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Thursday, September 29, 2011

A Libertarian Program for Urban Renewal

Government: Move over!

A common complaint about libertarians is that we criticize government without offering any policies to solve social problems. I think that complaint is unfair in a whole bunch of ways, not least of which is that the complainers seem to equate “policies” with “things government should do” and thereby eliminate libertarian policy proposals almost by definition. It’s also true that libertarians too often respond to this sort of complaint by talking in terms that are too utopian or too radical to ever persuade people that we’ve thought about how to actually get from here to there.

So in the spirit of providing politically feasible “libertarian policies,” I want to offer a set of proposals to improve one area of American society that desperately needs it: the inner city. There’s no need to recite the gory statistics on incomes, unemployment, poor schools, violence, fractured families, African-American men in jail — or the challenge that folks in these core urban areas face in extracting themselves from that mess. Here then is my three-point libertarian program for urban renewal.

Allow School Choice

First, institute some form of meaningful school choice. Abolishing the government schools is the ideal solution but unlikely in the short run. Expanding parental choice through a voucher or tax-credit system is more politically feasible as we’ve seen in several U.S. cities in the last decade or two. The evidence from these systems generally indicates that they have been successful in improving student outcomes, and the excess demand for the limited spots indicates that parents want alternatives to the disaster of inner-city schools. Education is supposed to enhance human capital, but those schools arguably destroy it because students not only don’t get a decent education, they also learn how to avoid doing so and face strong cultural pressure to not be smart. Opening up the school system to real competition from the private and religious schools would give the students who want to succeed real options and would put more powerful pressure on the government schools to reform or go private.

End the Minimum Wage

There are numerous paths out of poverty, but almost all of them involve either a good education or real job opportunities, which leads to my second policy proposal: Repeal minimum-wage and occupational licensing laws. The economic analysis of minimum-wage laws is well-known and is supported empirically by hundreds of studies over the years. A minimum wage acts as a minimum productivity law, requiring that people reach a certain productivity threshold before employers will be willing to employ them. Such a law cuts off the bottom rungs of the income ladder for people with less education or lower skills — in other words, the products of inner-city government schools. Firms will hire less-skilled workers if they are willing to work for a wage commensurate with their skills. Minimum-wage laws prevent employers and low-skilled potential employees from striking such mutually beneficial bargains.

Occupational licensure similarly shuts poor workers out of the labor market by imposing unnecessary costs on people who can least afford it. Licensure is usually lobbied for by well-resourced incumbents as a way to keep out lower priced competition. From beauticians to hair braiders to taxi drivers, licensing laws prevent people from selling goods and services to willing buyers. Eliminating such laws would create numerous job opportunities for workers with specific skills but insufficient resources to acquire the needed license. Such laws protect the privileged at the expense of the poor.

Terminate the War on (Some) Drugs

Finally, we need to end the War on (Some) Drugs. Whatever one’s perspective on whether people should be allowed to do as they please with their bodies, there’s little doubt that making pot, cocaine, and other drugs illegal has been a huge contributor to the level of violence in so many inner cities. When your product is illegal, there’s no way to settle disputes under the umbrella of law and the peaceful coordination it promotes. Just as the CEOs of Anheuser-Busch and Coors don’t have gunfights when one rolls out a new beer, so would legalizing drugs reduce, if not eliminate, the violence among drug sellers. And the corresponding drop in price would reduce the criminal behavior of users who steal to support their habit. By taking the huge profits out of the drug trade, legalization would also end the glamour of the dealer and help kids see alternative pathways to success. With violence reduced, both schools and the marketplace would be more conducive to learning and peaceful trade.

People on both the left and right might disagree with my program for urban renewal, but they cannot say that this libertarian hasn’t offered concrete policy proposals to address the problems. I would hope that conversations about public policy in any realm can move beyond accusations about “having no solutions” and instead debate the merits of concrete proposals. More freedom is a policy proposal and one that works. If libertarians can put “more freedom” in the right packaging, we might well start to see real results.

  • Steven Horwitz was the Distinguished Professor of Free Enterprise in the Department of Economics at Ball State University, where he was also Director of the Institute for the Study of Political Economy. He is the author of Austrian Economics: An Introduction.