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Paul Krugman: Master of the Straw-Man Fallacy

Paul Krugman’s August 10 op-ed attempts to mock advocates of unregulated free markets and, unsurprisingly, makes a pathetically weak case against them.

First let’s clear up an important matter of terminology. Although Krugman aims his criticism at “libertarians,” most of his remarks pertain to advocates of unregulated free markets. Many people who advocate free markets are not libertarians but radical capitalists, and many libertarians do not consistently advocate free markets or do not do so on solid philosophic ground. (For a discussion of the differences between libertarians and radical capitalists, see Craig Biddle’s “Libertarianism vs. Radical Capitalism.”)

As to the “substance” of Krugman’s argument, it is largely invective. He claims, for instance, that free markets are unrealistic, that those who advocate free markets are motivated by “rage,” that they operate by “pretending” and “imagining” things about markets and government that are not the case, that they “tend to engage in projection,” and that they are living a “foolish fantasy.” Krugman spends so much of his article making fun of free-market advocates that he never gets around to presenting a genuine argument against them.

And when he appears to be attempting an argument, he ends up attacking straw men or making unsupported assertions. Consider his “argument” that product safety depends on the Food and Drug Administration and other federal bureaucracies, in which he misrepresents the nature of a free market and then mocks his own straw man.

First, Krugman suggests that tort law would not exist in a free market, when in fact tort law is one of many rights-protecting mechanisms that comprise the legal system of a free market. (Many libertarians also fail to understand this point.) Krugman then claims that free-market advocates who do embrace tort law see torts as the only remedy for product safety—and he proceeds to mock this position as laughable, writing, “So, do you believe that would be enough? Really?” But the threat of lawsuits is not the only incentive corporations have to respect rights in a free market, and no one with any understanding of business or economics would ever argue that it is. What about a corporation’s reputation and the reputations of its officers and managers? Do businessmen not care about these? Do they not need good reputations in order to stay in business and make money? Do they not care about what their customers think, or say, or hear about them? Do their customers not care about any of this? Why do ratings agencies from the Better Business Bureau to Angie’s List to Yelp exist? How quickly are bad business practices reported via the Internet? What effect do such reports have? Krugman apparently regards all such questions as unworthy of consideration.

Notably, Krugman totally fails to account for the fact that, even as the FDA and other agencies “save” people by violating their moral right to decide for themselves whether to consume a given drug, those agencies also effectively kill or otherwise harm untold numbers of people by keeping potentially life-saving and health-improving drugs from them.

Another issue Krugman discusses is the phosphorus contamination of Lake Erie, which contributed to toxic algae blooms that temporarily affected the water supply for Toledo, Ohio. By Krugman’s account, the problem was caused by fertilizer runoff from farms near the lake. This case, Krugman claims, proves that markets must be regulated. Consider just a few reasons why this conclusion makes no sense:

  • Krugman wrongly holds a free market to the impossible standard of human omniscience. The fact that people sometimes can, whether intentionally or unintentionally, damage others’ property is no indictment of a free market; it is merely an indicator that, in a free market, government must sometimes intervene to protect people’s rights. In calling for regulated markets, Krugman effectively calls on government to proactively use force against people to prevent them from potentially harming others. But this is a contradiction: Initiatory force is wrong whether it is initiated by the government or by a citizen; force may not properly be used except in retaliation against those who have initiated it. That a person or a business might possibly violate someone else’s rights does not warrant force against that person or business.
  • Even as Krugman looks for ways to tarnish free markets, he sweeps the vast abuses and harms of regulatory agencies under the rug. To take just one indicator, in addition to the above-mentioned FDA example, “Costs for Americans to comply with federal regulations reached $1.863 trillion in 2013. That is more than the GDPs of Canada or Australia,” according to a report from the Competitive Enterprise Institute.
  • Water distribution in Toledo is handled by government, not by private, free-market businesses. Lake Erie itself is government owned, and drinking water is supplied by the government. So Krugman has taken a problem that is largely the result of socialized property and industry, and blamed the problem on a free market.
  • As a factual aside, although phosphorus runoff from nearby farms contributed to the problem, it is not the sole source of the problem. “[I]nvasive zebra mussels in Lake Erie have disrupted the food chain so much that it has helped the algae flourish,” the Associated Press reports. Another problem may be raw sewage, the AP reports—and sewage services are also provided, not by private businesses, but by government.
  • When the people of Toledo found that their socialized water distribution system was delivering contaminated water to them, they turned to bottled water—supplied by private businesses seeking profits to the extent that they are free to do so.
  • In general, Krugman looks to problems that can arise in a free market and largely ignores the solutions to such problems made possible by free markets—not to mention all of the life-serving goods and services provided by private businesses when they are free to produce and trade in accordance with their judgment.

Krugman has not shown that markets should be regulated; he has shown that his MO is to misrepresent the nature of free markets, to attack his own misrepresentations, and thereby to smear free markets and their advocates.

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