In 1995, the Gallup Poll found that 39% of Americans believed “the federal government has become so large and powerful that it poses an immediate threat to the rights and freedoms of ordinary citizens.” Pollsters couldn’t believe it, so they tried again, taking out the word “immediate.” This time 52% of Americans agreed.
Later that year, USA Today reported that “many of the 41 million members of Generation X … are turning to an old philosophy that suddenly seems new: libertarianism.” The Wall Street Journal agreed: “Much of the angry sentiment coursing through [voters’] veins today isn’t traditionally Republican or even conservative. It’s libertarian.… Because of their growing disdain for government, more and more Americans appear to be drifting — often unwittingly — toward a libertarian philosophy.”
The future, it is becoming increasingly clear, will be libertarian.
Libertarianism is the view that each person has the right to live his life in any way he chooses so long as he respects the equal rights of others. It is an old philosophy, but its framework for liberty under law and economic progress makes it especially suited for the dynamic world we are now entering: the Information Age.
Unfortunately, however, government in fact remains bigger than ever. In the United States, the federal government forcibly extracts $1.6 trillion in wealth a year from those who produce it, and state and local governments take another trillion. Every year, Congress adds another 6,000 pages of statute law and regulators print 60,000 pages of new regulations in the Federal Register.
Who Should Have Power?
There are now two competing forces in world politics: the pull toward centralizing power and the push toward devolving power to smaller, local entities. Despite the increasingly loud complaints about big government, Congress continues to offer federal solutions to problems, thus eliminating local control, experimentation, and competing solutions. The bureaucrats of the European Union in Brussels try to centralize regulation at the continental level, partly to prevent any European government from making itself more attractive to investors by offering lower taxes or less regulation.
Paradoxically, nation‐states today are too big and too small. They’re too big to be responsive and manageable. India has more than one million voters for each of its more than 500 legislators. Can they possibly represent the interests of all their constituents or write laws that make sense for almost a billion people? In any country larger than a city, local conditions vary greatly and no national plan can make sense everywhere.
At the same time, even nation‐states are often too small to be effective economic units. Should Belgium, or even France, have a national railroad or a national television network, when rails and broadcast signals can so easily cross national boundaries? The great value of the European Union is not the reams of regulation produced by Eurocrats, but rather the opportunity for businesses to produce and sell across a market larger than the United States. A common market doesn’t require centralized regulation; it only requires that national governments not prevent their citizens from trading with citizens of other countries.
Breaking Away from Big Government
As centralized governments around the world try to squelch regional differences and small‐scale experiments, another trend is also visible. Businesspeople try to ignore government and find their natural trading partners, be it across the street or across national borders. Businesses in the triangle formed by Lyon in France, Geneva in Switzerland, and Turin in Italy do more business among themselves than with the political capitals of Paris and Rome. Dominique Nouvellet, one of Lyon’s leading venture capitalists, says, “People are rebelling against capitals that exercise too much control over their lives. Paris is filled with civil servants, while Lyon is filled with merchants who want the state to get off their back.”
Other cross‐border economic regions include Toulouse and Montpellier, France, with Barcelona, Spain; Antwerp, Belgium, with Rotterdam, the Netherlands; and Maastricht, the Netherlands, with Liege, Belgium, and Aachen, Germany. National governments and national borders impede the creation of wealth in those areas.
Many regions are reviving an old solution to the problems of out‐of‐touch, out‐of‐control government: secession. The French‐speaking people of Quebec agitate for independence from Canada. So do a growing number of people in British Columbia, who see that their trade ties to Seattle and Tokyo are greater than those with Ottawa and Toronto. The Lombard League in productive northern Italy is calling for secession from what it regards as Mafia‐dominated, welfare‐addicted southern Italy. There’s an increasing likelihood of devolution or even independence for Scotland. National breakup may well be a solution to some of the problems of Africa, whose national boundaries were carved by colonial powers with little regard to ethnic identity or traditional trading patterns.
The United States is a part of the secessionist trend. Staten Island voted to secede from New York City in 1993, but the state legislature blocked its path. Nine counties in western Kansas have petitioned Congress for statehood. Activists in both northern and southern California have proposed that the giant state be split into two or three more manageable units. The San Fernando Valley is brimming with demands to secede from the city of Los Angeles.
Switzerland offers a good example of the benefits of free trade and decentralized power. Although it has only 7 million people, Switzerland has three major language groups and people with distinctly different cultures. It has solved the problem of cultural conflict with a very decentralized political system — 20 cantons and six half‐cantons, which are responsible for most public affairs, and a weak central government, which handles foreign affairs, monetary policy, and enforcement of a bill of rights.
One of the key insights offered by the Swiss system is that cultural conflicts can be minimized when they don’t become political conflicts. Thus, the more of life that is kept in the private sphere or at the local level, the less need there is for cultural groups to go to war over religion, language, and the like. Separation of church and state and a free market both limit the number of decisions made in the public sector, thus reducing the incentive for groups to vie for political control.
People around the world are coming to understand the benefits of limited government and devolution of power. Still, the centralists will not give up easily. The impulse to eliminate “inequities” among regions is strong. President Clinton said in 1995, “As president, I have to make laws that fit not only my folks back home in Arkansas and the people in Montana, but the whole of this country. And the great thing about‐this country is its diversity, its differences, and trying to harmonize those is our great challenge.” Kentucky Governor Paul Patton says that, if an innovative education program is working, all schools should have it, and if it isn’t, none should.
But why? Why not let local school districts observe other districts, copy what seems to work, and adapt it to their own circumstances? And why does President Clinton feel that his challenge is to “harmonize” America’s great diversity? Why not enjoy the diversity? The problem for centralizers is that appreciating diversity means accepting that different people and different places will have different situations and different results.
The bottom‐line question is whether centralized systems or competitive systems produce better results. Libertarians argue that competitive systems offer better answers than imposed, centralized, one‐size‐fits‐all systems.
Two large companies — ITT and AT&T — both announced in 1995 that they would split themselves into three parts because they had become too large and diverse to be managed efficiently. ITT had sales of about $25 billion a year, AT&T about $75 billion. If corporate managers and investors with their own money at stake can’t run businesses that size effectively, can it really be possible for Congress and 2 million federal bureaucrats to manage a $1.6 trillion government — to say nothing of a $6 trillion economy?