Libertarian Loopiness

Libertarianism was under fire late last year as the financial meltdown seemed to sweep away the notion that business deregulation â€" the removal of government oversight from the workings of business â€" was the key to prosperity.

Libertarians counterattacked immediately, arguing that the problem was that government had become too big in the first place.

Of course, government certainly didn't get smaller this decade, thanks more to deficit-driven military spending than increased spending regulating the financial services sector. Nobody likes big government. But it's absurd to say government is the only problem in a crisis of such massive proportions. The government deserves some blame, but it didn't create and market exotically structured mortgages, or use those mortgages to buy homes.

That there's plenty of blame to go around should be obvious. But today's Wall Street Journal has this libertarian apologetic, again blaming the government.

It's right to raise questions about how the government has handled the bail-out. There's even a nice line about how the more incompetent you are at business, the bigger the bailout you're getting now. Like many good lines, it's not actually true. Numerous incompetent bankers, and their shareholders, have been vaporized. Hedge funds, honest and otherwise, are taking it on the chin. There certainly isn't a redistribution of wealth going on to anybody who isn't a bank, and nor has there been for at least the last decade.

What to do? The writer, Stephen Moore, cites a passage from a novel by Ayn Rand, the patron saint of libertarians. In this passage, the hero calls for eliminating the income tax and firing all the government employees. Finally, we'll be rid of public schools, police officers and libraries, and best of all, we'll never again have to show anyone the terrible picture on our driver's license. Even better, no more military! That is an attractive thought â€" we'd save almost $600 billion just on the direct line item. And without a military, it would be much harder to go off on deficit-feeding boondoggles like Vietnam and Iraq.

Moore doesn't say anything about who's responsible for the existing mountain of debt, once there's no more government. Perhaps we just default. Or maybe we all volunteer to make debt elimination payments for a while. But at least they won't be income taxes.

Sarcasm aside, the Libertarian position is a Do-Nothing position: Let everything fail that's going to fail, and we'll pick up the pieces in a few years and start over. That approach in the 1930s fueled totalitarianism, not libertarianism. Sure, things are different this time. But not that different.