Question from a friend
(paraphrased for clarity):

Q: “Harry, I understand that government is force. And that you’re morally opposed to government, because you oppose the initiation of force against peaceful people. But from a practical standpoint, don’t we need government for certain essential functions of society? For example, without government, how would we have laws to prevent society from descending into chaos?”

My Answer:

If there are certain functions of society that are so essential (and indeed there are)… then from a practical standpoint, I believe these functions are too important to be left to government. Because government is full of perverse incentives that prevent them from doing their job well.

Let me explain…

First, it’s important to be clear about what government is. Government is not simply a maker and enforcer of rules. (Because private organizations make and enforce rules too, e.g. within the boundaries of their property.)

There are certain defining characteristics that set a government apart from other organizations. One of which is, a government is a territorial MONOPOLY on the legal right to INITIATE force. (In contrast, non-governmental entities only have the right to use DEFENSIVE force.)

Another defining characteristic is, governments are COERCIVELY-FUNDED via taxation.

So (from a practical standpoint), here’s why I believe any “essential function of society” would be better performed if it were left to the market (instead of a coercively-funded monopoly called government).

Reason #1:
Government Has No Incentive To Do Its Job Well

Whatever you believe government’s role should be – as a coercively-funded monopoly, government has no incentive to do a good job at it. Because its politicians/bureaucrats/agents get paid the same regardless of how badly government does its job.

In fact… because it is a coercively-funded monopoly… government even has the perverse incentive to underperform at its job, then use that as an excuse to justify increasing its coercive funding (i.e. taxes) and its power.

In contrast – voluntarily-funded institutions operating in the market, though imperfect, have far stronger incentives to serve consumers well (compared to a coercively-funded monopoly). Because their profits depend on providing consumers with better quality services (and at lower costs) than their competitors.

Reason #2:
Government Pays No Price for Being Wrong

As economist Thomas Sowell eloquently put it…

“It is hard to imagine a more stupid or more dangerous way of making decisions, than by putting those decisions in the hands of people who pay no price for being wrong.”

Thomas Sowell (economist)

This quote applies to practically all government decisions – because government decisions are made by bureaucrats who pay no price for being wrong. (Since it is TAXPAYERS who pay the price for mistakes made by government.)

To quote Ayn Rand…

“A businessman cannot force you to buy his product; if he makes a mistake, he suffers the consequences; if he fails, he takes the loss.

A bureaucrat forces you to obey his decisions, whether you agree with him or not. If he makes a mistake, you suffer the consequences; if he fails, he passes the loss on to you, in the form of heavier taxes.”

Ayn Rand

Reason #3:
Government Concentrates Power in the Hands of a Corruptible Few

Government, by its nature, concentrates power in the hands of a few decision-makers (politicians).

So if there is to be a government, then it’s important to make sure we put the right people in these positions of power. (Or at least, have some mechanism to drive them to take the right actions.)

But we have no effective way to make this happen.

Democratic voting is the best method we’ve come up with to choose our political leaders. But, as public-choice economics demonstrates, even democratic voting is (at best) a deeply flawed system for choosing our leaders (or keeping them accountable). The average voter is ignorant and uninformed – because voting doesn’t require them to put their money where their mouth is, and also because the costs of their bad voting choices are “socialized” to the entire country.

Is there a better system for choosing our leaders, where voters have strong incentives to make informed choices… because they have to put their money where their mouth is, and pay the costs of their own bad choices? Yes – it’s called “voting with your wallet”, aka the market. But then this becomes an argument for voluntaryism and free markets – NOT centralized power via government.

Reason #4:
Government Forcibly Entrenches Bad Solutions (while Suppressing Better Alternatives)

Whatever the problem is (that you believe government should solve) – a coercively-funded state monopoly tends to forcibly entrench one solution (or a narrow spectrum of solutions), at the expense of all others.

Even when human ingenuity and innovation comes up with better ways to solve the problem, they tend to get suppressed by the state monopoly, and we may never even find out about them (because they’re choked off before they even have a chance to prove themselves).

In contrast, a free market allows diverse solutions to peacefully co-exist. And the solutions that serve consumers best will rise to the top and get widely adopted, while the bad solutions get discarded.

The Logical Conclusion

So as you can see, government is full of perverse incentives that prevent it from doing its job well. This explains why (as Ringo Starr observed)…

“Everything government touches turns to crap.”

Ringo Starr

The above points apply even to the areas that minarchists believe government should handle – such as law and justice. It follows that even these areas would be better handled by a free market.

But How Would Law Function Without Government?

A society without government isn’t necessarily a lawless society. As I explained at the beginning of this article, government is a coercively-funded monopoly on law. So “anarchy” is simply the absence of such a monopoly – i.e. polycentric law.

How would polycentric law work? I’ll let David Friedman explain it to you in this video –