Michael Hicks: Libertarians going crazy

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Faithful readers of this column will surely know that I possess some deep libertarian tendencies.

I concur with Ronald Reagan’s opinion that “… the very heart and soul of [American] conservatism is libertarianism …” As he went on to explain, this meant embracing a view that less government interference in the general and particular affairs of life was helpful. He said this 40 years ago, when taxes were higher and government regulations more restrictive.

I interpret him today as suggesting that government has no role in deciding how I should organize or define my family. Government should not recognize any particular religion, nor decide for me with whom I can associate. Government shouldn’t suggest, much less decide for me, what occupation I should choose or where I should practice it.

Libertarian viewpoints, then, offer us a useful reminder of what restraints we must put upon those who govern us. In practice, libertarians would say that government has little role in telling a lawyer in which state she might or might not practice the law. Nor should government tell adults whom they may love, how they love or what type of plant they may smoke.

Conservatism and libertarianism are not the same thing. Indeed, in European Parliaments, Libertarians generally form governments with progressive parties. American Libertarians are different, because our form of government is a radical experiment in freedom. Here, Libertarians tend to argue for less government, even if they wish for more conservative personal practices. For example, it is a perfectly acceptable libertarian position to oppose any government restrictions on abortion, while still abhorring abortion.

Perhaps the most personal example I can offer is simple. I’m a conservative in that I feel it inadvisable for a couple to live together without the benefit of marriage. I also think that it is a mistake for government to define or recognize marriage, of any kind. Covenants of this magnitude are outside the scope of government, which has not the competence for these matters. Marriage should be made in churches, synagogues, mosques and through civil contracts. The local courthouse should have nothing to do with it.

None of this suggests no role for government. There’s no serious political philosophy that suggests children should be permitted the same decision-making authority as adults. There’s no serious political philosophy that suggests government of any type should be unable to act with special powers in an emergency or crisis.

There is disagreement about what the right amount of government might be or what powers government might prudentially exercise. But there is no serious political argument that would deny government a role in national emergencies. Unfortunately, we’ve just been through a global healthcare crisis, where government undertook a number of protective measures. Some were wholly appropriate, low-cost, high-reward actions. Others were mistakes that we understand now in hindsight. Others we will not be fully certain about for many years.

Sadly, the COVID pandemic crushed the sensibilities and reason of the American Libertarian movement. A philosophy that once animated a popular movement of American conservatism is now as relevant as last April’s snow. Nowhere is this more apparent than in Indiana’s Libertarian party. I’ll just note their tax plan as example of deeply unserious ideas.

The Indiana Libertarian party wishes to eliminate income taxes. The specifics of this plan are weak, so I’ll just assume they also mean local income taxes. Unlike other proposals, they make no pretense of considering replacement revenue. They just don’t want earnings taxed. So, let us see what that would mean.

The elimination of the personal income tax (assuming no revenue replacement) would mean a roughly 40% cut in state revenues. For local governments, it’d mean cuts from about 20% to almost 70%. They also wish to eliminate taxes on single-family residences, though to be honest in the four-sentence plan, they weren’t clear exactly what that meant. I will try to be clearer. The loss of residential property taxes would cut a further 40 to 70% of revenue from county and city government.

The tax proposal from the Indiana Libertarian party would reduce state government by 40% and every local government by more than half. That’s before we consider any of the other taxes they propose to cut. This is so silly, so childish, so ridiculous, that it is difficult to fully explain the magnitude of the impact. Let me try.

Indiana has had the lowest wage increase for teachers nationwide over the last decade. Accounting for inflation, wages for the average public employee are now below where they were 10 years ago. So, what do tax cuts the Libertarians propose do to Indiana?

If we hold cuts to state school funding by 20%, we’d only have to cut the rest of government by about two-thirds. That would surely mean closing all state parks, halving the state police, eliminating all agriculture, tourism, rural, arts, economic development, higher education and workforce development programs. We’d lose more than half our Medicaid funding, so we’d have another million uninsured Hoosiers. The state’s paving cycle would go from 7-to-10 years to about 30. There would be no more road or bridge improvements, ever.

Statewide, about a third of schools would have to close. With 20% state cuts and 50% local cuts, most school corporations would be unable to transport kids or heat buildings. There would be no more school athletics. Townships could keep fire departments open for another 3 or 4 years given their reserves, then they too would close. Police departments would be cut in half; there would be no more parks or snow removal.

That is what the Indiana Libertarian Party proposes.

Hoosiers would be well served by a discussion about the optimal level of taxes and public services. We would benefit from elected leaders explaining how being ranked 6th in low taxes but 42nd in educational attainment, 41st in productivity, or 43rd in per capita income makes us better off. We should all welcome that debate.

However, the Libertarian party no longer deserves a seat at this discussion. Their proposal is so bad that they would be laughed out of a high school debate class. I’m not trying to be unfair to Libertarians. They do propose legalizing and taxing marijuana; which would raise about $200 million per year, replacing about 2% of their proposed tax cuts. The rest of their tax proposal — the heart of their legislative identity — is bat guano crazy. There’s just not enough available weed, legal or otherwise, to make it make sense.

Michael J. Hicks is the director of the Center for Business and Economic Research and the George and Frances Ball Distinguished Professor of Economics in the Miller College of Business at Ball State University.