The Fallacy of Government Production

By Mason Mohon | @mohonofficial

On a school trip to Washington D.C. for Trump's inauguration a little over a year ago, my friend and I faced a bit of an awkward situation when we expressed our libertarian leanings to the school sponsor. He was also the government teacher (non-AP, of course). When we stated that we were libertarians, he said something along the lines of "If libertarians got their way, there would be no roads, no healthcare, no military, and no police."

Obviously, my friend and I do not hate healthcare or roads. Some basic rational thinking would suggest that we probably have alternatives to the government for such issues, but he was not willing to hear us out. He fell into the trap of his own fallacious thinking.

I don't blame him, because humans are not perfect.

We tend to get what is mixed up with what can be, and on most occasions, we think what is is all that can ever be. This is what is known as the availability heuristic - we tend to exhibit a bias towards what we can see. We look at what is in the present or in front of us, and we trust whatever that is more than whatever is not there.

There is a good reason for the availability heuristic. Heuristics exist so that we can save time and brainpower. They are mental shortcuts that allow us to quickly reach a solution. They can also be our undoing.

Most people tend to believe that if the government is producing something in the status quo, that is the only way that thing can ever be produced. A libertarian sees the clear flaw in this line of thinking.

Many economists that I have spoken to and enjoyed the lectures of have quipped that if the state nationalized production of T-shirts or sneakers, many would begin to believe that the only way we could ever have such products is if the government continues to produce. They despair that if the industry were taken from the hands of the government, shirts and shoes would be a relic of the past.

It is clear that this line of thinking has its issues, but most people have problems with privatizing industries such as the police and healthcare, rather than things like shirts.

Let us look, then, at what may be one of the most difficult functions of the government to privatize: money. Over the last hundreds of years, money without government intervention has been a rare phenomenon, with examples few and far between. There were brief spats, such as the gold renaissance in America after the Civil War. But these moments were still mixed with government, and eventually, we got to the monetary status-quo: fiat currency that is inflated at the whim of the Federal Reserve.

Money needs a central authority for everyone to accept it. Well, this was the case, until it wasn't. Satoshi Nakamoto's whitepaper birthed the first blockchain currency, Bitcoin, in early 2009. It showed that the long-accepted way we saw money was wrong. Such change from the status quo showed that the way we think about functions of government sits inside a box, and it takes a really smart person to think outside that box.

What seems impossible from our current economic vantage point may very well be possible. Humans are not very good at looking ahead past what we see as possible so it would be a wise move to give arguments for privatized industries a little more weight in the future. We get caught thinking in the box and miss out on an opportunity for a world without a violent state.