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3 Things That Make Libertarian Heads Explode

Libertarians tend to ride on theoretical unicorns that don’t take them too far in the real world.
 
 
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Libertarians are proponents of a philosophy that embraces free-market ideology, limited government, and a certain form of individual liberty. They would like to take the government and drown it in the proverbial bathtub. Unfortunately, libertarians tend to ride on theoretical unicorns that don’t take them too far in the real world.

Next time you find yourself in the company of one of these quizzical beings, try bringing up one of the following topics and watch them start galloping off in 10 directions at once.

1. The inequality problem: Why do some people end up with most of the toys? The fact that in a capitalist system, money seems to flow into the hands of the few is a source of big headaches for many libertarians, though not all—some seem to regard any market outcome as the hand of God herself.

Irrefutably, America’s income distribution has become ridiculous, ranked #4 in the world out of 141 countries for inequality, behind Russia, Ukraine and Lebanon, and this rattles many libertarians. 

Libertarians usually start by insisting that how much money you have boils down to the choices you make as an individual. Bad, stupid choices = poverty. Good, smart choices = wealth (those clever Russian oligarchs!). Often the libertarian will rush to the defense of the rich. For example, we have W. Michael Cox, director of Southern Methodist University’s Center for Global Markets and Freedom, offering this tidbit of wisdom recently on the Glenn Beck show:

“The truth is: If you look at almost all successful people in this country, from the time they were young they played with the right kids, studied in school, make good grades, get a job, get a lot of education, be productive at work everyday, save their money, start a business, hire people, invest—they made good choices.”

The truth is actually this: Many a rich person gets wealthy just by being born to wealthy parents. Others get rich by ripping off other people. Bankers committed massive fraud on mortgage loans leading up to the financial crisis, and continue a crime spree which includes laundering money for terrorists and drug cartels, rate-rigging, manipulating the prices of commodities, taking bribes, engaging in insider trading, participating in ponzi schemes, cooking the books, and so on. Fraud has grown so pervasive in corporate America that legendary short seller Jim Chanos describes a culture in which executives think they have a fiduciary duty to cheat. The idea is that since everybody else is cheating, they owe it to shareholders to cheat in order to stay competitive!

Beyond the blatant crimes, bankers are engaging far more in reckless speculation that destabilizes the economy than doing useful things like lending money to people who need it. Put simply, they make a great deal of money looting the economy through cheating taxpayers and screwing customers with fees and tricks. Result: Bankers get very rich, while the rest of us get poorer.

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When forced to deal with inequality, libertarians often talk about cronyism, something they insist would not happen in their free-market utopia. Cronyism, they insist, is all about government favors, forgetting that cronyism is rampant between various market players. What do you call it when corporate CEOs collude with their boards to award themselves outrageous salaries? If you are an English speaker, you call it "cronyism." When the owner of a bank colludes with other bank owners to do things like interfere with prices or squash competition, that’s also a form of cronyism. For some strange reason, libertarians seem to think cronyism is just something businesses do with governments.