A specter is haunting Robert Frank’s latest book the specter of libertarianism. For him, it is a doctrinaire view with little to recommend it; yet he again and again seems drawn both to try to refute it and to deflect it. Libertarianism he takes to be wrong; but even those who accept it, he thinks, ought to see that his proposals for progressive taxation and assorted welfare measures are reasonable. One might at first be inclined to explain Frank’s behavior by saying that it responds to the bad influence, as he sees it, that libertarian positions have on discussions of public policy. I suspect that there is more to it than that, though. Libertarianism exerts a peculiar fascination over him.
He says about libertarianism,
Unlike most critics on the left, I will grant the libertarians’ most important basic assumptions about the world that markets are competitive, that people are rational, and that the state must meet a heavy burden of proof before restraining any individual citizen’s liberty of action. Although there are reasons to question each assumption, the internal contradictions of the libertarian framework emerge clearly even if we accept these assumptions uncritically. (p. 11)
What is the internal contradiction at the heart of libertarianism that Frank claims to discern? Here Frank reprises a theme familiar to readers of his earlier books.
The fatal flaw in that [libertarian] framework stems from an observation that is itself completely uncontroversial namely that in many important domains of life, performance is graded on the curve. The dependence of reward on rank eliminates any presumption of harmony between individual and collective interests, and with it, the foundation of the libertarian’s case for a completely unfettered market system. (p. 11)
A recent news item illustrates what Frank has in mind. The US Anti-Doping Agency has stripped Lance Armstrong of his Tour de France victories on the grounds that he used forbidden performance-enhancing drugs. The merits of that controversy aren’t here our concern, but it serves to raise the question, Why do athletes ingest substances that may harm them? Obviously, they do so to gain an advantage over their competitors. But so long as a substantial number of rival athletes do this, none will gain an advantage over the others. You would get a jump on the competition if only you took the substances and no one else did, but this is irrelevant to what happens in the actual world. Athletes have gone to useless trouble and put their health at risk, and the result is that they are exactly where they were before in their battles with one another.
The dependence of reward on rank of course affects many others besides athletes, and one particular instance of it especially bothers Frank. People want their children to attend the best available school, and schools in richer neighborhoods are better than those in poorer areas. This leads parents to work longer and harder and under riskier conditions than they otherwise would have, in order to afford to move into a better neighborhood. Once more, though, their efforts do not gain for them the result they hope for: each parent is thwarted by the similar efforts of other parents.
A worker might well accept a riskier job at a higher wage because doing so would cover the monthly payments on a house in a better school district. But the same observation applies to other workers. And because school quality is an inherently relative concept, when others also trade safety for higher wages, no one will move forward in relative terms. They’ll succeed only in bidding up the prices of houses in better school districts. (p. 40)
Frank draws an analogy between this type of futile struggle and a phenomenon studied by Charles Darwin. An example is the bull elk, which has developed outsized antlers. These “function not as weaponry against external predators but in the competition among bulls for access to females” (p. 21). The antlers make them less speedy and thus easier for wolves to attack them. They are even worse off than Lance Armstrong and his fellow cyclists. Darwin’s study of this phenomenon leads Frank to “offer the following prediction. One century hence, if a roster of professional economists is asked to identify the intellectual father of their discipline, a majority will name Charles Darwin” (p. 16).
This is all very well, you may say or actually, as we’ll soon see, not so very well but what does it have to do with libertarianism? The answer is simple. The government can rescue us from these futile competitive struggles by imposing a heavy progressive consumption tax. People would then have less money to waste on trying to get ahead of one another, but they would be no worse off: remember, the money that we spend on clawing our way to the top does us no good. All of our efforts leave us where we were before we spent the money. Given the good offices of the government, people could still attempt to surpass one another, but the government can now spend the money it extracted in all sorts of useful projects.
Taxing "Darwinian" Consumption