On Losing Battles and Winning Wars

I delivered this talk at the 2009 Porcupine Freedom Festival.

The FSP has always shied away from using the term “libertarian” on our website and in our literature, chiefly because we want to create a big tent movement that’s welcoming to all freedom lovers. But the philosophy that we all have in common, that individual rights to life, liberty, and property are sacrosanct and should not be violated by any human beings, including those organized into governments, could easily be described as “libertarian,” and I’m going to use that term this evening. I think it has more positives than negatives for us in New Hampshire, and I also think it helps us strategically, for reasons I’ll explain shortly.

I’ve titled this talk, “On Losing Battles and Winning Wars,” and it’s about how the Free State Project for the first time lets us libertarians take all those disappointing and sometimes infuriating things that politicians do and forge a long-lasting, wide-reaching victory out of them. And the key to it all is being able to say, “We told you so.” Allow me to use a few examples.

When the Bush Administration told us last September that the financial system was collapsing, and they needed immediate authority to spend $700 billion of taxpayer money to buy “toxic assets” from U.S. banks, or the entire economy would be in ruins, libertarians opposed the bailout. We said that the large banks had largely brought the problem on themselves by making risky loans, that plenty of smaller banks were not in trouble, and that the Federal Reserve’s overly low interest rates and federal government’s aggressive incentives for risky homebuyers had been what caused the crisis in the first place. Bailing out the banks would only make them more likely to make risky decisions in the future, requiring, of course, more bailouts at some point down the road. We also said that when federal money gets involved, political considerations always enter the picture. There will be favoritism and meddling. But the politicians said that American consumers needed to spend themselves into even more debt, even as their future tax burden rose to support these big businesses, and that the banks needed to make ever riskier loans to prop up the economy.

As it turns out, the $700 billion were not used to buy toxic assets at all. They were used to buy stock in big banks, insurers, and other financial institutions, giving the government majority ownership over some of them. Then we found out that some of these corporate welfare queens were using our money on corporate junkets and big bonuses. The politicians got really mad about that, as if it couldn’t have been foreseen. But these misdeeds accounted only for a small part of the subsidy money, and all the attention on them was perhaps in part misdirection. For things were to get even worse. The feds then used a big chunk of the money to take shares in car companies, blatantly breaking the law. We were told it was necessary to prevent the car companies from going bankrupt, which they then did anyway.

And when it came to the financial institutions, some of them got more than others, a lot more. Citigroup, Bank of America, and AIG together got roughly half of the money that we know has been spent, but of course the whole program is shrouded in secrecy, so there’s still a couple hundred billion unaccounted for. Congress’ meddling in the whole program caused banks to start begging to pay back the money. Some of them insist they never would have taken the money in the first place had they known the strings that would be attached. The new administration for a long time wouldn’t let them pay the money back, but recently they have started doing so.

The TARP bailout was the perfect government program, because there’s no way to know whether it worked or not. But what did libertarians say would happen? Congress meddling? Check. Political considerations determining who gets money? Check. Smaller banks rising to meet the credit challenge anyway? Check. Moral hazard causing another crisis down the road? Well, check with us in a few years, America, because “we told you so.”

In March 2003, the Bush Administration invaded Iraq, a move supported by 72% of Americans. Libertarians were a big part of the tiny minority opposing the war. We said that Iraq did not pose a direct threat to the U.S. Even if Saddam had a few weapons of mass destruction, there was no way he could attack American soil with them, and some of us, like Harry Browne, predicted that there were no weapons of mass destruction. We said that Iraq was a diverse country with deep ethnic, religious, and political divisions, that the U.S. had no business nation-building there, and that such an endeavor would at best create another Bosnia, a failed state propped up by peacekeepers and an internationally appointed dictator, and more likely a Middle Eastern quagmire.

Well, we all know what happened. By December 2008, 64% of Americans thought the Iraq War was a mistake. It’s deeply regrettable that the mistake was made, and we did not wish for failure in this endeavor, but we knew it was more likely than success, America. Maybe listen to us next time.

When a new majority took over the New Hampshire state legislature in 2007, they decided to hike state spending by more than 17%, the largest increase in state history. Libertarians said that their revenue projections were too rosy, that they were creating unsustainable deficits that would require tax increases to cover. Fast forward to October 2008, and the projected budget deficit became $250 million. Some of that was closed with stopgap measures that won’t solve the problem permanently. Now, just this week, the legislature passed $200 million of tax and fee increases. New Hampshire, we told you so.

How do we turn these defeats into victory? Well, libertarians seem to have an uncanny knack for prognosticating the consequences of public policies. The reason for this probably has something to do with the fact that we are right. Libertarianism is not just a set of beliefs, but in large part a way of analyzing and understanding the world, and a pretty darned accurate one. On the national scene, no one listens to libertarians, so they don’t know that we’re right most of the time. We’re drowned out.

But here in New Hampshire, we can make our voices heard. Every time an important policy decision is made, we can carefully, thoughtfully, and boldly give our predictions about what will happen. Then when it does happen, we have to start saying, “We told you so.” And the more we’re proven right, the more people will listen. Everyone wants to be a part of the winning team, and we are that winning team. Right now, winning just means being right most of the time, and being right most of the time means being pretty depressed about things most of the time – but that’s not all there is to winning. We’re going to win the intellectual war for hearts and minds, right here in New Hampshire.