Tuesday, June 12, 2012

Why Libertarians are wrong

Private school goes bankrupt

Some things cannot be privatized. Any function where the price of failure is catastrophic cannot be insured, because the risk/reward ratio is beyond any sane or prudent private company. And yet some of those functions must be done.

One of them is national defense. The price of failure is complete social destruction. Therefore the people, as a collective entity, have the right to supersede individual decisions and allocate for national defense. This right includes taxation but also conscription when necessary. Most libertarians understand this; most libertarians allow for national defense.

But there are other functions with the same risk/reward ratio. Disease control - demanding that each individual undergo the tiny risk of vaccination so that the entire society can avoid decimation. Few libertarians are willing to grant the CDC a pass, but that's only because they don't understand the science of vaccination.

And now we have a concrete example of another function. In a perfect libertarian world, insurance companies or lawsuits would redress the harm that Mobray College cause by its breach-of-contract. Except: how do you give a kid back his senior year? Time is not a fungible commodity. These kids, having been disrupted in the middle of their education, will carry that burden (however minor) for the rest of their lives. This is a time-sensitive endeavor, like cooking an egg. You can't make up for being 5 minutes late.

Given that the burden of not educating an entire graduating class of students is unacceptable to society, society must step in and fill the breach. The Victorian government has already shelled out $400K just to get these kids to their mid-year exams. If you can find a libertarian who thinks the government was wrong to do so - if you can find a libertarian who thinks those kids should have been left to rot because some private equity firm decided profits were more important than educating the next generation or because their parents weren't smart enough to detect a well-hidden scam that government regulators missed - punch him. (And I say him because we all know it will be a him).

And if government is going to have to bail out the private school system when it fails, then why in the hell should it even allow a private school system? If the government has to pick up the tab - and it does - then why doesn't it get to run the show?

Come to think of it, the same logic applies to banks.




4 comments:

craftycoder said...

You think that private schools should be abolished because sometimes they go out of business? That's just plain stupid sounding. Should cars be abolished because sometimes they run out of gas?

There should not be a bail out! The $400K already given should be taken from the assets of the board and the managers of the school.

The parents should have taken a more active role in understanding the financial health of the school they invested in. They are paying, often in advance, for a product. They ought to make damn certain its going to be delivered. The cost to the students is the responsibility of their parents. They were irresponsible in choosing a school that would close mid year. The solution is simple. Let it go bust. Let the students and their parents feel the pain of finding new schools mid year. Put criminal liability onto the board and managers for theft of the money already paid for tuition but not to be delivered. Three or six months in prison should be sufficient penalty to remind these people that they can't screw up like this and that if they think they might go bust mid year then they better just go bust during the summer or they can get used to shackles.

These parents, and others, will also learn that if they don't want their children to suffer this sort of outcome again/too then they better threaten to leave their private schools unless they make their books available to the stakeholders. If enough parents leave without this transparency then they will open their books.

There is nothing wrong with bad outcomes. The problems begin when bad outcomes are not allowed to feel bad and become learning experiences. The cost here is minimal, there is no destruction of the moral fabric of society. Those kids a begging for a bail out because they are used to having everything they want and its just not fair!!!

MCPlanck said...

The administrators of the school probably committed a crime. If parents are required to protect themselves from crime, then they are going to take judgement and punishment into their own hands. In other words, anarchy.

This is why libertarianism is wrong. It simply fails to understand what society is for. The point of laws is not to create some utopia of fairness; it is to stop people from murdering each other in the streets. Because when people are murdering each other in the streets, it negatively affects everyone (not just the people being murdered).

To borrow an analogy from computing, it's like trying to communicate without a protocol; it can be done, but it's way more efficient if you have rules, and the more concrete the rules are, the faster the baud rate.

The cost is not minimal: children's education, like health and safety, are not fungible. They exist in a matrix that only flows one way. You can't learn once you're dead; so any mechanism that requires feedback cannot have death as a consequence of failure. Equally, these parents cannot wind back the clock for their children, so the feedback mechanism is broken.

Some functions are too important to allow to fail. Those functions must be insured by society. Privatizing those functions does not make them more efficient; it merely makes society responsible for debts they had no oversight on.

To put it another way: yes, the parents should have been more concerned with financial transparency and guarantees. In fact, they should have been so concerned that they put their kids in public schools in the first place. And the parents - all parents - should learn from this; what they should learn is that no private school can ever offer the financial guarantee necessary to justify risking your children's education.

And society should learn from this, and change the rules so that future problems don't occur.

Sometimes the problems are the bad outcomes, but I agree that the bigger problem are people refusing to learn from the bad outcomes. The lesson from this bad outcome is obvious: given that the definition of a private enterprise is that it can fail (go bankrupt), and given that some functions cannot be allowed to fail (such as time-critical ones), the lesson to learn is that some functions should not be provided by private enterprises.

Libertarianism puts ideological commitment above empirical evidence. If it didn't, simple cases like this would not be problematic (nor would they squirm when forced to admit that national defense is shared good). But the faith that unfettered personal decision-making always leads to the best outcomes is just that, a faith; it is counter-indicated by the empirical evidence, which shows that groups of people can capture and implement knowledge in ways that benefit each individual.

This is not to discount the equally true fact that personal decision making is necessary. The point is merely that it is not sufficient. Where libertarianism fails is acknowledging the latter.

craftycoder said...

Repeating your previous statements doesn't make them any more correct. You are still wrong.

If you want empirical evidence, why don't you look at the outcomes of privately educated people vs those publicly educated. I think you will find those privately educated end up in better universities. I think you find they end up earning more money over their lives. I think you will find them OVERWHELMINGLY pleased with their "investment" in a private education. Nicole's father still proudly boasts that Nicole's private education was the best investment he ever made. She would like to give that experience to her child(ren) as well.

Anecdotally, our current president and our next president both went to Harvard. So did our last president. Harvard is private and yet seems to have a real knack for training "successful" people. Banning it because it is private is stupid. Spare me, the oh didn't mean universities speech. It's bull$*1t to suggest that there is any fundamental difference between the two. The cutoff is completely arbitrary on your precious time continuum. On that topic, if anything that happens during time cannot be privatized because you cannot get that time back then that set of things includes EVERYTHING. That makes your point about time pretty silly sounding.

Your suggestion that people ought not protect themselves from bad deals (and big brother should instead) for fear of murder sprees is likewise absurd. Let's examine used cars for example. This is a business that people are also responsible for protecting themselves against fraud. Those that do not often times end up with lemons. The lesson they learn is that they need to get the cars "checked out" before they buy them. They DO NOT murder the person they purchased the car from. Please spare me the lemon law story. It applies to very few car sales. We'd know if our own murder was a cost of selling our car, and it is not.

MCPlanck said...

"why don't you look at the outcomes of privately educated people vs those publicly educated"

You are not controlling all the variables in that observation. Private schools have better outcomes because they have better resources and social contacts that make a difference later on. Rich people send their kids to those schools and boast about how much they spend educating their kids even while they vote for lower public school funding.

And then, at the end of it all, when you ask them why their children have all the best jobs, they say, "It's because they're smarter/work harder/earned it!"

If you want to see a mixed education system that works, look at Sweden. They have private schools, too, but with a difference: "Therefore, schools were not permitted to act in a way that segregated on financial or social grounds by imposing special rules on admissions or by charging tuition fees."

If that's the kind of private school system you have in mind, then yes; it's great! (BTW, it also produces equal outcomes with public schools). But if what you want is a class-based education system designed to maintain class barriers, whose existence is supposed to be justified by the tiny percentage of people who escape those class boundaries, then you already have it.

As for Big Brother, you have already provided your own refutation. The Lemon law clearly demonstrates that the consumer is not responsible for protecting themselves against fraud; in fact, the law allows them to be protected against even failure to do basic due diligence. The reason the Lemon law applies to so few car sales is because it exists, and therefore people who sell cars are not tempted to try and pawn off lemons. The mere fact that such a law was passed in a non-liberal state like Arizona demonstrates that even lawmakers who believe in the unfettered right to carry concealed firearms still think consumer protection is necessary.

The reason people do not commit murder over cars is because the State stands ready to defend them. In any form of commercial enterprise where the state does not regulate with force, there will be violence. Examples are easy to find: the drug market, which is in fact rife with murder, or Somalia, where even food markets are subject to violence.

Violence is less an act of acquisition than it is an act of retribution, as Stephen Pinker makes clear in his historical discussion (The Better Angels of our Nature). Our societies are less violent precisely because we have layered on so many ways to protect people.

The fundamental premise of libertarianism - that each individual is responsible for protecting himself - is the complete negation of the Leviathan, the entire concept of the State. The fundamental premise of the liberal state is that each individual is responsible for protecting his neighbors, because in doing so he best protects himself. That liberal premise built the American empire; dismantling it will dismantle American civilization.