Paul Krugman on libertarian fantasies

He writes:

…the cost of bureaucracy is in general vastly overestimated. Compensation of workers accounts for only around 6 percent of non defense federal spending, and only a fraction of that compensation goes to people you could reasonably call bureaucrats.

And what Konczal says about welfare is also true, although harder to quantify, for regulation. For sure there are wasteful and unnecessary government regulations — but not nearly as many as libertarians want to believe. When, for example, meddling bureaucrats tell you what you can and can’t have in your dishwashing detergent, it turns out that there’s a very good reason. America in 2014 is not India under the License Raj.

In other words, libertarianism is a crusade against problems we don’t have, or at least not to the extent the libertarians want to imagine.


And what all this means in turn is that libertarianism does not offer a workable policy agenda. I don’t mean that I dislike the agenda, which is a separate issue; I mean that if we should somehow end up with libertarian government, it would quickly find itself unable to fulfill any of its promises.

You can read his further points here.  In fact I agree with many of Krugman’s observations in what I thought was overall a useful post.  It’s just that I think a lot of other viewpoints are living in a fantasy world too.

That said, Krugman grossly underestimates the costs of government regulation.  For one thing, government regulations are a major obstacle to the infrastructure improvements which Krugman is so keen on.  To use Krugman’s own pick of the cherry, he wrote another post defending the DMV for its on-line service and reasonable wait times.  It was not always so, but on top of that let’s not forget the Virginia DMV just tried to put Uber and other ride-sharing services out of business (Krugman himself wrote rapturously about Uber a few weeks ago and how it held out the promise of a society with diminished car ownership in some locales.  I say bring it on.)  Fortunately the regulators were temporarily overriden in this case, although they may reemerge as an obstacle in a subsequent bargain.  More generally, taxi license and medallion requirements are a disgrace in many places, and who is in charge of that?  Typically the DMV.

You might also ask whether DMVs underregulate where they ought to regulate more.  The number of road deaths in the United States each year is so high as to be scandalous.  I am not sure how much this problem can be pinned on the DMV (how easy is it to get very bad drivers off the road through legal/constitutional means?), but still it is hard to argue that in absolute terms these agencies are overseeing a successful regime of road safety.


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