It is often assumed that if government didn't provide a certain good or service, no one would. The five books below challenge this common assumption with regard to five different areas in which the role of government is often taken to be essential: education, welfare, environmental protection, criminal justice, and monetary institutions. It is argued not only that these things could in each case be (and historically have been) provided privately and voluntarily, but also that private provision would increase quality, efficiency, and accountability, in addition to being more just.
1. James Tooley: Reclaiming Education
James Tooley is Professor of Education Policy at the University of Newcastle. In this interesting book, he makes a powerful case for reclaiming education from the state and giving it back to the private sector, to markets and civil society. Tooley argues for this, not from some narrow ideological perspective, nor on the basis of some controversial normative premises such as that choice is always valuable in itself, or that parents have the unconditional moral right to decide for their own children. Instead, he argues from premises that ought to be acceptable even to his opponents. He claims to give his opponents what they say they want, but without relying on the government they mistakenly think is necessary to achieve it. Many supposed justifications for state intervention in education are carefully dissected here and found wanting. Government is needed, Tooley concludes, neither in provision, funding, nor in regulation of education. Tooley's case is heavily informed by recent and historical evidence from the developing as well as the developed world, which provides us with radical new ways of thinking about the way education is provided for in society. “The private alternative”, he argues, can meet the local and global challenges facing education today and in the future. Markets in education, in combination with other agents of civil society, most notably the family and philanthropy, can satisfy educational demand, and has done so historically (before the state got involved in education in the first place). My full review of this book can be found here.
2. James L. Payne: Overcoming Welfare
As David Hume observed long ago, human beings are naturally compassionate. Giving to the needy is an extremely simple and primitive reaction to their plight. But this is taking the easy way out, argues political scientist James Payne. As Payne points out, those who oppose state welfare programs don’t do so because they are selfish and lack compassion, but because they see that such programs do not work. We could all agree that helping the less fortunate is a desirable thing, but the question remains how this can be done in a constructive manner. In order for help to really work, it cannot be based on sympathy alone. That kind of helping tends to be counterproductive and lock the needy into a destructive state of permanent dependency. What promises to lift the poor out of poverty is to help them to get back on their feet--to help them to help themselves. According to Payne this involves “giving with a definite expectation that the needy person will do something constructive in exchange for the help rendered”. One practical example is helping someone to get a job so that he can earn what he needs himself. This kind of helping bolsters the energy, self-esteem, and productiveness of people in unfortunate circumstances. But this requires taking account of the special circumstances and abilities of each individual recipient--a task much better suited for small, local charities than for large and anonymous government organizations. Even though most people probably agree that offering a "hand up" is preferable to offering "handouts", we still keep getting policies based on the latter, ineffective type of helping. Part of the explanation of this initially paradoxical situation is that government welfare programs have an inherent tendency to lapse into something-for-nothing-giving: “… fiscal, bureaucratic, and institutional pressures inherent in government […] push even programs with the best of intentions into the handout mode.” Payne points toward a fundamental inconsistency in our thinking: “we insist on using government to help the poor, yet government’s way of helping is the much-deplored handout.” Various voluntary alternatives for help and uplift are described and historical evidence indicates that such private alternatives have been effective in the past. Some people seem to believe that without state welfare the poor will be left to starve, but evolutionary theory (and common sense) strongly suggests that human beings are generally willing to help their less fortunate fellows as long as the latter are not perceived as shirkers or freeloaders (an argument made by Paul H. Rubin in Darwinian Politics). Overcoming Welfare is an inspiring book for those who really care about helping the needy (rather than about promoting their own view of the "good society"). My full review of Overcoming Welfare can be found here.
3. Terry L. Anderson & Donald R. Leal: Free Market Environmentalism
This book by Terry L. Anderson and Donald R. Leal challenges the common prejudice that "free market environmentalism" is an oxymoron and argues to the contrary that "if we are to continue improving environmental quality in the twenty-first century, we must harness market forces". The authors show how this could be done (and to various degrees is being done already) applied to pollution, waste, fishing, water, energy, nature reserves, and more. In general, free market environmentalism "emphasizes the positive incentives associated with prices, profits, and entrepreneurship, as opposed to political environmentalism, which emphasizes negative incentives associated with regulation and taxes". At the heart of free market environmentalism is private ownership of natural resources and decentralized decision-making. An important insight of free market environmentalism (and free market thinking in general) is that good intentions are not enough to produce good results: "Instead of intentions, good resource stewardship depends on how well social institutions harness self-interest through individual incentives." In addition to the right incentives, good resource stewardship depends on the information available to the individuals who make decisions about the resource in question. Anderson and Leal give many real-world examples of how bottom-up processes have mitigated many environmental evils past and present, and how political regulation has very often exacerbated them. Free Market Environmentalism contains many valuable insights into how voluntary exchange can promote cooperation, compromise, and harmony between different interests, and how economic growth can be sustained while environmental quality is enhanced. My full review of this book can be found here. To learn more about free market environmentalism, a good resource is the Property and Environment Research Center (PERC).
4. Bruce L. Benson: To Serve and Protect
The fact that the state has taken such a prominent role in criminal law is not a reflection of the superior efficiency of state institutions, argues Bruce L. Benson. Rather, it is a result of powerful kings beginning to see the legal process as a mechanism for obtaining revenue and for granting special favors to their supporters. Similarly, the development of public police in the nineteenth century was generally a result of their usefulness as political tools, not because they provided superior criminal justice. The rise of authoritarian law reflects the interests of powerful groups in society. Benson thinks that public-good justifications for a government-dominated criminal justice system are ex post rationalizations rather than explanations of their development. It is further argued that the state undermines the incentives for private participation in criminal law and thus forces governments to provide inferior bureaucratic alternatives. The historical reality of crime policy is that public provision of criminal justice is a recent social experiment that has not worked as predicted. Current governmental criminal justice systems are wasteful and do not work for the benefit of victims of crime and neither do they provide effective deterrence. What can be done? Benson argues that "perhaps the answer is not to 'build more prisons and employ more public police', as today's politicians seem to believe. Perhaps it is not to develop a 'bigger and better' version of some government program, as has been done throughout most of this century. Perhaps the answer is to turn back the clock in an effort to reestablish the incentives for greater private-sector involvement in criminal justice that disappeared centuries ago in the face of efforts by kings to expand their revenues and power." Benson argues further for a refocusing of criminal justice towards restitution for victims. It is criminals, not innocent tax payers, that should pay as much of the cost of crime as they possibly can, and they should pay the victim, not the state. With the right institutional arrangements, making criminals pay restitution will also increase deterrence and improve rehabilitation. Benson believes that such a refocusing towards restitution must go hand in hand with greater privatization in all areas of criminal justice. See this article for a short version of the general argument.
5. George Selgin: The Theory of Free Banking
Economist George Selgin argues that even though states have monopolized coinage and money supply, this does not mean that they were the best makers of coin or that coinage is a natural monopoly. Rather, "state coinage monopolies were established by force. Once rulers had set up their own mints they prohibited private issues, making their coins both a symbol of their rule and a source of profits." Selgin challenges the belief held by most economists that "money will not manage itself" and he argues against central banking. As an alternative, he sketches a free banking system with unregulated and decentralized currency supply. Such an unregulated system would respond much better to demand for currency and avoid both shortages and excessive money supply and be more stable. The full book is available online for free: The Theory of Free Banking: Money Supply Under Competitive Note Issue. There is also a very interesting podcast from Econtalk in which Selgin talks about this subject. Selgin has recently published a paper in which he considers the potential of electronic currencies (like Bitcoin) "to supply the foundation for monetary regimes that does not require oversight by any monetary authority, yet are capable of providing for all such changes in the money stock as may be needed to achieve a high degree of macroeconomic stability." See also this blog post by Matt Ridley in which he refers to Selgin's works.