krugman, Tyler Cowen did an interview with him, and Tyler was able to ask him some really hard questions about why exactly would you think the government would do well? Here’s the thing, Paul Krugman doesn’t think the governments do well. When you actually get him on that topic, he says, “Yeah, this government really screwed up.”

Tyler actually had what to me is the million-dollar question, he said, “You’re very partisan, Paul. You really hate the Republicans. You really like the Democrats. Yet if we look at a bunch of states where they have one-party Democratic rule, you’re not happy with what they’ve done. So, dude, what gives?” And Paul did not dodge the question. He did have some thoughts (that weren’t satisfactory), but he did acknowledge the issue. He even said, “Yeah, well, you know, in your one-party Democratic states you wind up getting a lot of good old boys’ clubs, they’re kind of corrupt, and they don’t really worry about pleasing voters anymore. Sometimes you get a pragmatic Republican governor in the Northeast and that works out maybe better, but let’s not quite say that.” That was the gist of it.

To me it really comes down to, at a core level, can you just say, “I just think the government is going to mess it up,” or is it just a matter of it has messed up a bunch of times, but there’s no general lesson? In other words, for someone like Paul Krugman, he’s happy to admit the government has screwed up a bunch of times, but he doesn’t want to draw the lesson of “we should expect government to keep screwing up in similar ways in the future”. He wants to think of that as accidental. For him, government failure is more accidental, it just happened. Whereas market failure is systematic, it’s the way the system works. If you were to say, “Well, that’s the way the government works, too,” it would just be very hard for him to deal with that. He does dodge that, but he’s not blind. He’s a super smart guy, and when you frame it in the right way, then he does acknowledge things that you might be surprised he acknowledges. That was one of my favorite encounters—I wasn’t there—but it was one of my favorite expressions of the way that he thinks.

In terms of problems that markets have that governments don’t have ten times over, probably the best answer is the problem of transaction costs. The key thing about markets is, to make things happen you’ve got to get people to agree. Sometimes that is so expensive that there’s just no way to accomplish it. Government basically has the ability to pull out a gun and say, “We’re going to save a lot of money on the negotiation now because we’re just going to do it my way. Shut up.” That causes a bunch of other problems, but it does save on negotiation costs.

Knight: All right. I’ll give that one to you. But for the same reason, we wouldn’t say, “Negotiation costs are high; therefore, the Koch brothers have the right to initiate aggression against peaceful people.” Well, we shouldn’t give it to Doug Ducey or Donald Trump either.

Caplan: Yeah, I agree, but that’s still the kind of thing I would point to.

Knight: Excellent, thank you.

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Keith Knight: I’ll often ask people, if I don’t like what Olive Garden is doing, can I stop working there or going there? Or, what if I said the same about Walmart? People look at me and say, “Obviously, of course you have the right to stop funding them.” However, when it comes to government services, people don’t extend that same courtesy. How is it that people understand government to be held to a totally different moral standard than all other organizations?

Jason Brennan: I work a great length on political psychology, and a lot of my work is on thinking about what political psychology tells us about the justification of democracy and voting behavior. In general, what political psychologists find is that most people don’t really have an ideology and they don’t really have strong political beliefs.

The people who do, for most of them, it’s kind of a post hoc rationalization. Where the model is almost—this would be sort of personal to me—it’s like you’re an Irish guy from northern Massachusetts, Irish guys from northern Massachusetts tend to vote Democrat. Not because there’s anything special about the Democrats helping them, but just because that’s what people like us do in the same way that you root for the Patriots, right? Then a small percentage of those people will then post hoc rationalize that they agree with the beliefs of their party.

So, when you look at what people believe about politics, you can’t really get too excited by that. As Robin Hanson would say, the purpose of politics is not policy. Politics is not about policy. People’s political beliefs are not about describing how they think the world really works or should work. Rather we use our political beliefs in the same way that we use t-shirts. It’s a way of showing certain people that I’m on their side and part of their coalition. The fact that there’s an inconsistency in most people’s beliefs is not surprising because they’re not using those beliefs to form a rational theory about the world. They’re using them for another social purpose.

But you’re right, there is a huge tension there. The reasons that people give against socially mandatory monopoly—why would it be bad if Walmart were the only retailer, and you were forced to shop at Walmart? If there were no permission to have competition, they’re going to give you some account for that. If you ask them the same question, “Why doesn’t your anti-monopoly argument apply to government?” It’s not clear how they overcome that.

The main thing they’re going to say is, “We have to have a monopoly on violence. Violence is different. Governments enforce the rules with violence, and if we had competition, what that would mean is that we’d have warring factions on the street constantly fighting. Police Force A and Police Force B would be shooting each other to try to maintain dominance.

Is that true? Well, again, if you would look at that book, Anarchy Unbound by Peter Leeson and Mike Heumer’s book, The Problem of Political Authority to give you an account of why this view of anarchy is probably not right. Anarchism would not mean just constant violence on the streets between warring factions and gangs.

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Keith Knight: A lot of criticism of the free market, you’ll hear things like, “Well, there’s corruption, there’s greed and people don’t have a lot of information, so they often get manipulated.”

The problem with virtually all of these criticisms is they apply ten-fold to government intervention because you can’t opt out of it, and they don’t face competitors to which you can go to if you’re not satisfied with their product or service. Do you see that there’s any unique criticism of the free market that doesn’t also apply to socialism or the state?

Johan Norberg: Now, what would that be? I mean, the corruption thing, definitely. If you have to go to eleven bureaucrats to start a business or get your permit or your license requirement, that’s eleven bureaucrats who can force you to pay bribes to do it. That’s one of the biggest problems in many poor countries. When I’ve been to Kenya, people tell me in the slums that they have a saying that it’s not safe to carry cash around here because there are too many policemen. The policemen, they say, “Oh, you got a store here. It would be sad if something happened to that. You don’t have a permit, right? Pay up.” So, the fewer restrictions and regulations, the fewer opportunities for corruption.

Is there anything unique you can say about the problems of free markets that doesn’t apply to it? They would have to be more, I think, psychological. It would have to be something about, are we overwhelmed with choice? Perhaps we don’t want as much freedom as we have in a more open economy. Perhaps it’s better if someone tells us what to do. I think there are some intellectuals who are trying to make that argument.

Knight: Well, we have Cass Sunstein who wrote the book, Nudge where he says, “Yeah, unfortunately, people have too much choice and it’s the role of the state to coerce them into doing otherwise.”

But for the same reason I oppose the state forcibly stopping me, I also oppose Walmart from stopping me, and Amazon. I hold them to the same standard I’d hold anyone else. Maybe choice is bad, but that doesn’t give me the right to go around violently dominating Johan Norberg. Like, I’m going to need to see a copy of the book before I allow it to be published because you have too many choices with what you want to write about.

Norberg: Yeah, it’s always the other guy’s choices that’s a problem, right? It’s never your own that has to be restricted.

Knight: Of course.