I recently received an email suggesting the subject of optimistic vs. pessimistic libertarians. I have written before on the topic of optimism vs. pessimism, but not as much specifically on those within the libertarian movement.
The person who emailed me said the following:
“I was first brought to libertarianism by economic people like Peter Schiff. The doom and gloomers. Telling me the dollar is going to crash under the weight of govt spending. Telling me I need to prepare..buy gold…there is going to be a lot of pain coming soon.
“But slowly over time I started to hear people like John Stossel. He is excellent at showing you how much better so many things in life have become, often due to the free market. He bucked the media’s narrative and showed me how much crime has dropped over the last 20 years, how much the internet has freed up information and how private businesses have made life so much more convenient for us etc.”
He concludes by asking if I am a positive or negative libertarian and whether I am optimistic for the future, both short and long term.
If you compare Peter Schiff to John Stossel, there are two different messages. It doesn’t necessarily make either one of them wrong. In my own opinion, I think Stossel may be overly optimistic, and I think Schiff is overly pessimistic. But they both have valid points.
When taking a step back and looking at the worldwide trend, it is mostly good news. There is still a lot of pain and suffering constantly throughout the world, but it was even worse in the past. Extreme poverty has dropped to a fraction of what it was just a few decades ago. There is still widespread poverty by Western standards, but it isn’t to the same level as it was.
You can pull up statistics on this subject, but you have to pay attention to definitions. They do get somewhat subjective. When I think of extreme poverty, I think of someone who is malnourished with very little food and with no access to medical care, and perhaps no access to clean water. It isn’t the same type of poverty as someone living in a tiny apartment having to work two jobs to pay for rent and groceries.
At one time, the majority of the people on the planet were in extreme poverty. Now it is maybe 10%. This is an incredible achievement for mankind. In spite of (some might argue, because of) a huge increase in the population of the world, the overall poverty rates have plummeted.
This is best seen in China, where they have gone from a communist system to something of a centralized Keynesian system. It is still far from being a free market system, but it is a lot closer than it was 4 decades ago. It has vastly improved the lives of hundreds of millions of people.
In fact, China may be a good example of what the future holds for most of the planet. The overall trend is up, but there is going to be some serious short-term pain.
Peter Schiff frequently warns about the US dollar, but there are libertarians who are actually much more pessimistic than him. Schiff may warn of a dollar collapse, but he isn’t typically warning of a complete breakdown of civilization. There are some people who warn about hyperinflation and total chaos.
I don’t think Schiff believes there will be total chaos everywhere. If he did, he wouldn’t be living in Puerto Rico of all places. He would be buying a house in a rural area in which he could live off the land when everything goes bad.
I don’t think there is going to be hyperinflation when it comes to the U.S. dollar. I’m not saying that it’s impossible, but just that it is highly improbable. But there will be economic pain in the future as compared to what we have become accustomed to.
The unfunded liabilities in the U.S. have been estimated to be as high as over $200 trillion. Even if they are “just” $50 trillion, it is an amount that cannot be fulfilled. These are promises that were made that are impossible to keep.
There are going to be broken promises. The government retirement age is going to go up when the government can’t pay the bills and further monetary inflation is not an option.
I like to say that we are living in the best of times and the worst of times. Of course, most people really aren’t living in the worst of times. We are very fortunate to live in today’s world. If you live in the U.S., you are living in one of the wealthiest countries in a time of the greatest wealth ever seen. The problem is that we have nothing to compare it to from our personal lives. Someone who is 30 years old only can compare his current life to his life as a younger adult or kid living in a first-world country.
There are many people living in the U.S. today who are struggling. There are people struggling with health and mental issues. There are people struggling with family issues. There are people struggling with financial issues. Part of this is our culture, and part of this is the burden of government. In some ways, these go hand-in-hand.
In some aspects, 1950s America was better than today. In some ways, it really was a simpler time. But for the most part, we are better off today than we were then.
The problem is that we should be much better off than we are currently. We would have much greater freedom and prosperity if the state were radically smaller. Right now, the government at all levels (federal, state, and local) spends about $60,000 per year per U.S. household. This is a massive misallocation of resources. If this money were actually spent or saved by those who earned it, then we would be vastly wealthier than we are now. Instead, we hear about people working extra hours and barely getting by. They are barely getting by with smartphones, but they should be able to enjoy new technologies without having to struggle to pay for health insurance and rent.
It is also important to note that communication today is like nothing we have ever had. This is obvious, but people tend to forget it. We hear about corruption, lying media, and other things that simply wouldn’t have been exposed in the past. Between cell phones that take video, and social media to share it, there aren’t many secrets anymore. But we have to remember that it isn’t that there is any more corruption today than there was in the past. It is just that there are more stories of corruption because it is exposed.
So even though we hear more negative news, it is actually positive. It means that people aren’t getting away with things as much. I don’t know if there is more police abuse of power today than in the past, but there is definitely more exposure. It would be naïve to think that police corruption was rare decades ago. It’s just that people weren’t taking videos then.
In conclusion, I think the overall trend is positive. If you look at the U.S., the government has become bigger in many ways. At the same time, we have a check against the establishment media that didn’t exist before.
We also have several other positive trends. Gun control advocates have gotten almost nowhere. Most Americans do not want to ban guns. Meanwhile, states have essentially nullified the federal government’s war against marijuana users.
Perhaps the best news is that homeschooling has exploded in popularity. Although parents have to pay their property taxes to support the government school system, they still decide to shrug off the enticement of “free” education and instead choose to do it themselves. This is a great victory against the state, and I see the overall trend only continuing.
I am a long-term optimist for liberty. As Harry Browne said, human nature is on our side. People want to be able to choose things in their life.
In the short-term, I am a bit more pessimistic. I do think there are going to be major financial/ economic problems. It will not be confined to the United States. In fact, I think China, Japan, and Western Europe will suffer more greatly than Americans.
The only thing hard for Americans is that we are used to high living standards. It will be an adjustment for some people when they have to stop eating out at restaurants and have to drive a 10-year old car. Maybe some people will have it much harder than this, but I don’t think there will be anything close to starvation for most Americans. Most people will still have a roof over their heads and food on the table.
If the government and the central bank react appropriately – that is, do nothing – then any hard period won’t remain hard for very long. People can adjust quickly if allowed. If the government and central bank prolong the suffering through more spending and monetary inflation, it will be unnecessarily that much more painful.
It will be similar for the rest of the major countries. The good news is that there is actually less fighting going on now than in the past. The 20thcentury was a very bloody century. The U.S. government continues to run an empire overseas and starts these wars in countries that most people don’t care about. This is bad news for the people in these places. The good news is that we are not likely to see any major world wars, and let’s hope that there is no use of any nuclear weapons.
As long as we can remain in relative peace, then the world will continue to prosper in a positive direction. But it won’t be straight up. There will be periods of pain. We will probably hit one of those periods of pain soon.