Paul Krugman’s Corrupt Confusion

Paul Krugman has a slam dunk argument for why libertarianism doesn’t work — provided his readers don’t know a thing about libertarianism and aren’t inclined to think critically about Krugman’s argument. It begins by quoting Milton Friedman, who tells us, as Krugman puts it, “that there’s no need for product safety regulation, because corporations know that if they do harm they’ll be sued.” But, ah ha! say Paul. Friedman’s an idiot because of, well, this:

In the wake of last month’s catastrophic Gulf Coast oil spill, Sen. Lisa Murkowski blocked a bill that would have raised the maximum liability for oil companies after a spill from a paltry $75 million to $10 billion.

Krugman thinks he has a cute syllogism here. 1) Milton Friedman says A. 2) The world is actually like B. 3) Therefore libertarianism is wrong.

“And don’t say that we just need better politicians,” Krugman says, cutting off what he sees as the libertarian’s only out. “If libertarianism requires incorruptible politicians to work, it’s not serious.”

Did you catch the problems? First, a libertarian could respond, “Yeah, Paul, that’s why we shouldn’t grant members of the legislature the power to set arbitrary limits on tort damages.” The solution isn’t incorruptible politicians. Rather, it’s to have perfectly corruptible ones without the authority to exercise their corruption.

Second, and more troubling for Krugman, is his admission that all politicians are corruptible. If that’s true (and it almost certainly is), then what does it say about Krugman’s constant calls for granting those same corruptible folks more power over our lives? Surely if Murkowski is corrupt enough to protect BP from tort damages, she’s corrupt enough to rig safety regulations in BP’s favor.

Krugman can’t have it both ways. If politicians are corrupt, then they’ll screw up both libertarian and progressive policies. The progressives have no solution but to hope for incorruptible politicians. Libertarians, on the other hand, have a very simple solution: take away the corrupt politicians’ power to do harm.