Don't Discount Switching Costs
Agreeing with "Some Buttons I'd Not Push..." by Don Boudreaux.
On March 20, the American Institute for Economic Research published Professor Don Boudreaux’s piece, “Some Buttons I’d Not Push, and Some That I Would Push.” I imagine Prof. Boudreaux’s piece angered some of the more radical libertarians who read his content; after all, Boudreaux refuses to push the end-the-welfare-state and withdraw-all-American-troops buttons. He even has the chutzpah to admit that he would not “immediately eliminate the Federal Reserve.” Like Boudreaux and other classical liberals, I do not entirely discount the costs necessarily incurred in the transition from a position of injustice and inefficiency to one of greater justice and efficiency. More to the point, if the transition costs from attempting a sudden, immediate change to our political-economic system fails a marginal cost-benefit analysis, the change should not occur.
I applaud Prof. Boudreaux for grounding his libertarianism in reality. It’s important to highlight that Boudreaux’s aims do not differ from those of his (and my) more radical counterparts. For example, Boudreaux regards the welfare state as corrosive to society and believes the “ultimate goal” is “eventually making it disappear for good.” I concur. However, unlike the would-press-the-button libertarians, Boudreaux factors in the costs of doing so:
The disruption for the recipients would be too great. Millions of people, sadly, rely on various forms of government-dispensed welfare payments. Suddenly severing this reliance would impose on welfare recipients too great and unjust a burden.
Libertarians are not immune to the revolutionary fervor and utopian thinking that animates leftists; we can just as easily veer into man-of-the-system style thinking, the likes of which Adam Smith so detested. To factor into one’s political prescriptions a consideration of the costs of getting from point A to point B does not make one a reactionary conservative—such people completely discount the gains from Point B while exaggerating the costs of getting there—but a good economist, i.e., someone who acknowledges the reality of switching costs and has a discount rate somewhere squarely between zero (reactionary conservatives) and 1 (utopian leftists).
Sometimes revolution really is politically, economically, and morally necessary. Desperate times call for desperate measures; the Founding Fathers were revolutionaries, after all, and I’m quite happy that I don’t speak the Queen’s English. Still, before undertaking a rash, high-cost course of action, we—libertarians of all kinds—ought to recall the wise words of Thomas Sowell: “There are no solutions; only trade-offs.”