Creating a Framework for Utopia

In 1995, the Gallup Poll found that 39% of Americans believed “the federal government has become so large and powerful that it poses an immediate threat to the rights and freedoms of ordinary citizens.” Pollsters couldn’t believe it, so they tried again, taking out the word “immediate.” This time 52% of Americans agreed.

Later that year, USA Today reported that “many of the 41 million members of Generation X … are turning to an old philosophy that suddenly seems new: libertarianism.” The Wall Street Journal agreed: “Much of the angry sentiment coursing through [voters’] veins today isn’t traditionally Republican or even conservative. It’s libertarian.… Because of their growing disdain for government, more and more Americans appear to be drifting — often unwittingly — toward a libertarian philosophy.”

The future, it is becoming increasingly clear, will be libertarian.

Libertarianism is the view that each person has the right to live his life in any way he chooses so long as he respects the equal rights of others. It is an old philosophy, but its framework for liberty under law and economic progress makes it especially suited for the dynamic world we are now entering: the Information Age.

Unfortunately, however, government in fact remains bigger than ever. In the United States, the federal government forcibly extracts $1.6 trillion in wealth a year from those who produce it, and state and local governments take another trillion. Every year, Congress adds another 6,000 pages of statute law and regulators print 60,000 pages of new regulations in the Federal Register.

Who Should Have Power?

There are now two competing forces in world politics: the pull toward centralizing power and the push toward devolving power to smaller, local entities. Despite the increasingly loud complaints about big government, Congress continues to offer federal solutions to problems, thus eliminating local control, experimentation, and competing solutions. The bureaucrats of the European Union in Brussels try to centralize regulation at the continental level, partly to prevent any European government from making itself more attractive to investors by offering lower taxes or less regulation.

Paradoxically, nation-states today are too big and too small. They’re too big to be responsive and manageable. India has more than one million voters for each of its more than 500 legislators. Can they possibly represent the interests of all their constituents or write laws that make sense for almost a billion people? In any country larger than a city, local conditions vary greatly and no national plan can make sense everywhere.

At the same time, even nation-states are often too small to be effective economic units. Should Belgium, or even France, have a national railroad or a national television network, when rails and broadcast signals can so easily cross national boundaries? The great value of the European Union is not the reams of regulation produced by Eurocrats, but rather the opportunity for businesses to produce and sell across a market larger than the United States. A common market doesn’t require centralized regulation; it only requires that national governments not prevent their citizens from trading with citizens of other countries.

Breaking Away from Big Government

As centralized governments around the world try to squelch regional differences and small-scale experiments, another trend is also visible. Businesspeople try to ignore government and find their natural trading partners, be it across the street or across national borders. Businesses in the triangle formed by Lyon in France, Geneva in Switzerland, and Turin in Italy do more business among themselves than with the political capitals of Paris and Rome. Dominique Nouvellet, one of Lyon’s leading venture capitalists, says, “People are rebelling against capitals that exercise too much control over their lives. Paris is filled with civil servants, while Lyon is filled with merchants who want the state to get off their back.”

Other cross-border economic regions include Toulouse and Montpellier, France, with Barcelona, Spain; Antwerp, Belgium, with Rotterdam, the Netherlands; and Maastricht, the Netherlands, with Liege, Belgium, and Aachen, Germany. National governments and national borders impede the creation of wealth in those areas.

Many regions are reviving an old solution to the problems of out-of-touch, out-of-control government: secession. The French-speaking people of Quebec agitate for independence from Canada. So do a growing number of people in British Columbia, who see that their trade ties to Seattle and Tokyo are greater than those with Ottawa and Toronto. The Lombard League in productive northern Italy is calling for secession from what it regards as Mafia-dominated, welfare-addicted southern Italy. There’s an increasing likelihood of devolution or even independence for Scotland. National breakup may well be a solution to some of the problems of Africa, whose national boundaries were carved by colonial powers with little regard to ethnic identity or traditional trading patterns.

The United States is a part of the secessionist trend. Staten Island voted to secede from New York City in 1993, but the state legislature blocked its path. Nine counties in western Kansas have petitioned Congress for statehood. Activists in both northern and southern California have proposed that the giant state be split into two or three more manageable units. The San Fernando Valley is brimming with demands to secede from the city of Los Angeles.

Local Power

Switzerland offers a good example of the benefits of free trade and decentralized power. Although it has only 7 million people, Switzerland has three major language groups and people with distinctly different cultures. It has solved the problem of cultural conflict with a very decentralized political system — 20 cantons and six half-cantons, which are responsible for most public affairs, and a weak central government, which handles foreign affairs, monetary policy, and enforcement of a bill of rights.

One of the key insights offered by the Swiss system is that cultural conflicts can be minimized when they don’t become political conflicts. Thus, the more of life that is kept in the private sphere or at the local level, the less need there is for cultural groups to go to war over religion, language, and the like. Separation of church and state and a free market both limit the number of decisions made in the public sector, thus reducing the incentive for groups to vie for political control.

People around the world are coming to understand the benefits of limited government and devolution of power. Still, the centralists will not give up easily. The impulse to eliminate “inequities” among regions is strong. President Clinton said in 1995, “As president, I have to make laws that fit not only my folks back home in Arkansas and the people in Montana, but the whole of this country. And the great thing about-this country is its diversity, its differences, and trying to harmonize those is our great challenge.” Kentucky Governor Paul Patton says that, if an innovative education program is working, all schools should have it, and if it isn’t, none should.

But why? Why not let local school districts observe other districts, copy what seems to work, and adapt it to their own circumstances? And why does President Clinton feel that his challenge is to “harmonize” America’s great diversity? Why not enjoy the diversity? The problem for centralizers is that appreciating diversity means accepting that different people and different places will have different situations and different results.

The bottom-line question is whether centralized systems or competitive systems produce better results. Libertarians argue that competitive systems offer better answers than imposed, centralized, one-size-fits-all systems.

Two large companies — ITT and AT&T — both announced in 1995 that they would split themselves into three parts because they had become too large and diverse to be managed efficiently. ITT had sales of about $25 billion a year, AT&T about $75 billion. If corporate managers and investors with their own money at stake can’t run businesses that size effectively, can it really be possible for Congress and 2 million federal bureaucrats to manage a $1.6 trillion government — to say nothing of a $6 trillion economy?

The Information Age

One big reason that the future will be libertarian is the arrival of the Information Age. Information is getting cheaper and cheaper and thus more widespread. The Information Age is bad news for centralized bureaucracies.

First, as information gets cheaper and more widely available, people will have less need for experts and authorities to make decisions for them. That doesn’t mean we won’t consult experts — in a complex world, none of us can be expert in everything — but it does mean we can choose our experts and make our own decisions. Governments will find it more difficult to keep their citizens in the dark about world affairs and about government malfeasance.

Second, as information and commerce move faster, it will be increasingly difficult for sluggish governments to keep up. The chief effect of regulation on communications and financial services is to slow down the pace of change and keep consumers from receiving the full benefits that companies are striving to offer us.

Third, privacy is going to be easier to maintain. Governments will try to block encryption technology and demand that every computer come with a government key — like the “Clipper Chip” — but those efforts will fail. Governments will find it increasingly difficult to pry into citizens’ economic lives. When digital bits become more valuable than coal mines and factories, it will be more difficult for governments to exert their control. As techno-entrepreneur Bill Frezza puts it, “coercive force cannot be projected across a network.”

Some people worry that the cost of computers and Internet access creates a new divide between the haves and the have-nots. In fact, an adequate used computer and online access for a year can be had for the cost of a year’s subscription to the New York Times. In any case, the cost of computers is falling and will continue to fall, as did that of telephones and televisions — once the playthings of the rich. By mid-1996, entrepreneurs were offering free e‑mail to any consumer willing to put up with advertisements on the computer screen.

There will be no haves and have-nots, says Louis Rossetto, editor of Wired, the libertarian bible of the Information Age: “Better to think of the haves and the have-laters. And the haves may be the ones who are really disadvantaged, since they are the guinea pigs for new technology, paying an arm and a leg for stuff that in a couple of years will be widely available for a fraction of its original price.” Attempts to force companies to supply their technology to everyone at once or at a below-market cost will just reduce every entrepreneur’s incentive to come up with a new product and thus slow down the pace of change.

As more of the value in our world reflects the products of our minds embedded in digital bits, traditional natural resources will become less relevant. Institutional structures and human capital will become far more important to wealth creation than oil or iron ore. States will find it more difficult to regulate capital and entrepreneurship as it becomes easier for people and wealth to move across borders. Countries will prosper by reducing taxes and regulation in order to keep innovators and investors at home and attract them from abroad. The importance of free markets and individual effort will indeed be enhanced by the more open, participatory economy made possible by cyberspace. Peter Pitsch of the Hudson Institute calls this new economy “the Innovation Age.”

People have always had trouble seeing the order in an apparently chaotic market. Even as the price system constantly moves resources toward their best use, on the surface the market seems the very opposite of order — businesses failing, jobs being lost, people prospering at an uneven pace, investments revealed to have been wasted. The fast-paced Innovation Age will seem even more chaotic, with huge businesses rising and falling more rapidly than ever, and fewer people having long-term jobs. But the increased efficiency of transportation, communications, and capital markets will in fact mean even more order than the market could achieve in the industrial age. The point is to avoid using coercive government to “smooth out the excesses” or “channel” the market toward someone’s desired result.

A Framework for Utopia

Lots of political movements promise utopia: Just implement our program, and we’ll usher in an ideal world. Libertarians offer something less and more: a framework for utopia, as Harvard University philosopher Robert Nozick put it.

My ideal community would probably not be your utopia. The attempt to create heaven on earth is doomed to fail, because we have different ideas of what heaven would be like. As society becomes more diverse, the possibility of agreeing on one plan for a whole nation or the whole world becomes even more remote. And in any case, we can’t possibly anticipate the changes that progress will bring. Utopian plans always involve a static and rigid vision of the ideal community, and such a vision cannot accommodate a dynamic world. We can no more imagine what civilization will be like a century from now than the people of 1900 could have imagined today’s civilization. What we need is not utopia, but a free society in which people can design their own communities.

A libertarian society is only a framework for utopia. In such a society, government would respect people’s right to make their own choices in accord with the knowledge available to them. As long as each person respected the rights of others, he would be free to live as he chose. His choice might well involve voluntarily agreeing with others to live in a particular kind of community. Individuals could come together to form communities in which they would agree to abide by certain rules, which might forbid or require particular actions. Since people would individually and voluntarily agree to such rules, they would not be giving up their rights but simply agreeing to the rules of a community that they would be free to leave.

We already have such a framework, of course. In the market process, we can choose from many different goods and services, and many people already choose to live in a particular kind of community. A libertarian society would offer more scope for such choices by leaving most decisions about living arrangements to the individual and the chosen community, rather than government’s imposing everything from an exorbitant tax rate to rules about religious expression and health care.

Such a framework might offer thousands of versions of utopia, which might appeal to different kinds of people. One community might provide a high level of services and amenities, with correspondingly high prices and fees. Another might be more spartan, for those who prefer to save their money. One might be organized around a particular religious observance. Those who entered one community might forswear alcohol, tobacco, nonmarital sex, and pornography. Other people might prefer something like Copenhagen’s Free City of Christiana, where cars, guns, and hard drugs are banned but soft drugs are tolerated and all decisions are at least theoretically made in communal meetings.

One difference between libertarianism and socialism is that a socialist society can’t tolerate groups of people practicing freedom, while a libertarian society can comfortably allow people to choose voluntary socialism. If a group of people even a very large group — wanted to purchase land and own it in common, they would be free to do so. The libertarian legal order would require only that no one be coerced into joining or giving up his property. Many people might choose a “utopia” very similar to today’s small-town, suburban, or center-city environment, but we would all profit from the opportunity to choose other alternatives and to observe and emulate valuable innovations.

In such a society, government would tolerate, as Leonard Read, founder of the Foundation for Economic Education, put it, “anything that’s peaceful.” Voluntary communities could make stricter rules, but the legal order of the whole society would punish only violations of the rights of others. By radically downsizing and decentralizing government — by fully respecting the rights of each individual — we can create a society based on individual freedom and characterized by peace, tolerance, community, prosperity, responsibility, and progress.

Libertarian Prospects

Can we achieve such a world? It is hard to predict the short-term course of any society, but in the long run, the world will recognize the repressive and backward nature of coercion and the unlimited possibilities that freedom allows. The spread of commerce, industry, and information has undermined the age-old ways in which governments held men in thrall and is even now liberating humanity from the new forms of coercion and control developed by twentieth-century governments.

As we enter a new century and a new millennium, we encounter a world of endless possibility. The very premise of the world of global markets and new technologies is libertarianism. Neither stultifying socialism nor rigid conservatism could produce the free, technologically advanced society that we anticipate in the twenty-first century. If we want a dynamic world of prosperity and opportunity, we must make it a libertarian world. The simple and timeless principles of the American Revolution — individual liberty, limited government, and free markets — turn out to be even more powerful in today’s world of instant communication, global markets, and unprecedented access to information than Jefferson and Madison could have imagined. Libertarianism is not just a framework for utopia, it is the essential framework for the future.