That’s what Bryan Caplan asks Jeff Hummel, after the latter trashed the “crazy Rothbardian” take on the 100% reserve gold standard. I don’t know if said debunking is online, but I do think central banks throughout the first world have outperformed Milton Friedman‘s expectations perhaps because of Friedman himself. I do think it’s a good question to ask libertarians, and brings to mind James Q. Wilson’s book (which I reviewed here). Wilson has a high opinion of the Army Corps of Engineers (as well as the Forestry Service and for a long time the Social Security agnecy). Libertarian Steve Horwitz says the Coast Guard performed relatively well in the aftermath of Katrina here. I agree with some of Caplan’s commenters that the military is one of the few bureaucracies that actually faces competition that could eliminate it, but the U.S is such an overwhelming superpower and its military used for such pointless excursions I don’t know if I would select it. The Post Office now breaks even and competes to some limited extent with UPS, so it’s a candidate. Finally, if the comparison was not to a hypothetical privatized version but other existing states, I would say that our country does a quite good job of providing “rule of law“.
July 18, 2008
Are central banks the most efficient state enterprise?
Posted by teageegeepea under Uncategorized[2] Comments
July 19, 2008 at 12:32 pm
I think the existence of a nominally independent central bank can help facilitate more responsible banking practices. It helps cultivate a sense of territorial jurisdiction in which the bankers can fancy themselves those in the know, keeping a potentially profligate and irresponsible democracy at bay. As you’ve noted with lawyers, who actually “think like lawyers” and not simply the hired guns of this or that lobby (on average), central bankers get to “think like bankers” – those relatively frugal, belt-tightening father figures who tell people things they don’t want to hear. And they like it.
I think Friedman’s efforts inadvertently made the case for Albert Hirschmann’s “Voice” over “Exit” in some situations. In this case, urging state agencies to act in a manner that at least mimics how one would act if he or she faced competition.
Of course a Rothbardian is like “What?!” right now. But as you note, the comparison is to other states, not a hypothetical.
August 1, 2008 at 4:08 pm
[...] give his and Jeff Hummel’s choices for the most efficient state enterprise. I discussed that here. Many commenters asked whether they could hear Hummel’s debunking of the “crazy [...]